Seller Wants to Sell House for Less Than Mortgage

[Neil Schindel]

I am currently working with a seller who owes 70k on his mortgage. His house is assessed at 63k. It has a finished upstairs with 2 bedrooms and a bathroom but isn't added to the assessment because it doesn't have A/C. He wanted to sell it for 60k until he found out he would be liable for the other 10k. The numbers work till about 65k as my max purchase price. He is somewhat of a hoarder and I am now working with him to sell me a couple motorcycles in his garage along with the house to reach the 70k in value. 

Has anyone done something like this before?

I am most likely going to take it for myself but what if I Wholesale it? do I assign the purchase for the house but keep the motorcycles? what investor will want the house an motorcycles?

This is a very strange situation.

[Will Barnard]

If he owes $70k and sells for anything less than that, then yes, he still has to pay off the mortgage unless the lender agrees to a short sale. If after the mess was cleaned out and it could sell for $80k or more, than as a licensed agent, you have the fiduciary responsibility to get the seller the most money for the home by listing on the open market and obtaining the highest offers possible. That would eliminate the seller from coming out of pocket for the mortgage difference and even put cash in his pocket at close, plus you get a commission. Find the buyer too and double end it potentially.

If you truly want to take it down as your flip, then at minimum you should be offering him the $65k and disclose that you feel with a clean up jon, the seller could get $80k plus so the seller has options.