Seller financing - nuts and bolts please

[Jamie Montpellier]

Hi,

I would like to know how a seller-financing deal  works.  I will for the sake of the matter indicate what I understand by using a fictious scenario.

Property A : Purchase price : $75 000

Can I offer the seller the down payment and the Stream of payments (promissory note) for say 15 years and have that all setup with a real estate lawyer etc? Would this allow me to bypass the banks or conventional lenders?

What happens if the seller still has a mortgage on the property?

In other words, is seller financing only feasible if the seller has a clear title on the home?

Any help with this matter would be greatly appreciated.

Jamie

[Darrell Shepherd]

You're putting the cart before the horse.

You get a lawyer to do the paperwork after you've reached an agreement. You make an offer to the seller, they accept, you get whatever that is on paper (if you want the purchase and sale agreement I use PM me)

First thing, ask "how much do you owe?"
Then soon after "do you need the money for the house right away/all at once/for something in particular?" Sometimes you're dealing with someone who is selling a week from the foreclosure sale and sometimes you're dealing with someone who is selling because its their 3rd home and they're selling it so their kids don't have to mess with it later. VERY different approach on structuring your offer because their financial needs are vastly different.

When dealing with private sellers your offer needs to fit their needs, not yours.

What's your goal? Pretty easy sell to leave a loan in place for a few months on a flip, 30 yr fixed rate mortgage is only going to appeal to certain people.

I was taught "A confused mind will always say no" and it's true, if you get too complicated they tend to freak out and run away. I say things like "would you be OK with getting some money now and some later? I can pay you more if we do it that way". Again, you want to be talking about benefits for them, not you and not in investor lingo "will you owner finance it?" Usually gets a knee jerk "no".

Too much to go into seminar mode on a post here, but hopefully you get the idea on approach.

You can still owner finance if there is a loan there, people will rarely do a sub2 unless they are in distress (can't make payments). You can buy with a lease option (I've never bought with an L/O, you don't have much control, but would if the deal was right), subject to (read up on them, I've done many, but they need to be done right), straight up owner finance if its paid for (I've gotten great terms with those), or a wrap mortgage if there's a mortgage (too complicated to explain to most sellers).

The main thing is that a) there are LOTS of ways to put a deal together. b) you need to know what your seller needs/wants before making an offer that isn't all cash.

There aren't really any rules to what you can do, it's what you guys come up with.
I've written up contracts that say "buyer will pay required deposit at apartment when located" and all kinds of other stuff because that's what the seller told me they needed.