Can I buy a pre-foreclosure for less than the outstanding amount ?

Question

Hi I am new to real estate, and i am having a hard time understanding how to negotiate a pre-foreclosure, my question is pretty straight forward. " can I buy a pre-foreclosure for less than the outstanding balance?" .

So estimated values is 160k, outstanding loan amount is 96K, so at this price the home is a 60%, now everywhere i read the benefits for the owner to go with pre-foreclosure is to safe credit and walk away with cash. so in order for the owner to walk away with cash i will have to buy it for more than 96k, and it wont leave me room for repairs, interest and fees of hard money etc.

or can you subtract repairs and other cost from the outstanding balance 96k - $$$ (repairs, etc) .

sorry if this is so simple for you guys but this is confusing, and I already read as much as possible about how to negotiate pre-foreclosures, or how to negotiate a purchase agreement and as you can see I am still confused, so i decide to create an account to see if you guys can share your knowledge with me. thank you very much in advance I really want to learn this.

Jim Viens · Answer

@Alfredo Crespo Keep in mind that the lender will NOT allow the borrower to take any money if a short sale is performed. The only way I've heard of to get around this is to "buy" items from them that stay with the property (i.e.: $2500 for appliances, etc.) Banks are VERY picky about these things and there could be some serious consequences if they catch you doing "backdoor" deals with the homeowner.

Alfredo Crespo · Answer

thank you for your response, so if i promise the home owner to walk away with some cash i have to account accordingly to make it work.

Lisa Kohl · Answer

In order to save the home from foreclosure- the loan, all back payments and late fees must be paid in full before the home goes to auction. The lender could care less if you need to account money for repairs etc so you'll need to confirm those amounts and act accordingly.

The only way you may be able to get any "discount" would be in a short sale situation and discounts on short sales can come few and far between these days.