Purchase Agreement
I have a home that I am interested in. The buyer has it listed with a real estate agent. There is only a few weeks left until forclosure auction day. The home has three liens on it and the price he is asking covers the liens. Basically he is not going to be able to sell it unless he gets a full price offer. Therefore, he is not going to get anything out of the deal except that his liens are wiped out. To me this is a perfect short sale opportunity. I want to make him an offer that I will buy his home and wipe out all of his liens. I want to make this contingent on the fact that I have to be able to negotiate the liens down enough to where it is a good deal for me. I am pretty sure that I can get the third lien holder down to almost nothing as they won't get anything if it goes to auction. I can also probably get the 2nd lien holder down some also.
1. At what point do I draw up a purchase agrement? Prior to speaking with the lendors? Do the banks require this to negotiate with?
2. Most purchase agreements you put in the offer price. I don't know the offer price until I finnish negotiating with the lenders so how can I do question one. Is there a clause that I can use to put in that offer price is the amount that I can negotiate the liens down to and I can decide not to buy it if I cannot negotiate the debt down to my satisfaction? Basically the offer price will be the payoff of the three liens, payoff of taxes and payoff of the real estate agent commission.
3. I really don't want the seller or the real estate agent to know the offer price until the end. I don't want them to try to take the deal to someone else. (I am going to have to try to "short sell" the real estate agent into taking less commision to make the deal work. She probably won't be too happy with me.) By the time I finish negotiating with the banks there will only be a week left prior to auction so they won't be able to take it to anyone else. At the same time I don't want the owner to be "shocked" at how low he is actually selling the house for and think that he is getting a bad deal, even though he is getting the same deal if he sold it for full price....his liens get wiped out.
4. I want to make this contingent on the fact that I have to be able to negotiate the liens down enough to where it is a good deal for me. Does anyone know of a good out clause for this? If the deal does not look like it can work after negotiating with the lenders then I want out. I will just buy it at the forclosure auction and get rid of the debt there.
If anyone has any suggestions or wording used it would be much appreciated.
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