If so, what do you owe?

I currently own a home (3BR, 1.5 bath, 1,200 sq ft ranch) that's valued at around $165K, I bought at $79K, I still owe around $35K, that's too small for the two of us.

Steele , one of the principals, is a BP member, though I have not seen her here lately.Note:  No affiliation with Lincoln-Steele or their products.

Of course i want to make sure i get a good portion from this deal but it seems the only way to do this is to offer the seller less than what he owes on his mortgage.

They owe $110k, but home comps for the area is running at $130k.

The "Peter Principal" says you rise up  to your level of incompetence. 

Then, you can foreclose from second position (if necessary) and take ownership of the property subject to the first without paying the full balance owed.

So owing a landlord a landlord $500 is a dead stop, but someone else 2k is ok?

Will have to generalize to make this work.Assumptions NPN 2nds underwater based on past experience:Price of notes: 20% of UPB (some are cheaper, some are more expensive so pick a blended number)Face interest of note: 10%Face value of note: $70,000Percentage of complete loss of notes: 20%Percentage of settled of notes: 20%Percentage of settlement rate: 180%. i.e. 100k note, 20k purchase, 36k pay offPercentage of re-performing notes: 60% at 7%Terms of re-performing notes: 7% interest, principal paid off when property is re-financed or sold.Term of performing note till property sold or refinanced: 15 years (historically 7-9 years but these may be less apt to sell due to value issue)Example:Buy 5 million face value of notes for 1 million.20% are wiped out leaving 4 million of notes20% pay off for 360k leaving 3 million of notesBasis; 1 mill

But you want to make sure they're going to pay you first and not the judgement they owe.