Smells Like A Deal...not Sure Whether To Make Offer
Hi All,
This guy I found is falling 3+ mths behind on his mortgages and would be willing to sell to me for well under FMV.
I did a title search and the only liens that came up were the 90k and 30k mortgages as we discussed. However, the search also documents judements against him that probably are more than the value of the house!
He tells me that if he could realise around 50k in cash to him from the sale (there's around 120k in equity in the house) then he'd be willing to do it, otherwise he'll just hang on in the house to the bitter end and then declare bankruptcy.
Are there any creative solutions out there that could make this work or is this a dead deal because of the extent of judgements that he owes?
Many thanks in advance.
Budgie, NJ
Creative Loan Officer and REI
I am a little confused about a few of the facts:
What is the market value?
What is owed on the property including all mortgages, liens, taxes and so on?
JohnMichael's questions will definitely be needed to answer your question.
Also, how do you intend on taking this house (sub2, new loan, etc.)?
Dave
[addsig]
The mkt value of the townhouse is 250k - 275k. Even though it prob needs a coat of paint and new carpets to get it there.
There is around 125k owed on the house between the 1st and 2nd mortgages. No other liens on the house as yet. I would prob come in w/new financing as he would have to get some cash to go to make an agreement. Perhaps a split in the equity or somewhere around there.
Thanks.
Quote:
On 2004-09-02 15:28, budgie wrote:
There is around 125k owed on the house between the 1st and 2nd mortgages. No other liens on the house as yet.
What about:
Quote:
the search also documents judements against him that probably are more than the value of the house!
Are they against the house?
i would try to find out how old the judgments were to see if they are within the statute of limitations. If they are, I would contact the judgment holders to negotiate a settlement that would still leave you enough spread to make a decent profit.
Wouldn't the judgements go away if the house was foreclosed on?
If so, you can buy the foreclosing lein and make agreement with the owner to split the profit after forecosure.
Alexander.
Maybe I'm not sophisticated or knowledgeable enough. But wouldn't negotiating a split of the profit with the seller, after the sale, be fraudulent? The bank would sure think so, I think.
Which bank, if you buy a lien, you are the bank.
Thanks for the responses.
Hey lacashman, how've you been?
The judgements are not liens against the property as yet. However, they are pretty recent and substantial - a majority of the monies owed are to the state of NJ, which to my understanding is very difficult and laborious to negotiate.
I'm thinking at this point that I may have to let this one go, eventhough the seller is very easy to work with, just because the numbers seem too tight.
Now, if I was to buy the mortgage notes, I could then foreclose and take over the property without the judgements being satisfied?
If you are a foreclosing lender, and no one bids above the minimum bid you establish, then you take the property.
In your situation, since you mentioned there is enough equity, there is a possiblity that someone will bid above minimum, and if that is the case they will take the property.
Budgie,
The deal may not be dead yet. Check with your title attorney, or title company. It could very well be that the judgements against him will preclude him from getting a check, but would not preclude him from selling. It is just that proceeds from the sale that are left over after paying off the lien holders will go to pay judgements.
bnorton,
i hear what you're saying, but if that's the case then he won't go for the deal, he'll just hang in there until the bitter end.
i am procuring an opinion from my title company.
thanks, budgie
bnorton,
so from your posting it sounds like you're pretty definite about the following fact.....
that if the searches show unpaid judgements, even if they are not property liens, that they have to be paid 1st from the proceeds from the sale.
Just checking
For the most part that is correct. At least that is correct in my state. That is why the title company runs judgements against the parties involved in the transaction.