Making Seller Financing Offers. Don't Mention Interest Rate.

[Marco Bario]

I wrote this article recently. It was inspired by many questions I've seen here, so sharing with the community. 

Seller Financing Tip: Making Offers. Don't Mention Interest Rate.

There are three main types of home sellers who agree to seller financing:

1. They can't stand the thought of money in the bank at 0.01%
2. They want monthly cash flow
3. They want to defer capital gains (refer to installment sales in a previous issue)

This technique is meant for group #2. If you've done your job prior to making an offer, you know what your seller wants. If it's cash flow, ask what they plan to do with their monthly payments and how much they need each month.

Like I used to tell my kids - I can only help if I know what the problem is. Think people won't open up? You'd be surprised. And when they do you can help.

Example:

• $300,000 house
• Sellers need $2,500 per month to hire a home health care worker

Offer:

• "I will make 120 payments of $2,500 each."
• Do you mention down payment or interest? Nope.

*** $2,500 x 120 months = $300,000. No down payment. No interest. ***

In seller financing, I see zero interest rate loans all the time. There are lots of reasons why, but they all come down to the buyers and sellers being unaware of any "rules" they should play by. When you think less like a bank and more like a problem solver, your view of what's possible will change.

In the example, the sellers will be motivated to accept your offer because they'll see relief by receiving monthly payments.

[Drew Berman]

Thanks guys, always nice to have people to bounce ideas off and get feedback.  I think I have a good idea of the people to target my problem is actually finding them, but if it was easy everyone would be doing it! My current strategy is leveraging my realtor and incentivizing her with a finders fee above commission.  I'm looking to form similar relationships with other professionals who have contact with people who may be in these situations.  I'm thinking ways to incentivize property managers, financial advisors, lawyers? I imagine it may be unrealistic to think a financial advisor is going to give out client info but this is where my head is going...any suggestions?