Strategy for Seller Financing

[Lance Turner]

I'm working on purchasing a unique property that includes a small home on 20+ acres.  The seller owns an arborist business, has been in the home since the late 90s, and owns the house outright.  He wants to move further out, away from the city.  I belive the property will be a challenge to sell because, based on comps, its over priced.  The style is not on the current trends and attractive for a home that's priced 3-4x the average home in the area (nothing high end about it).  How would you approach the seller to plant the idea of seller financing.

[Todd Rasmussen]

Find him a place to move to. If you solve his problem, chances are he won't care that you solve yours at the same time.

[Lance Turner]

Quote from @Todd Rasmussen:

Find him a place to move to. If you solve his problem, chances are he won't care that you solve yours at the same time.

 I think he already has a property in mind.

[Chris Seveney]

Quote from @Lance Turner:

I'm working on purchasing a unique property that includes a small home on 20+ acres.  The seller owns an arborist business, has been in the home since the late 90s, and owns the house outright.  He wants to move further out, away from the city.  I belive the property will be a challenge to sell because, based on comps, its over priced.  The style is not on the current trends and attractive for a home that's priced 3-4x the average home in the area (nothing high end about it).  How would you approach the seller to plant the idea of seller financing.

 IF they want 3-4x what it is worth why even have the discussion? You are just going to be wasting your time vs. trying to close on actual deals. 

[Lance Turner]

Not 3-4x what it's worth.  3-4x the average property in town.  It's a high end property and should be expensive but it's not providing high end amenities that people want when they are spending 3-4x the median home price.  He is over priced but it's close enough that we might find alternate means to make the deal work for both of us.

[Nicholas L.]

@Lance Turner

no need to 'plant the idea' - just make an actual written offer

[Lance Turner]

Quote from @Nicholas L.:

@Lance Turner

no need to 'plant the idea' - just make an actual written offer

The concern is that some people don't understand the benefit of seller financing.  For example his realtor was immediately against the idea, not because of any knowledge, but because of a la k of knowledge. I'm not confident that a seller financing offer will be accepted enough to be really understood without some preparation.  Thoughts?

[Chris Seveney]

Quote from @Lance Turner:

Quote from @Nicholas L.:

@Lance Turner

no need to 'plant the idea' - just make an actual written offer

The concern is that some people don't understand the benefit of seller financing.  For example his realtor was immediately against the idea, not because of any knowledge, but because of a la k of knowledge. I'm not confident that a seller financing offer will be accepted enough to be really understood without some preparation.  Thoughts?

 I think more people do not understand the risk of seller financing. all the people I see applying for seller financing could not get a visa card there credit is so bad and there savings is from the pennies they find walking down the street. 

[Lance Turner]

Nonetheless, the only way for him to get anywhere near the profit he's looking for is through seller financing and since he owns it outright that's a solid option.  I can qualify for the loan.  That's not the issue.  The question is how we can structure it in a way that is workable for both of us.

[Christopher Robert Noland]

When approaching the seller about seller financing, especially given the unique nature of the property and potential challenges in selling it, it's essential to frame the conversation in a way that highlights the benefits for both parties. Here’s a step-by-step approach you can take:

### 1. **Do Your Research**

- **Understand Seller Financing**: Familiarize yourself with the mechanics of seller financing, including how it works, the benefits for sellers, and the risks. This knowledge will help you answer any questions the seller may have.

- **Market Analysis**: Gather data on the local market, including comparable sales, average days on the market, and trends. This will strengthen your position when discussing the property's value.

### 2. **Schedule a Meeting**

- **Set Up a Face-to-Face Meeting**: If possible, arrange to meet the seller in person. This creates a more personal connection and allows for a better discussion about the property and financing options.

### 3. **Build Rapport**

- **Acknowledge the Seller’s Situation**: Start the conversation by acknowledging the seller's desire to move further out and his long-term ownership of the property. Express understanding of his position and why he might be looking to sell.

- **Discuss the Property’s Unique Aspects**: Talk about what makes the property special and your appreciation for it, but gently introduce the reality of its market position.

