Existing Mortgage Research on Private Deals

[Tom Nellman]

Hi, 

We are still fairly new to off market deals.  We have found that a lot of prospects say "If you just pay off my existing mortgage" or "If you just pay off my existing mortgage plus "$X.XX" Dollars More" it's yours.  They then when asked, they say I owe "about... "X" on the property".  As investors, how do we investigate/confirm how much they actually owe on the house.  Do you have to wait until the purchase agreement is signed and the title company gets the payoff letter from the bank and if the number is off you back out?  Just curious how this is handled, thanks!

Tom

[Jon K.]

What they actually owe doesn't matter. What matters is the price you both agree to in the purchase contract which isn't going to be "whatever the principal turns out to be". It's going to be an actual number. Either that number works for you or it doesn't. If you come to find out later that they owe far less or far more you still have a signed purchased contract saying it's yours for X.

So if they say "My mortgage is about $90,000. Pay me 90k and it's yours" and you find out later it was only 70k when 90 worked for you you'd be a fool to back out. No different than a wholesaler bringing you a contract for 100k and you find out they got it under contract for 70 when you finally see the HUD-1. If the number worked for you it worked for you so you wouldn't back out.