WHERE DOES THE MONEY GO,ARE WE RESTRICTED

You have to find motivated buyers, ones that are so eager to sell (to prevent foreclosure or for other reasons) that they will accept a lower price than FMV. Many homes now do not have equity unless the owners have been in them a good while. Even then, sometimes there is no equity simply because it is not worth what is owed due to the market we're currently in. In some cases, the seller might even have to bring money to closing...worse case scenario. If you are buying a foreclosure or REO, the bank owns the property and the offering price will usually be less than FMV. The banks know this but will still try to get enough to cover the loan (the balance).

You can also try to find FSBOs that need to sell... "need" being the key word. They could have gotten laid off work, gotten ill or lots of other reasons that they cannot continue to make payments. After 3 missed payments, they can go into foreclosure which will hurt their credit for 7 years. If you offer them enough to pay off their loan and are still able to make a profit after any needed repairs, that's a deal. If you cannot make a profit, it is not a deal and you have to walk away.

I hope this helps, but I'm sure there are others that can clarify or elaborate on what I've said.

Good luck.

Thanks for the answer to my questions it will help allot with what you said concerning REO's and Foreclosure's. I thought that was the way I would be forced to go. You have a Great Day and Good Luck with your R.E. business to. It looks like I'm not the only one who does posting's late at night. Thanks for your time, talk to you again soon. JohnnyPVAZ P.S.By the way I'm just an Ol Country Boy trying to make it in the Big City LOL. Bye

The short sheeted side of it is the person(s) that took the loan out eat any difference one way or another. So in your case the 20k is theirs to find away to pay back depending on their contract with the financial institution. So you get them down another 30% they end up responsible for that too, again depending on their financial contract.

Same thing applies to REOs, short sales, etc. Say it is a FHA or equivalent loan. The bank gets paid by the government and then the government goes and collects from the person(s) that signed for the loan for any difference plus plus added fees and costs. So you add to it the extra 30% you are just compounding it. But, something to offer the bank is better than nothing and that is where Short Sales come in which can minimize the end costs. But to use an old phrase; you can't squeeze blood out of a turnip, more often applies and the full balance often never gets paid back and in time become a charge off or a bankruptcy.

For those that are not aware the banks get the first 20% of their loss covered by the insurance that the home owner is forced to pay for when they get a mortgage with less then 20% down payment,(PMI). Plus the interest they have been collecting for years.

Then the cash they get from the sale, and what ever the difference is they then write off as a tax loss. Plus they get the bad dept off their books which gives them a better ratting to borrow more.