### 4. **Introduce the Idea of Seller Financing**

- **Present It as a Solution**: Frame seller financing as a creative solution that benefits both parties. You could say something like:

- “Given the unique nature of this property and the current market conditions, have you considered seller financing? It could help attract buyers who may be hesitant due to the price point.”

- **Highlight Benefits for the Seller**:

- **Quicker Sale**: Explain that seller financing can make the property more appealing to potential buyers, increasing the chances of a quicker sale.

- **Income Stream**: Discuss how seller financing can provide him with a steady income stream while still retaining ownership of the property until the loan is paid off.

- **Tax Advantages**: Mention potential tax benefits of seller financing, as he may be able to spread out the capital gains tax liability over time.

### 5. **Address Potential Concerns**

- **Clarify Terms**: Be prepared to discuss terms, such as the down payment, interest rate, and duration of the loan. Having some preliminary figures in mind can help facilitate the conversation.

- **Reassure about Risk Management**: Address any concerns the seller might have regarding the risk of financing a buyer. You can suggest performing background checks, credit assessments, or offering a higher down payment to mitigate risk.

### 6. **Listen and Adapt**

- **Gauge His Reaction**: Pay attention to the seller's response and be open to his thoughts and concerns. This can lead to a more productive conversation and help you refine your proposal.

- **Be Flexible**: If he seems open to the idea, be willing to discuss different terms or options that might work for both of you.

### 7. **Follow Up**

- **Provide Written Details**: After your discussion, send a follow-up email summarizing the benefits of seller financing and any agreed-upon terms to keep the conversation going.

- **Stay Engaged**: Keep the lines of communication open and express your continued interest in the property, even if he needs time to think it over.

By approaching the seller with empathy, clear benefits, and a willingness to listen, you can effectively plant the idea of seller financing and potentially create a mutually beneficial arrangement. Good luck with your negotiations!

[Joe S.]

If an agent is involved your chances of having a meaningful conversation with the seller is limited. 

[Lance Turner]

Quote from @Joe S.:

If an agent is involved your chances of having a meaningful conversation with the seller is limited. 

Valid

[Lance Turner]

Quote from @Christopher Robert Noland:

When approaching the seller about seller financing, especially given the unique nature of the property and potential challenges in selling it, it's essential to frame the conversation in a way that highlights the benefits for both parties. Here’s a step-by-step approach you can take:

### 1. **Do Your Research**

- **Understand Seller Financing**: Familiarize yourself with the mechanics of seller financing, including how it works, the benefits for sellers, and the risks. This knowledge will help you answer any questions the seller may have.

- **Market Analysis**: Gather data on the local market, including comparable sales, average days on the market, and trends. This will strengthen your position when discussing the property's value.

### 2. **Schedule a Meeting**

- **Set Up a Face-to-Face Meeting**: If possible, arrange to meet the seller in person. This creates a more personal connection and allows for a better discussion about the property and financing options.

### 3. **Build Rapport**

- **Acknowledge the Seller’s Situation**: Start the conversation by acknowledging the seller's desire to move further out and his long-term ownership of the property. Express understanding of his position and why he might be looking to sell.

- **Discuss the Property’s Unique Aspects**: Talk about what makes the property special and your appreciation for it, but gently introduce the reality of its market position.

### 4. **Introduce the Idea of Seller Financing**

- **Present It as a Solution**: Frame seller financing as a creative solution that benefits both parties. You could say something like:

- “Given the unique nature of this property and the current market conditions, have you considered seller financing? It could help attract buyers who may be hesitant due to the price point.”

- **Highlight Benefits for the Seller**:

- **Quicker Sale**: Explain that seller financing can make the property more appealing to potential buyers, increasing the chances of a quicker sale.

- **Income Stream**: Discuss how seller financing can provide him with a steady income stream while still retaining ownership of the property until the loan is paid off.

- **Tax Advantages**: Mention potential tax benefits of seller financing, as he may be able to spread out the capital gains tax liability over time.

### 5. **Address Potential Concerns**

- **Clarify Terms**: Be prepared to discuss terms, such as the down payment, interest rate, and duration of the loan. Having some preliminary figures in mind can help facilitate the conversation.

