How do you negotiate if you don't know ......

the amount owed on the mortgage balance. I understand that I need to purchase the property at a number that works for me. But I would still like to understand why a seller would agree on a price less than what they owe on the mortgage or if they can even do that. Thanks for anyones reply and info.

If they are deep in the foreclosure process, meaning they’ve already received letters stating that a foreclosure has started, they may just want to get rid of the property. Not everyone sells a house to make a profit. Sometimes their credit is more important than taking a check to the bank. If the only way to purchase the house and make some money, is to offer less than they owe, they/you (mostly you) are going to have to talk the bank into accepting a short sale.

Of course this will hurt their credit some, but not as much as a foreclosure, and alot less than a bankruptcy. I suggest you read up a bunch on short sales, because they’re no simple matter for someone not familiar with them. There are also other options for purchasing a house with not much equity. Purchasing subject to existing financing, and even lease options, will allow an investor to “pay more” than what they would in a cash transaction. With these options, you’ll have to negotiate good terms.

If you’re going to pay more for the house, you have to have the option to not pay the entire purchase price up front. I’ve heard of lease options going on for five or more years before the home owner gets cashed out. If you’re attempting to flip the contract, make sure you know some buyers who are willing to take on a Sub2 (subject to existing financing) or a lease option. There are plenty of investors who use these strategies, they tend to be “buy and hold” type investors.

That’s why in this business we deal with Motivated sellers whose main priority at the time you talk to them is to get rid of their properties. Their reasons are not necessarily economic, most often it’s personal. The only way you will understand why a seller would agree to sell at a price where they can’t profit is to know their situation.

What’s up my friend I hope all is well…For one in order for negotiations to start, if there is an outstanding mortgage or mortgages, we must find out from the seller exactly what the payoff balance is.

To me honestly it sounds like the seller may be upside down, meaning they owe more than what the house is worth. If that is the case, the seller is not in a position to negotiate with you. The best option for you to buy is through a short sale.

Sounds like you may have to dig a little further into this situation and ask the seller if they are current with their payments? If not current with their payments, this is a definitely a short sale situation.

Hope this helps! To your success! :biggrin