Possible Pre-foreclosure Deal. Need Help.
Hello everyone
I'll try to make it as short as possible. I've located a home owner in distress. She can no longer afford her home and she's currently been posted for foreclosure. These are the numbers:
Mortgage owed: $190K
FMV: 250K
No liens of any kind
I gave her an offer of 210k. She's considering it and will get back to me this week. My questions are:
1. What's my next step if she agrees to my offer.
2. Is it really that simple once you find and negotiate with a distressed owner?
3. Can she legally sell the house for 210k pay off her mortgage and leave herself with 20k.
4. Can I legally purchase her home while it's in pre-foreclosure.
Any suggestions or advise will help. Thanks in advance. 
If your making her an offer you aren't doign a short sale at all, your just buying the property from her as a FSBO. As long as the deal closes prior to foreclosure, you are fine. She owes 190, she can sell for that if she'll accept it. You offered 210, she needs out, if she doesn't have any more offers you might have a shot.
Your next step is to close. Contact a title company and get the title search and Title Insurance, and your real estate attorney for the paperwork and proceed to closing.
Just because a house is in pre-foreclosure doesn't make it a short sale. a quick definition of a SS is a property that is at least 3 months in arrears, and you make an offer to the mortgage company for a discounted payoff in order for them to release their lien. The owner normally would not get any proceeds from the deal because they are fixing to loose their home anyway in the foreclosure.
Hope this clears it up.
Tim
ruben,
Yes, it can be that simple! All you need is a highly motivated seller and they will sign anything you put in front of them. As long as you are honest, reasonable and create a win-win situation, then you should be ok.
Once the offer is accepted, then you have many options. You can buy it and turn around and sell it. Or you can assign the contract to another buyer who is willing to pay you more for the house. As for paying off the mortgage, you have to find out what the "payoff balance" is from the lender. You can ask the seller to order a payoff balance, so you know what you are looking at.
As for the equity, you can convince her that there is not as much equity as you both thought. You should read these articles that will help you show the seller on paper how much equity she really has:
Using Financial Judo Series (Part 1 of 2)
Using Financial Judo Series (Part 2 of 2)
Yes, you can legally buy a home before it goes to the foreclosure auction. As long as you purchase the property from the owner, then you are fine. Since the seller still holds the deed, then you can buy it from the seller and help them save their credit from foreclosure. Let us know how it turns out.
Tanya
Thanks for your help Tonya and Tim. I'm a little overwhelmed write now since it's my first time negotiating with a actual home owner. I have one last question for the night. If I have access to phone #'s of homeowners who have been posted for foreclosure is it a good idea to call them or should I do a mailing. I must add that 9 out 10 calls are not appreciated
Thanks again
How awesome that you are doing your first deal! I've heard that it is better to mail letters. It gives them time to think about it and I've heard that it gives a better return on how many you send out. Congratulations again on you first one! I can't wait for mine.
The Ghini
My offer hasn't been excepted yet but I feel that I've learned a lot just by speaking with a distressed owner. I think your right by next week I should have letters ready and a www.P.O box. Thanks for your support Ghini we all need some.
Good luck