How to privately purchase a property from a buyer with a mortgage balance

[Alex Collins]

Hello!

Backstory: As some of you know based on previous post of mine I've found my first "possible" real estate deal.  A co-worker of mine is selling her condo (which is not listed on the market) and is allowing me first dibs. It's 3 bed 2 full bath and 1,300 sqft. Currently valued at ~180K. She still owes 57k on her 80k mortgage. Although it's valued at ~180k I'm thinking about offering her 90K because it needs some work. Both bathrooms need a complete remodel as well as the kitchen, the ceiling in 2 of the bed rooms are bowed (previous roof leak that was fixed) so new ceiling drywall, appliances, flooring, and paint throughout. I'm assuming I'll need 35-40K for the rehab which would bring my investment total to around ~130K. I've already had a home inspection done and it basically told me what I already knew about the property. I'm now looking into having a title company do a comprehensive title search before officially putting in an offer. 

If I was to purchase the property from her without realtors involved on either side how would I do so?  What are the pros/cons of doing a deal in this manner? 

[Chris Seveney]

Quote from @Alex Collins:

Hello!

Backstory: As some of you know based on previous post of mine I've found my first "possible" real estate deal.  A co-worker of mine is selling her condo (which is not listed on the market) and is allowing me first dibs. It's 3 bed 2 full bath and 1,300 sqft. Currently valued at ~180K. She still owes 57k on her 80k mortgage. Although it's valued at ~180k I'm thinking about offering her 90K because it needs some work. Both bathrooms need a complete remodel as well as the kitchen, the ceiling in 2 of the bed rooms are bowed (previous roof leak that was fixed) so new ceiling drywall, appliances, flooring, and paint throughout. I'm assuming I'll need 35-40K for the rehab which would bring my investment total to around ~130K. I've already had a home inspection done and it basically told me what I already knew about the property. I'm now looking into having a title company do a comprehensive title search before officially putting in an offer. 

If I was to purchase the property from her without realtors involved on either side how would I do so?  What are the pros/cons of doing a deal in this manner? 

 Are you spending money on a title report? Typically I do not spend a penny until I get it under agreement (inspection etc). The pros of not using an agent are you save a few grand the cons are who is going to be negotiating and creating the offer and purchase and sale agreement. Are you going to negotiate inspection items, contingencies etc. If you are only offering $100k I think its worth speaking to an agent and letting them make the $3-5k as an agent (if they would do it for that) on this deal. 

Question you also need to answer is how are you financing this? If it needs that much work will a traditional lender finance it and are you qualified to get financing?