How to get a seller to say YES to sellers finance

Question

In the process of searching for potential investor properties but most are listed with a local real estate agent. After finding out the owner through the county's assessor's office, how do I get the seller to agree with seller financing??

Brian Gibbons · Answer

@Brittany DentI learned a long time ago to ask questions to the seller but I think it's a mistake to try to do it over the phone, Sellers want to feel good when I am walking through their house, that I really want to buy it for cash, and if you try to ask the following questions over the phone you won't get the best results,I use these questions sprinkled through a conversation and not using these questions like a reporterIf the seller feels that you are not showing empathy and understanding, and you are building rapport throughout the conversation , they're not to entertain a creative offer, ever.Here are the questions to get the seller to even think about a creative offer-----MOTIVATED SELLER - QUESTIONNAIRE CHECKLISTThe following is a list of sample questions you should ask a seller. When talking to a seller, try to ask the questions through the course of a conversation and try not to sound like you are reading from a list.(Note: You will not ask all of these questions depending on the answers the seller gives and your investing objectives.)Asking About The Seller And Their Property: • Can you tell me a little bit about your home? (# of bedrooms, baths, size etc.) • What do you like most about the home? • What do you like the least? • Are there any repairs needed? • What is your sales price and how did you arrive at it? • What do you think your house would appraise for in excellent condition? • What do you think your property could rent for? • Is your property listed with a real estate agent? • If you don’t mind me asking, why are you selling?Asking About The Existing Financing: • Do you own the house free and clear? • Do you know if your mortgage loan assumable? • Would you sell the house for what you owe? • If not, how much are you looking to get above what you owe? (Subtract that from sales price to get loan balance.) • How much are the monthly payment on the mortgage? • Are the payments current?What Kind Of Deal Can You Get: • If I paid you all cash and closed quickly, what is the least you could take? (Follow-up by asking if that is truly the least they would take.) • Will you consider leasing the property to me with an option to buy if I guarantee the mortgage payments and maintenance? • Do you have a problem with someone living in the property until I get it sold? • Would you consider optioning the property to me, if there is absolutely no risk or cost to you?

Gino Barbaro · Answer

@Brittany DentHi BrittanySeller financing only works when the seller is motivated or the property is a difficult sale. Motivated sellers come in all shapes:divorce, health reasons, lack of money for repairs. It is our job to listen why the seller is selling the property. If the property is difficult to finance through a bank, this is another avenue for seller financing. You do have to educate the seller as to the benefits of holding paper. They will not be hit with a cap gains tax because the payments will be spread out. The seller may feel uncomfortable that you will not pay the mortgage. You can always put a lien on an existing property that you own, but this is risky. I would only do this if the deal was terrific. Put a specific time period on the lien, say 12 months.Good LuckGino

Micah Copeland · Answer

Hey Brittany. This is a hard one. In my opinion talking someone into giving you a house for free through seller financing is about the hardest thing you could do in real estate. I have noticed that If you state the question as "Do you mind taking that in payments?" instead of "Will you be willing to seller finance the property to me?" then you get more warm responses. Hope that helps.

Gene Hacker · Answer

When I make offers directly to sellers I give multiple options.Here is a basic breakdown of what the three offers could look like...1 - Small price discount, with very little down, low interest, long amortization.2 - Medium price discount, large downpayment, medium interest, medium amortization3 - Lowball all cash offer.This is the easiest way I have found to ask for owner financing...they see that they can get a better price if they can work with me on the financing.

Steve L. · Answer

I do about 1% seller financed deals for two reasons:1. I always want to buy at a discount. 2. My cost of third party funds is relatively low.When a Seller describes the following situation:1. If the borrower does not have an immediate need for cash, but they want to sell the property due to management problems or large upcoming repairs.2. They want to delay a tax bill on a big gain and don't really need the money.I will give them a cash price and a financed price (usually about 5% higher). Sometimes I also break out total money received over 5 years, this can show them making a lot more. Seller financing is a hard niche to exclusively pursue. Good luck.

Brittany Dent · Answer

Thanks Brian, that was very helpful. I guess another helpful tip is to see how long the property been on the market.