Request Help Screening Threatened FSBO
I discovered a non-advertised FSBO while looking at a nearly identical realtor listed house next door; turns out FSBO needs to sell, and seems to be willing to share hard info, but I don't want to be remiss; he's 3 pmts late on a 32k 1st, owes a family member 12k as a 2nd, had a 14k bailbond lien that he now claims is gone, and the property has been assessed for 82k past 3 yrs. Listed house next door in worse shape also appraised coincidently at 82k just 2 months ago, but hasn't sold yet listed at 68k. As an experienced builder/remodeler, I know what it needs, and would sink about 10k in labor/matl improvements to boost it to a realistic 85-95k sell; with a 798 FICO I should be able to get a good chunk covered, and it'd likley appraise at least 82k too. He's ready to sell, verbally accepted a bottom dollar of 60k (to payoff his Harley too) so am trying to determine best sequence of safety checks b4 making the final offer maybe around 55k; 1)should I first do or hire a title search at my own cost? 2) Will it show everything I need to know, including prop tax, IRS, mech. liens, release of bailbond lien, etc - OR should I only care about items recorded prior to signing contract to purchase? 3) Should I make earnest money paid to order of a title company vs. him? 4) how can I verify his claim that he hasn't rec'd any letters yet from the 1st mortgage holder, payoff amt, late charges, etc; this seems a bit fishy. The family member owed 12k started to foreclose on him but he talked her out of it just before a sheriffs sale, so it appears to be preforeclosure to me, but as a willing FSBO so far, but I think it's a bit edgier than he's letting on. - thanks for all your insights in advance! 
Gemini 10
For some reason known only to the spirits of Negotiation, I do not think he has been perfectly open with you.
Make your offer as you suggest, of course the offer is subject to his being able to deliver a marketable title free of all the little goodies which appear to be clouding. Do you have Escrow in Colorado or are you still in Settlement with an Attorney or a Closing Agent?
Thats it, now it is up to him to deliver title as he described it. Make a minimum little tiny deposit to the Closing Agent and lets see what happens. Every deviation you will deduct from the amount offered, so you are in good shape. Relax and let her fly. Check out the property, you might even have it inspected by a proper qualified contractor. Thats a contractor with a license and who is active and does not show up for work with a seeing eye dog.
Cheers Lucius
lufos in on the mark - great post!
Eric & Rosa
[addsig]
-thanks Lucius, I agree. I know a realtor who will help me with this deal for a flat $1k, which I'd ask seller to pay in addtn to closing fees he's ok with so far, & making earnest pmt to a title co, not to him as he wants. In CO we close with a title co, using escrowed earnest funds held by them - is that what you meant? BUT, is there ANYTHING that would NOT be found or covered by title search/insurance, which I want to have in addition to appraisal which I pay for? Does this deal look pretty good so far? I am a contractor of 25 years, so the building side I got a handle on, just don't want to get stuck with some lien outa nowhere after closing - if I get insurance it's the title co's problem, right? Even IRS problems he might have that don't show now? I want noworries once I got it.
Also, wondered IF he doesn't move out in 7 days after closing as he says, will it take me going thru weeks of eviction hassles, or should I insist on closing-day possession?
This should appraise with at least 20-25% equity, and I've heard of doing a seller-quit-claim to buyer, then doing a refi for the 80%, thereby covering the full cost - any legal problems with this? I'm told it'll work even w/o seasoning with the right lender; other option is to tap a potential partner's 75K heloc. Opinions?
Dear Gemini,
Damn you are doing great! Teach me.
The title insurance will cover you on everything. Open the escrow, order the policy, read (most important) the preliminary report on title. Any items on it that have not been disclosed, arrange for him to retire (pay) from escrow and the title Co. will make everything all clear and nice at closing.
The acceptance of a Quit Claim Deed prior to close should be checked with the title company, just might scare them a bit. Use your charm. Buy Lunch. Actualy from what you have told me you should be able to finance the deal from Escrow and close with your new mortgage/trust deed on title.
Very good nice job. Get Richer Lucius