trying to understand buying preforclosure and buying home with equity

[David Daniels]

Hey bp

just a quick question that been floating in my mind for a while, I probably already know the answer but I like to overthink things for some reason. Ok when you buy a pre-foreclosure or say a home with 40% equity....Are you just paying for the note on the property, so that would be your discounted price right?. And what else additional cost are there?

for example, if I found a house with a fmv of a 150k with 40% equity. Am I getting the house for 90K? because all I have to do is pay off the bank right?

now lets say if I need to put in 40 k repair into it, would I need to apply the 70% formula on the fmv minus repair. which is 65k for my max offer. if that is so, what about the 90k loan? would I need to try negotiate with the seller to come up with a difference and have him pay off the remainder of the loan at 25K.

(I would use a subject to existing financing deal for this example, but I still need to know how things work expand my brain please)

Thank you

-David D

[Curt Davis]

You are making this far too complicated and honestly, dealing with pre-foreclosures to me is a waste of time.  If a home owner was truly in trouble, with a 40% margin they could surely list it on the open market with a realtor. 

Most people in distress dont have any funds, thats why they are in trouble and they are surely behind on their mortgage.  You would be better working already foreclosed homes.

Good luck