I live in the Raleigh NC area. I would like to find someone on the verge of bankruptcy who is desperate to

Asked by Eric, Carrboro, NC Sat Jun 14, 2008

sell and off them 70 cents on the dollar for the balance of their loan. Can this work?

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Cameron Piper, Agent, Forest Lake, MN
Sat Jun 14, 2008

I am normally a happy optomist on Trulia but on this question I think I need to take a little different slant. First things first, you will need to get a realtor to help you out here. The process you are about to undertake is way too difficult to do without the help of a professional.

That said, the reality of what you are proposing is not terribly likely. The vast majority of the loans in today's mortgage market are not assumable and as such the seller would have no ability to assign it to you. Another note about sellers in bankruptcy, they are in a terrible financial mess and have with all of the easy money that flowed into the mortgage markets in the last few years, they undoubtedly have a mortgage larger than what the house is worth, so 70 cents on the dollar may not be as good a deal as you think. You would probably be better off finding a house that is on he market but simply listed below market value.

Lets pretend you do find the right house and seller who is willing to let you negotiate with the bank. You would now be working on a short sale as Larry pointed out. These are very common today, but banks aren't likely to just throw 30 cents on the dollar out the window you are going to really need to be able to build a strong case for what you are offering.

There are deals out there, don't get too focused on one particular (and in this case unlikely) scenario and miss the other really good deals that don't fit your mold. I'm sorry to deflate your hopes, but I hope that helps.

Cameron Piper
Web Reference:  http://www.campiper.com
2 votes
Tim Hoelle, Both Buyer And Seller, Saint Petersburg, FL
Sun Jul 20, 2008
Yes, it can work. You have to understand several things before you start; (1) you will only be able to choose from certain homes so you'll have to be flexible on selection (2) the lender and the seller will control how far this process goes and (3) it will probably take 4-6 months to resolve. If you are planning to finance the purchase you will have to get your financing in order as the lender negotiating the short sale will want to see a "pre-qualification" letter on your behalf with the short sale package. If you're paying cash you may still need to provide written evidence that the funds are available. You can and should have all of the other "usual" pre-purchase work done, i.e. inspection, buy title insurance, etc.

I agree that it's a bit much to try to do this without someone working on it that knows short sales and what to do. I can recommend someone for you if you are interested. Good luck with it.
0 votes
Cory Barnett, Agent, Garner, NC
Wed Jul 16, 2008
0 votes
;, , Riverhead, NY
Sun Jul 13, 2008
Eric, you might google some real estate investor/investment sites in your area. We've attended a few (NOT THE KIND WITH A PAID GURU- simple local investors) and have found interesting info. Good luck.
Web Reference:  http://optionsrealty.com
0 votes
MichelleinNC, Home Buyer, Wilmington, NC
Sun Jul 13, 2008
Usually the seller is not very motivated to do this sort of transaction anyway, as it goes against their credit.
0 votes
Eric, Home Buyer, Carrboro, NC
Sat Jun 14, 2008
Thanks, I figured it was a long shot.
0 votes
Larry Story, Agent, Greensboro, NC
Sat Jun 14, 2008
Eric, you can try that would basically be a short sale. You will either be negotiating away their equity or negotiating with the bank for them to take less then what is owed on the home. Now a bank will generally not approve a short sale unless the homeowner can prove hardship. These cases are going to be few and far between. Of course remember you are not going to be the only one trying to do something like this. Also as it will be explained to the homeowner if they do agree to a short sale at the end of the year the bank is going to send them a 1099 statement for the amount that they lost off the loan. So they will have to declare that as income.

Hope this helps
0 votes
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