Offer to pay $10K for the equity, based on seller’s representation of the loan amounts.
Include language that states that the amount which is higher than that stated will be deducted from seller’s proceeds.
Structure the money as follows:
Small $ upon signing
Small $ amount upon you gaining possession
Balance due (perhaps in form of note or just cash) upon you obtaining marketable title, clear of encumbrances, which may take a few months. After all, you didn’t create the title problem, he did.
Meanwhile, you negotiate with the code enforcement or other city people to reduce or eliminate that lien. Once it’s resolved, seller gets the balance of sales price.
If lien payoff is ultimately higher, it comes out of his $10K. If lower, you pocket that (because you bought the equity, not a specific sales dollar amount.
I have a seller with a 43k first, and a 35k city lien on it. The property has an ARV of 140k. The seller wants 10k net.
I want to work with the city to eliminate the debt or settle for pennies on the dollar. I know that I can get them to come way down on the lien, but prior to that I have to bring the property up to code and go through an appeals process.
I need to tie the property up with the seller while I clean up the property and handle the appeals process, to see if we can make the numbers work on a wholesale deal.
I am caught between estimating what I can negotiate the lien down to, and signing a regular FL FARBAR contract with a purchase price that would reflect that, and of course adding the contingincies necessary. Or could I write an option that leaves the purchase price subject to what we negotiate the lien down to?
I know the FARBAR would be simple, but what if I completely eliminate the debt? THat would leave a lot more money on the table for the seller, and I wont see any of it.