- **Reassure about Risk Management**: Address any concerns the seller might have regarding the risk of financing a buyer. You can suggest performing background checks, credit assessments, or offering a higher down payment to mitigate risk.

### 6. **Listen and Adapt**

- **Gauge His Reaction**: Pay attention to the seller's response and be open to his thoughts and concerns. This can lead to a more productive conversation and help you refine your proposal.

- **Be Flexible**: If he seems open to the idea, be willing to discuss different terms or options that might work for both of you.

### 7. **Follow Up**

- **Provide Written Details**: After your discussion, send a follow-up email summarizing the benefits of seller financing and any agreed-upon terms to keep the conversation going.

- **Stay Engaged**: Keep the lines of communication open and express your continued interest in the property, even if he needs time to think it over.

By approaching the seller with empathy, clear benefits, and a willingness to listen, you can effectively plant the idea of seller financing and potentially create a mutually beneficial arrangement. Good luck with your negotiations!

 I've never seen better and more thorough advice on this forum.  Thank you!

[Christopher Robert Noland]

Quote from @Lance Turner:

Quote from @Christopher Robert Noland:

When approaching the seller about seller financing, especially given the unique nature of the property and potential challenges in selling it, it's essential to frame the conversation in a way that highlights the benefits for both parties. Here’s a step-by-step approach you can take:

### 1. **Do Your Research**

- **Understand Seller Financing**: Familiarize yourself with the mechanics of seller financing, including how it works, the benefits for sellers, and the risks. This knowledge will help you answer any questions the seller may have.

- **Market Analysis**: Gather data on the local market, including comparable sales, average days on the market, and trends. This will strengthen your position when discussing the property's value.

### 2. **Schedule a Meeting**

- **Set Up a Face-to-Face Meeting**: If possible, arrange to meet the seller in person. This creates a more personal connection and allows for a better discussion about the property and financing options.

### 3. **Build Rapport**

- **Acknowledge the Seller’s Situation**: Start the conversation by acknowledging the seller's desire to move further out and his long-term ownership of the property. Express understanding of his position and why he might be looking to sell.

- **Discuss the Property’s Unique Aspects**: Talk about what makes the property special and your appreciation for it, but gently introduce the reality of its market position.

### 4. **Introduce the Idea of Seller Financing**

- **Present It as a Solution**: Frame seller financing as a creative solution that benefits both parties. You could say something like:

- “Given the unique nature of this property and the current market conditions, have you considered seller financing? It could help attract buyers who may be hesitant due to the price point.”

- **Highlight Benefits for the Seller**:

- **Quicker Sale**: Explain that seller financing can make the property more appealing to potential buyers, increasing the chances of a quicker sale.

- **Income Stream**: Discuss how seller financing can provide him with a steady income stream while still retaining ownership of the property until the loan is paid off.

- **Tax Advantages**: Mention potential tax benefits of seller financing, as he may be able to spread out the capital gains tax liability over time.

### 5. **Address Potential Concerns**

- **Clarify Terms**: Be prepared to discuss terms, such as the down payment, interest rate, and duration of the loan. Having some preliminary figures in mind can help facilitate the conversation.

- **Reassure about Risk Management**: Address any concerns the seller might have regarding the risk of financing a buyer. You can suggest performing background checks, credit assessments, or offering a higher down payment to mitigate risk.

### 6. **Listen and Adapt**

- **Gauge His Reaction**: Pay attention to the seller's response and be open to his thoughts and concerns. This can lead to a more productive conversation and help you refine your proposal.

- **Be Flexible**: If he seems open to the idea, be willing to discuss different terms or options that might work for both of you.

### 7. **Follow Up**

- **Provide Written Details**: After your discussion, send a follow-up email summarizing the benefits of seller financing and any agreed-upon terms to keep the conversation going.

- **Stay Engaged**: Keep the lines of communication open and express your continued interest in the property, even if he needs time to think it over.

By approaching the seller with empathy, clear benefits, and a willingness to listen, you can effectively plant the idea of seller financing and potentially create a mutually beneficial arrangement. Good luck with your negotiations!

