Making offers on abandoned properties - Posted by Chad (MD)

Real Estate Investing
#1

Posted by Chad (MD) on June 06, 2007 at 09:29:27:

Thanks, IB.

That really clears it up! Your advice makes a lot of sense. I asked several rehabbers I do business with and received different advice from each. I guess they all have their own methods and preferences.

I know you’re in New Jersey, so your search methods are different from Maryland. Otherwise I’d ask you some specific questions about the title search.

Thanks again,

Chad

#2

Making offers on abandoned properties - Posted by Chad (MD)

Posted by Chad (MD) on June 05, 2007 at 10:15:41:

Hi all,

I’ve recently started looking at properties other than listed properties. These are mainly abandoned. My question is, do I have to know the amounts owed to make an offer?

Say for example I contact an owner who agrees to sell. The ARV is $100k and repairs are $25k. Do I just agree on a price with the seller (say $30k) and fill out a purchase agreement?

What if he owes more than $30k? My agreement says the seller has to deliver a warranty deed, so does that mean the agreement is void if he can’t?

Should I do title search myself to get an indication that it’s a deal worth pursuing? Should I only look for deals with equity – or does it matter?

The other option I could see is getting a quit claim deed, but then I would become responsible for all encumberances on the property, right?

Sorry for such a simple question, but I’ve only dealt with listed properties, and this is a whole new market. I’m really confused but determined to work it out.

Thanks in advance,

Chad

#3

Re: Making offers on abandoned properties - Posted by IB (NJ)

Posted by IB (NJ) on June 05, 2007 at 13:49:29:

I don’t make a specific offer on an abandoned property until I do a title search (which I do myself - I also do an professional one prior to the closing) and tax search (check with the tax collector and get an exact figure owed).

I then let the owner know (verbally, not in writing as I don’t furnish the owner with any written documentation of mortgages, tax certs, etc. until AFTER we are under contract) an approximate amount of dollars in liens that are levied against the property. I then let him know (based on the current status of title) what I’m able to pay him/her. I also let them know that I can pay x dollars more if I can get mortgage A discounted or mortgage B discounted down to a certain amount. All of this is outlined in the contract.

You can get a quit claim deed without recording it to make sure you can get the liens down to a ‘doable’ amount. Although that last statement should take into consideration that I’ve never gotten a quit claim deed from a property owner before.Personally I would get a quit claim deed, a sign P&S contract, AND an authorization letter to obtain mortgage info. That way all your bases are covered.

Ib