If a property owner is willing to sell the property but owes more than the investor is willing to pay, there are two ways to deal with that situation. The most common method is the short sale. Another method is to have the investor purchase the existing note from the lender at a discount. If the lender agrees to sell the note at a discount, they can not go after the property owner for a shortfall, like they can do in many states, after a foreclosure.
An example: FMV of the property $150,000, amount owed to the lender, $200,000. The investor analyzes the property and would be willing to purchase it for $115,000. The owner is agreeable to that price. The investor goes to the lender and offers to purchase their note for $115,000. The lender agrees and assigns the note to the investor. The investor and owner then close on the deal with the owner /seller receiving the paid note for transferring ownership to the investor. Benefits for the owner/seller are no foreclosure shows in their credit records and the original note is shown as settled in full. This would require the investor to have the money to pay the lender cash for the agreed price but can be a very good incentive to get the seller to sell the property in this manner since it minimizes the damage to their credit.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125