Your advice on this situation would be appreciated!

Here’s my dillemna:

I have an opportunity to purchase a home Sub2 or talk to the mortgage company and try to deal them down on the price.

The home has a 308,000 dollar balance on the loan.

The home is worth approximately 370,000.

The owner wants 27,000.

House has been on market for 3 months w/o selling. Bank is supposidly desperate (don’t know why) and want to “short sale” due to a few late payments by owner.

The bank says that they will deal with someone to “short sale” the property (supposidly they will take less)


  1. Should I take it subject to?

  2. Should I call the bank and offer money?

  3. How much money should I offer for the property to the bank?

Thank you very much for as much info and handling this situation. I am totally green but have read the various articles. I now need some real life input.

Hi There,

This is what I would do,

1st) I would get the owner to agree on taking 5K for the house, he’s late on his mtg. payments thus he is or will be in foreclosure very soon, depending on the laws in your state.

  1. I would offer the bank 275K, if they foreclose on the property, it will cost them more than the discount they’re extending to you just on attorney fees and court fees for the foreclosure process.

  2. Since the house is not selling, you have the upper hand in the negotiation, be smart about dealing with all the parties and I’m sure you’ll come out with a good deal.

Finally, make sure the house is in decent condition prior to making your offer and going all the way on this deal. You don’t want to the owner to blow a gasket and put cement in the plumbing system, thus creating a less profitable situation for you.

Thanks for that important feedback, first off.

Follow question: The owner needs 27,000 to pay off debts and such. That part is not really negotiable due to ethics in part on my behalf. At the same time, what leverage do I have over the price offered to the bank.

In other words, before reaching the point of diminishing returns, how low of a price can I offer and expect to be awarded the house? (How much would it cost for lawyers/forclosure?)

Second question is: do I assume the existing loan or do I have to get my own loan?

Thanks, once more. :wink:


A few comments on this.

First, the $27K (or whatever amount a seller wants) is ALWAYS negotiable. I’m not sure what your ethics has to do with negotiating the deal, but what they want and what they get are two completely different things. I’m pretty sure that if the bank foreclosures, that they aren’t going to get $27K, so $5K would be better, right?

Second, if you do a Short sale, then the homeowners cannot receive ANY money (at least on paper), so you will not be able to offer then any money and do a short sale.

Third, why is the house not selling? Is it really worth $370K? Does it need work? Slow market? What? You don’t simply want to trade places with the sellers. If you don’t know why it isn’t selling now, then how will you know what to do to make it sell when you have it?

Fourth, there are no hard and fast rules concerning shortsales and price %'s, etc. Make a fair, reasonable offer based off of the property’s condition and see what happens.

Fifth, If you take the prop Sub2, then you informally ‘assume’ the existing loan. If you do a successful SS, then you will need your own funds to close the deal.

And finally, sixth, no offense, but you’re not ready to do this deal. If you really want to help these people, the best option is for you to put them into contact with a more experienced investor that may be able to help them. You can get a finder’s fee and probably a paid education by asking the investor to let you sit in own what he does so that you can learn this firsthand.


Well thank you very much for that detailed advice and your candor as to my inexperience.

You are correct in that this deal may be outside my capacity in the sense that I do not fully understand all elements well enough to smoothly negotiate a transaction.

I will look into the factor and then decide on a course of action that will provide the clients, the bank, myself and other parties a solution.

Any other comments from anyone would be appreciated. :slight_smile:

Bank will do a short sale as long the seller receive no money on paper.