 I've never seen better and more thorough advice on this forum.  Thank you!

No problem!

[Ámlèh Quáwáin]

Quote from @Lance Turner:

I'm working on purchasing a unique property that includes a small home on 20+ acres.  The seller owns an arborist business, has been in the home since the late 90s, and owns the house outright.  He wants to move further out, away from the city.  I belive the property will be a challenge to sell because, based on comps, its over priced.  The style is not on the current trends and attractive for a home that's priced 3-4x the average home in the area (nothing high end about it).  How would you approach the seller to plant the idea of seller financing.

Your best bet is to LBO the acquisition through packaging the business into a CDO

You'll take that CDO to private or commercial investors 

[Ashish Acharya]

@Lance Turner Approach the seller by emphasizing the benefits of seller financing: it could help sell the property faster, provide a steady income stream, offer tax benefits by deferring capital gains, and give them security since they’ll hold the title until fully repaid. Present it as a flexible, win-win solution that meets their needs.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

[Yahya Radman]

Quote from @Christopher Robert Noland:

When approaching the seller about seller financing, especially given the unique nature of the property and potential challenges in selling it, it's essential to frame the conversation in a way that highlights the benefits for both parties. Here’s a step-by-step approach you can take:

### 1. **Do Your Research**

- **Understand Seller Financing**: Familiarize yourself with the mechanics of seller financing, including how it works, the benefits for sellers, and the risks. This knowledge will help you answer any questions the seller may have.

- **Market Analysis**: Gather data on the local market, including comparable sales, average days on the market, and trends. This will strengthen your position when discussing the property's value.

### 2. **Schedule a Meeting**

- **Set Up a Face-to-Face Meeting**: If possible, arrange to meet the seller in person. This creates a more personal connection and allows for a better discussion about the property and financing options.

### 3. **Build Rapport**

- **Acknowledge the Seller’s Situation**: Start the conversation by acknowledging the seller's desire to move further out and his long-term ownership of the property. Express understanding of his position and why he might be looking to sell.

- **Discuss the Property’s Unique Aspects**: Talk about what makes the property special and your appreciation for it, but gently introduce the reality of its market position.

### 4. **Introduce the Idea of Seller Financing**

- **Present It as a Solution**: Frame seller financing as a creative solution that benefits both parties. You could say something like:

- “Given the unique nature of this property and the current market conditions, have you considered seller financing? It could help attract buyers who may be hesitant due to the price point.”

- **Highlight Benefits for the Seller**:

- **Quicker Sale**: Explain that seller financing can make the property more appealing to potential buyers, increasing the chances of a quicker sale.

- **Income Stream**: Discuss how seller financing can provide him with a steady income stream while still retaining ownership of the property until the loan is paid off.

- **Tax Advantages**: Mention potential tax benefits of seller financing, as he may be able to spread out the capital gains tax liability over time.

### 5. **Address Potential Concerns**

- **Clarify Terms**: Be prepared to discuss terms, such as the down payment, interest rate, and duration of the loan. Having some preliminary figures in mind can help facilitate the conversation.

- **Reassure about Risk Management**: Address any concerns the seller might have regarding the risk of financing a buyer. You can suggest performing background checks, credit assessments, or offering a higher down payment to mitigate risk.

### 6. **Listen and Adapt**

- **Gauge His Reaction**: Pay attention to the seller's response and be open to his thoughts and concerns. This can lead to a more productive conversation and help you refine your proposal.

- **Be Flexible**: If he seems open to the idea, be willing to discuss different terms or options that might work for both of you.

### 7. **Follow Up**

- **Provide Written Details**: After your discussion, send a follow-up email summarizing the benefits of seller financing and any agreed-upon terms to keep the conversation going.

- **Stay Engaged**: Keep the lines of communication open and express your continued interest in the property, even if he needs time to think it over.

By approaching the seller with empathy, clear benefits, and a willingness to listen, you can effectively plant the idea of seller financing and potentially create a mutually beneficial arrangement. Good luck with your negotiations!

 This is really good stuff that I plan on using moving forward.