Pre-Forclosure Opportunity…Need Advice - Posted by Bill K. (AZ)
Posted by Bill K. (AZ) on May 19, 1999 at 14:04:06:
Thanks for taking time to read this post. I could use your help.
A seller called me today hoping that I could purchase her home. She is recently divorced, kept the home, but can no longer afford the mortgage payment. Her ex-husband has no intention of paying another dime to help out. She is not contemplating bankruptcy, is moving out-of-state in 10 days, and wishes to avoid this foreclosure. Here is the scenario…
Home Layout: 3 bd/2 ba, 1450sf
Original Purchase Price: $85,500 (new in 1991)
Loan Amount: $120,000 (Yes, she’s upside-down)
Interest Rate: 11%
Monthly Payment: $1,180 (She’s currently 2 months behind)
Could Rent For: $950-1,000/month (Although, I’d like to flip it)
The seller has contacted the lender about a possible sale to me. She also mentioned that I would be asking for a discount in order to proceed. They are willing to talk to me, but she says that they are NOT at all happy about it. As a matter of fact, the word “gruff” came up in our conversation about the lender’s demeanor.
Before I contact the lender directly, I wanted to get your thoughts on how I should proceed. I want to sound like I know what I’m doing.
I’m familiar with asking for a BIG discount, say offering the lender $86,000 for their interest. However, since the seller is only 2 months behind, I don’t see the lender’s motivation for such a large discount at this early stage. Am I off-base in my thinking here? Or, is it advantageous for the lender to negotiate an “out” early on in the process?
I can certainly help them understand their holding costs and the “upside-down” nature of their relationship with this property. But, I need to get some confidence in my position here. If they were to list it with an agent at 6% commission, and sell the property for $115,000, they stand to make more than I’m offering. They’d still lose money, but not as much. How do I negotiate from a position of strength and control?
Finally, are there any other opportunities that you can see in this situation?
Thanks in advance for your consideration.
Bill K. (AZ)