How to best present seller financing offer

Question

I recently finished a duplex in the dallas area. Going through the BRRR method and have begun looking at a new property. It's right next to mine and it is not on the market. Last year I mentioned to the owner that I was interested in buying his property. At the time he stated that the property was his retirement plan. It took some thinking on my end, but I feel I have a solution ...Seller Financing.

I reached out to the owner today to see if he had interest in such an option. He is, hesitantly. His response is that I provide him via email my full proposal.

Here is the question,  what should I include? What should I exclude?

The property is in really bad shape, so I Am not sure what it will appraise for so hesitant to place a number on the offer. Should I offer a down payment? If the consensus is yes how much? Do I offer an interest rate? What terms should I offer? What format or layout should be used for offer presentation and while this may not be the most important part of getting this property,it is the first piece of evidence the owner will have from me..

Jason Hirko · Answer

@Tony Karns I got this email yesterday about buying one of my houses seller financed. I thought it was a pretty good way of broaching the subject:

Mr. Hirko,

I have gotten back the bids that I needed to proceed with the bank so I could make an offer.  Since this would be my first “project” house as they say, they do not want to lend the money because it could take a couple of months to complete repairs before we could rent it.  I was curious if you wanted to owner finance it to me?  If not I understand, I just hate to see it still sitting there when it has so much potential.  Please let me know your thoughts.

Account Closed · Answer

You may have to present  your offer to multiple sellers. I know we want to make ever seller work with us on our terms.

With that being said, present yourself as a stable person that WILL pay as agreed. Tell your story in the best light possible ( without lying ) and show that what your offering is way more than you could offer with all cash.

Andre' Arceneaux · Answer

@Tony Karns See what his number is. Try to get a best guess of what the current appraisal would be and the ARV  .. without these, you may be throwing darts in the dark. Get a number (amortization) that works which will keep you with the ability to renovate successfully, while also providing a payment that will be assured passive income in his mailbox every month.

If he plans on retiring in 20. Offer a 20 year amortization, even a balloon if you know what would be a comfortable timeframe to pull your investment back out and pay him .. stay worst case in your own mind as far as time, since he's open.

The years can be adjusted if he is uncomfortable with any initial proposal.  Key is to give him what HE wants and what you WANT. Win. Win.

When you make an offer, don't provide one for a yes or no answer, provide multiple scenarios as people in that scenario may choose instead of saying yes or no, gives a better opprtunity for a proposal to be accepted.

Account Closed · Answer

@Tony Karns unless he wants to sell

you are chasing a non motivated property owner.

Account Closed · Answer

@Tony Karns Present a offer with the terms you would be happy with. Then let him accept, reject, or counter.

Have it wrote/ typed out and go over it with him in person if possible. I got a number of deals like this when I was starting out a number of years back and usually had three offers that I could live with. You can make which ever one you want the seller to take a no brainer in contrast to the other two. My first owner finance house were the owner carried the note was where the seller and myself talked terms on the first visit and then wrote up the contract on the spot. The is free and clear today. You can make one written offer and go from there, but the the main things is to make a firm offer and make them give you a response if possible.

As for as putting it on a contract a head of time, my thoughts is unless it’s a simple contract it could cause them to blank out. Simply have a easy to use contract ready to fill out and know how to use it. I fill in most of my contracts on the spot with the sellers present. We work out the details together.

Tony Karns · Answer

@Joel S.

I fully agree with you. That being said I think that anyone can be convinced to make a deal. In this case it just needs to satisfy both of us.

Tony Karns · Answer

Since he has not said he wants to sell I am hesitant to push for a number. I paid $90 per sqft for mine last year. His is a bit smaller and in a lot worse shape then mine was.  The gentleman is 70 now, I think he is concerned about supplementing his SS and any thing else he may receive.

Andre, for me your last point is the most important one. How do I write up such an offer when it is not a yes or no response. That is where I am struggling at.

Tony Karns · Answer

Jason and Joel:

So I have already broached the topic with the owner, no numbers or anything just that If he is willing to do seller financing we could ensure he has long term retirement income. He has also walked through my now finished duplex so he is well aware what I intend to do. I am willing to work with the owner because of the proximity of his property to mine.

The question I am trying to get answers to is should I make a formal offer of she I shoot him an email with broad terms? If I go informal how much information do I need to provide?

How to best present seller financing offer

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