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I am a nineteen year-old engineering student living in NY state, and have saved up enough money through jobs in high school to pay a down payment on a house (to avoid paying rent at college). I've been through the costs of it and understand that not everybody would be comfortable doing the same thing, but I've decided to do it.
Four months ago I located the perfect property: a 2-unit in good condition 1.5 blocks from campus. The building commands high rents and the numbers work great for me. One unit is rented, the other vacant (I would live in it).
The seller's wife had recently lost her job and they were having trouble making the payments with only one unit rented. As it was priced ($92,000) he stood to repay his loan entirely and break even. The bank gave him a letter of credit for a personal loan should the house sell for less than $92,000 to cover the difference.
This meant that I had some great leverage over this guy, and the bank breathing down his neck could only help me.
I lined up my loan and had my pre-approval letter in-hand when I approached the listing agent (I am working without a buyer's agent [which I know not everybody would advise me to do]).
I made an offer, there was a counteroffer from the seller, I countered again, he countered again, and I accepted his offer ($82,500) (which was not in writing). But before we could get all the documents signed, his wife asked him for a divorce. I don't understand the specifics entirely, but now he would be bearing the entire personal loan himself instead of splitting the payments with his now ex-wife. He panicked and called off the deal.
Fast-forward to today: One unit is still unoccupied and he has stopped returning his Realtor's calls. School is about to start back up, and if he hasn't rented the unit by now, he can forget about finding a tenant until the spring term (January) at the earliest.
This is the perfect property for me, and I've tried all conventional means through his Realtor (who is now actually my Realtor, too) but no luck even getting a call back.
What I'd like to ask about is the ethical landscape of sending letters to him, his wife, and his bank explaining the situation in plain terms and with my offer to buy in cash. I'm sure the bank is worried about this loan. Where could I go to find who holds his mortgage? Has anyone else ever done such a thing? Are there any other avenues I might be able to pursue? Any advice from seasoned professionals?
The bank won't talk to you so forget about that avenue. You would need a release of information from the seller to discuss the mortgage with them.
If they are getting a divorce then you won't be buying that property anytime soon, unless it is in the name of only one of them. If they have an agreeable divorce then they can sell it together, as reasonable people. If they are unreasonable, then the court will step in on the property.
So, why would you send them a letter? Why not just write up your offer for cash and send it certified mail or something to the seller? Just because you want the property doesn't mean the sellers are ready to let you have it.
The bank won't talk to you so forget about that avenue. You would need a release of information from the seller to discuss the mortgage with them.
If they are getting a divorce then you won't be buying that property anytime soon, unless it is in the name of only one of them. If they have an agreeable divorce then they can sell it together, as reasonable people. If they are unreasonable, then the court will step in on the property.
So, why would you send them a letter? Why not just write up your offer for cash and send it certified mail or something to the seller? Just because you want the property doesn't mean the sellers are ready to let you have it.
OP heed Silverfall's advice - re the lender and the fact that the 'D' word changes all the dynamics. Just do what SF recommends and see what happens (and pray it's an amicable divorce and no super long delays). Contested? All bets are off.
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