Obviously they're selling their property at a significant discount so their rational strategic mental processing might not be the strongest at that point in their life, but I wouldn't say they're stupid, they are just motivated.

What I would end up doing (like most newbies) is rationalizing a higher price and paying too much for a property.Now after I did a couple rehabs myself (I made $1,500 on my first REHAB and I LOST a ton on my second), I had to face the fact that the reason I needed to offer such a low amount was to even have the hope of making money on the deal.

I think new investors get discouraged because 70% equity in a deal requires some diligent effort to find, so they get discouraged and start rationalizing the numbers higher.

To be successfull you need a spirit inside of you that will allow you to objectively view a situation, make a rational decision, have a good math, business, and negotiating backgrounds, and in my opinion the two biggest attributes that are needed are the ability to make a decision (it sounds easy but it iw harder than most can possibly believe).

Experience has shown me that people in foreclosure some times do not think rationally and many times are in denial.What has been effective in the past is to mail postcards to a general area of smaller older houses simply saying that you buy houses and can close at their convenience when they want.

So much and so many different people's paychecks hinge on if they can prove comps.I have also heard it rationalized from appraisers that if someone is ready and willing to buy the house for that much and there are comps (in their opinion) to support it, then that is the true market value.

Due diligence means; confirming what you've been told, analyzing that information and then making a RATIONAL DECISION based upon what you've confirmed.

To simply ignore the experience and advice of successful investors and intentionally make mistakes (all the while trying to rationalize it or attacking the messenger) is crazy.

So you could buy on the equity markets a 'put' (option to sell the investment at a net gain, if the market turns down) or a future (locked-in price for the home market index in your metro region) for 9 nine out to protect much of the downside, like insurance.It looks straightforward enough to buy options "insurance" - some volatility like stocks but well within the realm of rational investing - not a gimmick.

If he still doesn't want to do it, then you can't make him be rational about it and it just won't work.If he insists on getting his payments in cash, I would have him show up at my bank where he can receive the cash and he can go out in public with large sums of cash.