Possible first deal?? - please advise!

I may have my first deal. Kudos to BluestarHomes for giving me great ideas and calming my nerves… . .
Got a response to my website - Property is a SFH built in 1963 - 2000 sq ft on a 20,000 lot. Comps that I could pull from websites have a 2,276 sq. ft home on same road sold March 31, 05 for $475K (built 1997), another close house sold July 7, 2005 for $300K at 1,066 sq. ft (built 1962), and yet another - this one on the same road agin - sold 10/2004 for $274.5K at 1,568 sq. ft.

Owned since 1998 but lived there for 33 years. Owner says no major repairs need to be done that he’s aware of. Selling because wants to move. . . in Decemer. One month behind in mortgage payments. Owe approx 270K on the home - are asking $325, minimum all-cash offer they’ll take at this point response was $310K.

Bluestar gave a great idea of working with a property value of 350K - if that is indeed what it is truly worth - to see if I could catch him up on payments, check into getting the deed (is this an assumption or a sub-2, don’t know all the terminology yet), giving him the cash he needs now. . . fixing the house and then selling. The problem I see with this is that they don’t want to move until December.

My question is how can I structure this. . .if the numbers can work. . . and purchase but they don’t want to move until Decem ber. I’m afraid if I let them stay in the home, they won’t want to move and then I’ll have to go through an eviction process.

Right now I can talk with them because they are not within 41 days of foreclosure by any means. . .but may be headed there soon and the MD law precludes me purchasing their home if they are in that position which I won’t get into detail here on. . . so they have 2 months to go, basically, before they are in default and an NOD gets filed. . . this is THE ideal time to talk and try to structure a deal. . .

How can I go about this? I’m excited, scared, excited, worried, EXCITED!! and just trying to keep a level head. I know that they are not motivated by their projected selling date. . . but they ARE 1 month behind in payments and could be looking for debt relief.

Please give me what you would do in this situation!

Hi Immy,

I read your post so thought I would respond. I don’t flip properties, I buy and hold. Eviction could always be a possibility here. But how about closing in Dec, when they say they will move.

First, you need to know, repeat KNOW, what is the real fair market value of the property. Guessing doesn’t get it. As a first-timer, it would be best for you to get a RE agent friend (or two) to pull comps for you, or better still to get a true appraisal.

Assuming that all of the houses that you listed are comparable to the subject property in style, lot size, detail, etc., then based on price per square feet, your property should sale in the area of $425-450K, not $350K. See how assuming can make the numbers change?

If he has a good solid contract on the property (ie, you can actually get the money/close a loan), then the bank will not foreclose on him. Simply set the closing date for whenever he wishes to leave.

Recap: Determine the true FMV of the property, determine the repairs and the costs, determine your exit strategy, then determine how best to proceed with buying the property.


I have an agent running comps for me and hope to get that info shortly - I am going to go see the property and take notes on possible repairs, talk further with the sellers to assess the situation, etc.

My ultimate exit strategy is to fix/touch up what needs it and to sell it. I’m not holding onto this one, except will do a lease option as a back-up exit strategy.

I guess I am still thinking with a traditional, “retail” mindset. If the loan is assumable, should I do that? Should I cash him out with a conventional loan and set the close for December – I mean, how does that work? I guess I’m so green that I am not understanding how I could buy this house in September and have closing in December. . . how does that work? Since they are a month behind I’m thinking they may want someone to take over payments. . . so do I just take them over, pay out of my pocket, factor that into my purchase offer so I recoup that investment, and then do the “traditional buy and close” in December?

I was thinking of trying to do a split-funding deal where I could get them caught up, make a “deposit” that would equal there next 4 months payments, and then buy them out in December (again factoring all of that into the purchase price). Wouldn’t that require HML? I don’t have big enough cash reserves myself. THen I would be paying a boatload in holding this loan through the December close and any work that needs to be done… .

I am seeing a big fog when I try to see the big picture!

I agree I would ask the seller to pay for an appraisal! Get the real picture! Good deal on this Immy as long as the numbers work!

Alright, I am going to see this SFH tomorrow afternoon at 4 PM. I found out through talking with owner the following:

she is in Chapter 7 bankruptcy
The hearing is Oct. 17 and discharge is Nov. 17
She is (almost) 1 month late on her payment - it’s more than 5 days overdue to lender for September and will likely be late this month.
She has 2 mortgages totally approx 277K (1st is 241K and second is 36K).
She has a prepayment penality on one loan which is up November 23rd - that’s one reason she doesn’t want to sell until December and she said the other is because where she is looking to buy - about 45 minutes north of where she is now, over the MD/PA line “the houses sell within 48 hours” and she doesn’t want to do an HOC contingency.

I asked if her loan was assumable or a VA loan - it’s not a VA and she is looking through her papers to determine if it’s assumable or not and will let me know. Probably not, I think.

I know nothing of bankruptcy, etc. From talking with her today I am thinking that in her mind, she is going to let the payments go because she knows a NOD won’t be filed until 90 days deliquency, which puts her at November 29. I think she is looking to actually sell this between November 23rd, when the prepay penality is up and November 29!

She also said she is starting a new job next week, gave up the daycare she was doing.

My one question - just random - is how can someone in bankruptcy buy a house???

Now, with this new info, if anyone would like. . .please advise how I may be able to structure this for a buy and resell, or an assignment.