Read the Judgment First

Before I talk price with anyone, I read the judgment.

Every Monday starts the same way for me. I open the auction calendar, I look at what is coming up, and I read the numbers before I read anything else. The calendar is a lead list with a deadline, and the judgment is the first number that matters on it.

In a pre foreclosure deal, the judgment is the number that sets the floor. It is what the lender is owed, and everything I offer has to start from there. If I skip this step, I am guessing. And guessing is how a wholesaler ends up with a deal that looks good on paper and falls apart at the closing table.

Here is how I read a judgment, step by step.

The first step is to compare the judgment to the assessed value. I use the assessed value as a proxy, and I look for a judgment around 10 to 20 percent of that value. That range usually leaves room to work. A judgment close to the full assessed value usually does not, because there is not enough equity left for the seller, for me, and for the investor who buys the deal. A small judgment is a plus. It means more room, not less.

The second step is to work backwards from the investor price. An investor can pay about 70 percent of the assessed value, minus the rehab. That is the ceiling. My offer to the seller has to sit below that ceiling, clear the judgment, and still leave cash for the seller and a fee for me. If the math does not leave room for all three, the deal does not work, and I move on. I do not force it.

Take a simple example. A home assessed at 200,000 dollars. A judgment of 30,000 dollars, which is 15 percent of the assessed value. The investor price is 70 percent of 200,000 dollars, or 140,000 dollars, minus the rehab. If the rehab is 20,000 dollars, the investor can pay about 120,000 dollars. My offer has to clear the 30,000 dollar judgment, leave cash for the seller, and leave a fee for me, all inside that 120,000 dollars. That is the test. If the numbers pass, the deal is worth a conversation. If they do not, I walk away before anyone wastes time.

The third step is to confirm the payoff, not just the judgment amount. The judgment is a number on a page. The payoff is what it actually costs to clear the lien, and fees and interest move that number. I never build an offer on the judgment amount alone. I confirm what the lender needs to release the lien, in writing, before I put a number in front of a seller.

There is a fourth step that is not about the math at all. It is about the seller. A judgment is a legal number, but behind it is a person who is about to lose a home. When I call, I do not open with a number. I open with a question. I ask what is going on, I listen, and I find out what they actually need. The judgment tells me whether the deal can work. The conversation tells me whether I should be the one to help.

That is the order that works for me. Read the judgment. Run the numbers backwards from the investor. Confirm the payoff. Then talk to the seller like a person, not a file.

The judgment is not the whole deal. But if I cannot read it, I cannot price the deal. And if I cannot price the deal, I have no business making an offer.