Wholesaling: Bidding Lower than the amount of Equity in a home

[William Laranga]

One concept that I can not seem to wrap my head around, is offering a homeowner less than the amount of money they owe on the property’s mortgage. If Steve owes $100,000 to Bank of _______ and based on the math, I, as the wholesaler, offer him $80,000 to place the property under contract. 

As the wholesaler, do I or Steve contact the Bank of ____________ to validate the agreement / I imagine the bank would prefer taking a small loss as opposed to foreclosing and incurring significant legal and management costs. However, who is responsible for having the conversation with the financial institution?