Seller may say NO, but would accept $85,000 --- so that's good - you've reduced the price by $15,000, your trial offer was successful.The next step is Second Stage Negotiation, you've made an appointment, you got your comps, you have a fair idea of value - after inspecting the building you'll certainly find other deficiencies that you can negotiate for a lower price - at that time you make an offer that suits you.Pull out your Skinny Contract of sale and write it up - if the transaction is done right using the right clauses you should be able to control the building with right of possession and the right to market - now go find an assignee to flip your contract to.

Less than 35 non accredited investors, no general solicitation or advertising, etc.The other 15 states are a hodgepodge of various laws or lack thereof.One thing almost no one understands that if you are sued by an investor because the investor lost money ( not talking about property foreclosure or liability for deficiency, but about being sued because you did not properly explain risks to investors etc), and you comply with SEC Reg D, you have an affirmative statutory defense against those allegations.

The demand will return once the restrictions are lifted and hopefully there will actually be a supply deficiency on your side for those that did not have reserves and had to either sell or convert to a long term rental.    

You could make repairs at your risk, but you can't covey with a general warranty deed as the notice to redeem the property places a cloud on title.In some states, even after you take possession of collateral and sell the collateral, additional amounts over your costs may again go back to the borrower and they can sue you for it.A security agreement is not the keys to the house, it represents a way for you to get the amount of money you are entitled to and excess equity is due the owner (borrower).If the property after foreclosure sale sells for less than the bid amount, the lender may seek a deficiency judgment to collect amounts remaining due, if it was a cash loan, if the loan proceeds were made as an amount of equity based on a particular sale price, it is an installment sale and receiving the property back terminates the sale.

Sellers tax liability could be less selling at a discount.If you have a default you will have any deficiency judgement, if allowed, limited to your purchase price not the upb.

The approval letter must specifically note the lender/investors waiver of their right to pursue a deficiency judgement .. or they could come after the seller for the difference later on.

In lending there are compensating factors, if a borrower is weak in one area they might make up the deficiency in another area, say you only have owner experience in 3 SFDs, but your net worth is twice the purchase price, that will probably fly if everything else is decent.You can get creative, you can use seller financing, but unless the seller is family, most all investors who own multis are not going to be walking away taking a note with 5% down or doing some contract, generally there will be some real money involved.

Foreclosure or refiancing is much easier with a servicer involved.When you modify a note that was initially an equity note you change the complexion of the debt since you paid and advanced cash, take great care in your modifications paying the equity first then your basis as your basis can fall under deficiency judgments, equity is not.Get up on the tax issues too as a modification can be a new loan and selling the note is obviously income.If you can get borrower information (processing issues) you can certainly take the road of HMLs and look at the LTV.

.*)---To recap and further clarify on the issue of trying to value a property that has a multitude of deficiencies (high current vacancy, repairs, etc.)

They have collateral and are not concerned with tapping into your qualified savings, lender's kinda figure that you have already gone through that before they get to foreclosure and it would only be at the tail end when seeking a deficiency judgment that a lender would start looking for your cash, the fact that the reserves can't be touched by a judgment are irrelevant