I found a Homeowner that is going thru a divorce and is willing to walk away from his home. Its a 2 yr old 1500 Sq Ft 4/2 He owes 173K Zillow puts the value at 153,900K He has the house rented for another 4 1/2 months. The house sits in a newer subdivision with some really nice homes. My plan is to market this home with a 10K down plus Closing Costs. Has anyone done these types of deals? I hope to make 7 or 8K, I may have to make up 1 or 2 back payments. Give me some input.
Hi,
You know divorce is interesting, however the problems I have with divorce properties and there are ways to mitigate these issues however your odds of success are less than 50 / 50!
When a couple is married in most states husband is responsible for wifes debt, and wife is responsible for husbands debt!
Now when you have a mortgage loan, a lot of times the husband or wife will ask the court to assign a trustee and to sell / liquidate the property to remove responsibility for the mortgage! Now if the fact a mortgage is in husbands name and missed during the divorce or not specifically discussed to determine disposition, the husband or wife can come back to court after the fact and request either a new mortgage be taken out or the sale to remove liability for debt’s!
Now if the husbands name is on this house and your thinking you want to take over his existing mortgage go get the wifes agreement in writing to agree to let you carry and pay that loan for 1 year, 3 years or 5 years depending on your desired terms, if you don’t you could end up with problems down the road as the mortgage is still potentially the responsibility of the marriage partners!
The biggest problem I have found is even if the original mortgage was in one name (Husbands) the lender as a part of marriage records the debt on the wifes credit report and shows it as an asset / debt of marriage, when the divorce occurs and is final and suddenly wife gets remarried or decides she wants to buy a new home, her debt to income ratio is effected because this mortgage still shows as her being responsible as part of a marriage asset (Community Property State) then she suddenly steps up and asks the court at any later date (One Day, One Week, One Month or One Year) after divorce is final to order the property sold and the existing mortgage relieved and then your kind of screwed!
The second problem will be value, you will have a rough time convincing anyone to buy this for $185k when it’s only worth $153k, walk away from this while you can, this is not even a good short sale candidate as you have missed back payments and a tenant protected by law for 4.5 more months! Run, Run, Run!!!
Just beware (Caviot Emptor)
GR
Yea I am aware of potential problems, I can convince the wife to sign off her interest explaining having the loan stay in their names is better than a Foreclosure especially when I have a qualified buyer with an income. If this buyer defaults I will sell it again. The mortgage is 173K, Zillow estimates the value at 153K My buyers are very willing to pay 20K more bcuz they cant qualify for a new loan. I have the buyers and seller sign disclaimers acknowledging the risks and relieving me of any liabilities since Im only the go between. I shud make 8-10K for setting this up. I have several buyers willing to buy this, its a 2 yr old home in a new subdivision. I know there are future probs that cud arise, The buyers and sellers sign docs stating they are not under any duress, know all the risks and that Im not responsible for any future probs. Why am I still worried?
Randoskie
Listen to Gold River, don’t make the newbie mistake of becoming motivated buyer. If there is any real meat there I don’t see it.
And surprise that signed document by a duress-ed seller who can substantiate he was in duress when he signed it just made it worthless, and just because of the situation he was in he has a good prima facie case for the judge.
Yes, it may work out as you hope, and me putting my life savings on number 12 in Las Vegas may work out too, but is it good odds.
I seemed to fall into a lot of divorce situations early in my career, and counting on two sane people to remain sane if a war starts, or they need to erase past mistakes in order to get on with their future can cause a ton of problems for other people.
Maybe worth the risk if there is enough meat on the bone, but i don’t like your chances here, not only do you have the problem of the sellers but buyers that can walk as a possibility too if they feel they made a mistake, how much skin do they have in the game? There are other angles to do a deal here but I’m running out of time at the moment.