Can anyone help with this situational wholesale problem?

[Javon Rice]

If a house is bought by a family for $100,000 and then after two years they owe $95,000 but the property is appraised at $160,000, if an wholesaler offers them $115,000 and they accept will that cover the mortgage and make it free and clear for the buyer to sell for around $160,000? I would also sell to the buyer for $125,000 for a profit of 10k for me

I'm a newbie so it might be a dumb question.

[J Scott]

When buying a wholesale deal, the amount the seller owes on their mortgage is going to be the key number for you. In your example, the seller owes $95,000. When they sell, they will need to pay off that $95,000 at the closing table in order to be able to sell the property. If you are offering $95,000, they can take that money and pay off the mortgage and walk away. Of course, they won't walk away with anything (all the money went to pay off the mortgage), but they were able to sell.

If you pay $100K for the property, they'll walk away with about $5K in "profit." If you pay $125K, they'll walk away with about $30K.

Does that mean you HAVE to pay at least $95K to buy the property? Nope. Let's say you can only pay $90,000. If the sellers are desperate to sell and have the ability to, they can add $5000 of their own money to the $90,000 you pay for the property, and be able to pay off the mortgage and sell. That's called "coming to the table with cash." The seller are coming to the closing with extra money to add to your purchase funds to be able to pay off the house and sell it.

Does that make sense?