What happens when those wholesaling houses run into situations in which sellers owe more than their homes are worth or need to bring cash to closing to solve other issues? Should investors run from these scenarios assuming there is no deal to be had, are there strong arguments for investors to bring that cash to the table, and could there be other ways to build in big value?

This is a tough situation that many U.S. homeowners are going through. They owe more than their homes are currently appraised at, or have some type of fines which must be remedied in order to sell. Most obviously don’t want to reach into their pockets or scrape the bottom of their piggy banks to unload a distressed asset.

First, investors need to remember that not all of these situations actually mean there is no deal to be had. In fact, by taking a deeper look at many of these deals there can actually be far bigger profits to be had while the competition is looking the other way.

The first step is to recognize what the issue really is. Does the property owner have a negative equity due to a mortgage, do they have third party liens, is it a code violation problem, are liens on the property even valid or legitimate?

Depending on the obligation there can be a variety of solutions from negotiating short sales to having an attorney negotiate down liens or even challenging the validity of them altogether.

Even if a seller does need to come up with cash they might be convinced to come up with the money to close to protect their credit, save on bleeding cash flow every month and risk of loss due to holding property.

All of these things can come together to create huge value in a deal. Plus, in some cases those wholesaling houses may even promote the fact that sellers may not need to pay any closing costs or attorney fees, etc. if you find enough value in the deal and can make enough on it.

If the numbers simply don’t work there are other alternatives for taking these deals by wholesaling mortgage notes. Buy the note at a substantial discount from the lender and either just flip the note or foreclose on the property.

Finally remember if the seller does need cash to close make sure they have it, and is liquid, and is wired into the closing agent early.

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