Need to get creative... Deal deatails inside

Let me preface by saying that I this is my first attempt at a ‘real life’ deal and I am not even sure if there is a deal here anywhere, but I would love to make this a win-win for both myself and the homeowner if at all possible.

That said, here are the details:

PROBLEM: Seller can’t make payment anymore.

Seller owes 151,000 on first and about 8,500 on 2nd. Total payoff = $160,000

Comps from realtor say $177,000.

Purchased with no money down, 30 yr fixed at 6.75% in May 2003 for $162,000.

Seller spent $100,000 renovating since purchase. New windows, new plumbing and gas pipes, new ducts, new windows, etc.

She cannot list with an agent because she can’t pay the commission. She cannot make another payment, though she is current on BOTH loans. Payment #1 = $1680, payment #2 = $89.00

What the seller wants, if possible:

Seller wants at MINIMUM to get rid of mortgage payment without forclosure.

Ideally, she wants $225,000 to make her happy. She has not yet done anything to sell on her own (denial?).

I guess the biggest thing here is to figure out what the house is really worth (Dee works lighting fast, so I should have this soon), but after that, is there a way that I can help her out and make some money too?

If the comps support the lower price of $177,000, is there any way I can rig a deal so that she isn’t responsible for the mortgage payment (some creative solution)?

She doesn’t need the small amount of equity it looks like she has anytime real soon. She just wants out without forclosure.

And, of course, if there is no deal, I need to know that too. This seller is really motivated and needs to do something FAST.

Thanks in advance! This is my first post, but I have been reading my butt off here. :slight_smile:

Laura in Austin, TX

Hey Laura:

This is a classic sub/2 purchase. You 'Get the Deed" but she still keeps the mortgage. You simply buy the home subject to the existing financing. You then make the payments until you sell or lease/option out.

I’m not sure your exit strategy though? Obviously your not going to pay her $225,000 for a home that comps out at $177,000 or $180,000. Just by your brief description, it sounds like she’s in trouble.

Without knowing the specifics- Get comps, factor in any holding time or fix up time ($$$ wise), make her an offer to purchase at or near what is owed . Run a preliminary title check. Then go from there.
I just picked one up 2 months ago. The owner gave me $6,000 to take the property from him. Saved him a foreclosure on his record, saved the bank from an REO, and made some nice up front cash while waiting and hoping the lease/option holder will cash out in 18 months for a nice $25,000 profit.

You have to have a solid exit strategy and know how to do this technique though. It can be tricky and confusing for a newbie.

Good Luck!