Seller-Financing when Seller Agent is involved?

Question

Not so sure how to go about this.
There is an 8-unit building that is being for sale by the owner is the heir. However, it is listed with an agent/broker.
I don't have the funds, but I definitely want to see if Seller-Financing is an option with the seller.

How does this work if the Seller Agent is involved?

Anyone got into the same situation or similar one?

BTW, feel free to connect with me! Love to network with everyone here.

Thanks in advance.
Simon

Leon Y. · Answer

Never hurts to ask for seller financing. I recently closed on a deal because the seller got frustrated after a deal failed and put owner financing option out there. He also had an agent. It doesn't matter whether there's an agent or not. However, do try to work with the seller agent if you don't already have an agent.

Simon W. · Answer

Joel Owens, I appreciate your comment.

I do have some money, but no where close to a down payment. 
This property has been in the market for over 3.5 years and still haven't sold. So that's why I want to see if seller-financing is do-able.

The seller is actually still fixing up 2 of the units and those are the only units that are not occupied.

forgot to mention. The property is located in PA

Joel Owens · Answer

Sounds like the property is overpriced, has problems, and the seller bought at the wrong time and overpaid or market rents have dropped and debt service owed is too high compared to market value.

If the owner had low debt service owed compared to market value or no loan on the property then more options are available. If that was the case I would just lower the price and sell to a cash buyer or someone with money down and regular financing unless I had taken all depreciation and carrying a loan would help me out tax wise.

It not just about the numbers of the property but the sellers specific situation and if you can structure a deal that works for everyone.

Joel Owens · Answer

If you do not have any money then really you should not be looking at this property.

Even if you can get seller financing with nothing down you will need thousands and thousands and thousands of dollars for closing costs and inspections etc.

So even financed at 100% you still have to have money. What state is the property located in?? Some states have lengthy foreclosure processes.

As a seller I do not want to finance someone with nothing down and on top of that pay all closing costs and then the buyer has no reserves to fix ongoing repairs with the property.

Now I can spend months or longer getting the property back at occupancy and repair levels worse then when I owned it. Now I have to work twice as hard getting it to a level I can sell it at again without taking a huge discount and losing equity.

I haven't even arrived at the fact that the seller owes a commission (depending on the contract they signed and what type it was) with the brokerage at closing seller financed or not.

I work on apartment deals everyday and I can tell you if this property is a deal at all buyers with some cash will be knocking on the door. If it's a dog of a problem property a seller is trying to sell then you will need money to turn it around and the tenants that are slow paying will crush any ongoing cash flow to do repairs and service your seller financed debt.

You might want to try building up some cash by wholesaling or bird dogging. You need something to come to a seller with. If someone came to me wanting nothing down but they had trophy properties I could latch onto with cross-collateralization then at least I would have some recourse. No money down could work a few years ago when many markets were frozen and nothing was selling. In many markets today there are too many credit and cash qualified buyers to compete.

Simon I do not want to bust your bubble just telling it like the markets that I am in are performing.

Good Luck

Simon W. · Answer

@Page Huyette

I actually had to decline on this. Turns out the foundation was in terrible shape so I didn't bother with it. Thanks for asking!

Page Huyette · Answer

@Simon W.  curious if you ever made an offer on this one.

Simon W. · Answer

Page Huyette - I definitely made sure I am never attached to a single property. I am waiting for Schedule E to check out the numbers!

Thanks for responding.

Page Huyette · Answer

I recently had a similar situation,  house sitting on the market, seller's agent and seller not terribly helpful with info on the property beyond the basics.  I was working with a buyer's agent not by choice but because we'd worked together on another deal and he brought it to my attention thinking I might be interested.

Before even seeing the inside, I could tell roughly what work needed to be done to increase rents and appeal, and asked him to see if the seller would consider financing so I could put more of my money into the rehab.  They said maybe but for a short time.  I did more research, and decided to let the property sit longer to see what happens--no offer.  It may work out in the future, but if not, on to the next one.

I wouldn't get too attached to a single property.  Use this one as a learning tool, if it works out the way you want it great.  If not, adjust and find the next one.

Simon W. · Answer

Leon Yang, if the seller is willing to do the financing. I am thinking amortized the loan in 30 years. balloon payment in 5+ years by refinancing it.

Leon Y. · Answer

Also look if you can refinance later. With no prepayment penalty you can always switch to a better loan later on. Lock the property first if it's good.

Seller-Financing when Seller Agent is involved?

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