Approaching a seller in Distress to Create a Deal

[Vincent Plant]

I brrrr’d a house several months ago. It worked out great. The street it’s on presents tons of opportunity so I want to get another.

I got word that the neighbor next door is in distress and possibly in foreclosure (it showed up on Zillow as pre foreclosure).

I’ve talked to this guy before, I have his cell, and I know from him that he inherited the house from his father (he told me). If he’s in danger of losing the house I want to approach him and propose a win win strategy where I help him financially, and I end up with the house free and clear, or with him as a tenant, and me and the owner in the long run.

I just don’t know how to go about approaching him or how to structure a proposal. The guy does not see me as a friend (long story but the house I own was previously his baby mommas house), I don’t know anything else about his personal circumstances, and I don’t know exactly what he would need.

I was thinking something like, I’ll pay off all/any liens, and give you $5k cash in hand to walk away from the house and sign the deed over to me. House as is. I’m just not sure if that’s best way.

Suggestions?

[Don Konipol]

@Vincent Plant

First, you’ll need to determine if he has clean title. Often in these situations the occupant is one of a number of people with a potential interest in ownership, some of which may not even know of their potential ownership interest. This often happens when a person dies intestate, it without a will.

Even if a Will was executed, has the will been probated? If not and people with an inheritance claim can’t be convinced to “sign away” their claims, you might be looking at 2 years of probate court.

IF you are able to determine that this person has sole and legal title and can deliver title at his will (some title restrictions grant title to someone only for their lifetimes, known as a life estate), then you will need to determine much more specifically exactly what distress he’s under. Going in with a ton of options that probably won’t provide any gain to him will only make you look unknowledgeable, untrustworthy, or insensitive.

Once you determine the above, you’ll need to determine how much in liabilities are attached to the property, and exactly what those liabilities are. Then it can be determined the possibility of some of those liabilities being discounted and an analysis run to determine the financial viability of a purchase.

Only at this point are you ready to consider various alternatives for property acquisition.