How Much Can I Offer The Motivated Seller On A Preforeclosure?

I am new to this forum, and I want to know how much can I offer the motivated seller? I would like to know is there a certain percentage of the sales price I would offer the seller so that the seller can deed me the home?

Comments(12)

  • I would offer $10. to keep the deal legally binding.

  • loon6th June, 2004

    The sales price is what you say it is, since you're the one helping them out. You should only offer, at most, the max $ you can put in and still have wiggle room for resale. Are you buying sub2? Then your cash offer will be for the equity, if any, and can be as little as they'll accept. Good idea not to offer a total (mortgage + back payments + cash) of more than 75% or so (some say 70%) of your best and most realistic estimate of as is market value. Reduce that number by the amount of fix up costs you plan to incur.

  • active_re_investor6th June, 2004

    In a subject-2 deal there is no equity for someone who does not have the time to get it sold before a foreclosure, etc.

    Hence I do not consider offering them anything. I focus on solving their problem. If they need some cash to find an apartment and get their stuff moved I might consider making such an offer if it saves me money be getting things moving.

    If they have a lot of equity but they can not get the place sold then maybe, just maybe there really is less equity then they think.

    As $Cash$ says factor in the costs they will have to sell conventionally (more payments until it sells, the commission, the selling costs like title/escrow fees, recording costs, maintenance when the appraisal comes back with something, the clean up costs in money and time so the place can be presented, etc).

    Viewed from this angle if they really need to get the deal done then they should be paying you as they will have to pay others if they go the conventional route.

    If they can sell some other way and end up with more cash let them try. It might work and all the power to them. If they are in a panic and just do not want the hassle and risks you are offering them a guarantee that the deal will get done. The guarantee comes at a price and that price is the equity they think they have that they turn over to you. You are solving their distress and being paid to do so. This is not a charity.

    John
    [addsig]

  • dreamer646th June, 2004

    Thank you all for all your comments. Much appreciate it.

  • annadynasty8th June, 2004

    Its folks like John, who make me look like a white knight. No wonder folks always say "i'm a breath of fresh air". After John beats them up, they come to me and feel great about our deal.

    Yes, I make sure I get the deal for a price that allows me to hold it for 3-4 months, fix it up and sell it for top dollar, netting 15-20% clear profit on the resale, assuming no appreciation.

    You don't have to be ruthless to do this business. In fact, having a heart goes a long way....

    You know, what goes around comes around. I wonder how many of the people he has bought houses from say nice things about him....

  • edmeyer8th June, 2004

    If they are near foreclosure, you may have a difficult time determining what equity is. It is a moving target because of liens and lender penalties, etc.

    Some offers may be accepted by trying to estimate what these might be and offer some cash beyond this so the seller gets something positive besides having some obligations paid off in escrow. This has worked for me.

    Be aware that you may have an angry seller when he/she doesn't get as much cash as anticipated so you might want to prepare on how you will handle this.

  • JohnLocke8th June, 2004

    annadynasty,

    You must be a real peach of a person.

    You knock a fellow investors style of investing and then tell everyone what a great person you are.

    My suggestion to you is post about what you do without making comments about anyone elses method or style of investing.

    John $Cash$ Locke

  • dealfinder9th June, 2004

    John,

    Kudos on your reply to annadynasty.

    In my former profession I have been involved with negotiating for over 25 years with large, medium, and small companies and individuals. I learned a long time ago that if you bash others in your same profession or if you bash your competition it will inevitably hinder your deal making ability and may just come back to bite you right in the butt.

    Just one man's opinion.

    Dave
    [addsig]

  • JohnLocke9th June, 2004

    Dave,

    There is usually a reason a person posts like this, come to find out in checking his profile there were 6 of his 7 posts advertising a foreclosure site the poster must be involved with. I deleted his posts.

    I also put this foreclosure site on my bad guy's list because of this poster.

    So, your advise is very sound.

    John $Cash$ Locke

  • dreamer649th June, 2004

    If a homeowner does not have any equity in the home how can I structure the deal without any equity? Do I walk away and find another that does have equity?

  • dealfinder10th June, 2004

    Dreamer,

    If you are talking about a pre-foreclosure or foreclosure and you find the property has no equity, in my opinion, I would try a short sale if there was enough time.

    It is also important for us to know what your exit strategy is in order to really answer your question. Good Luck.

    Dave
    [addsig]

  • dreamer6416th June, 2004

    I would like to lease option the home.

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