They are going to have a "deficiency judgment" against them if it does not sell for the amount of the lien.Their credit is going to be buggered up - they are going to have problems with buying anything that needs a credit rating.They are not in a good place - the bank - lawyers and others want their money and they are being harassed (good reason to not answer the phone).Now ---- here you come - you want to control some equity - you want to make some money - you may want to flip this property!

However I totally agree with you.. this scheme simply should not be used by anyone who does not have SIGNIFICANT CASH reserves... the chance of harming the seller and their credit is huge and especially in a state like Texas were a bank can and WILL get a deficiency judgment on a foreclosure.

If this will inevitably happen to your building you may want to get those guys in there BEFORE you buy it so you use any deficiencies they find as negotiating fodder.

This is a very common "deficiency" in older homes.

The investor should have the knowledge to inspect the home inside, above, below, inside and outside to translate from deficiencies to repair cost at the time of initial purchase offer.

No home is perfect, and there are reasonable items  and deficiencies, to address, but remember, the seller has zero obligation to do anything.

I have a colleague I've known many years who has a number of defaulted California 2nd trust deeds Fact is they were cash out 2nd mortgages on investment properties,,they turned into bad deals ,borrowers went thru foreclosure but have not declared Bankruptcy.These are California properties .Some of the Notes are 9 years oldI have been pursuing Judgment Enforcement for the last 6 months with moderate success In a word ,Id like to help my friend collect on these 2nds that went South Its my understanding I can pursue them as a collection and if that fails ,hire an attorney and create a deficiency judgment ,At that point I can request an Assignment of Judgment,represent myself in court and collect on the debt Is that accurate? 

Again, given existing constraints that contractors and materials suppliers have had to comply, not including possible changes in compliance which can take place by surprise events any given time, (minor material deficiency or contractor's burden however minor of an incident, and that this could be beyond contractor's control) can escalate and could lead to project slowdown up to project cancellation/project shutdown.

I came across what looked like a deal 2 weeks ago but my planning has been deficient when it came to financing.  

The inspection issues are just going to come up with the next buyer so just walk away and who knows, maybe they will come back to you.I wouldn't go scorched earth on the owners either and tell anyone who will listen about the house's deficiencies either.