First Seller Financing Deal - To Do Or Not?!!!

[Patti Royster]

Hi there.

My husband and I work in real estate together and have been learning as much as we can about seller financing.  We came across this deal and have been considering it but will probably walk away.

The property is a legal duplex 3100 square feet and 100 years old.  Kitchens and bathrooms would need to be replaced eventually.  Galvanized plumbing - may not be as big of a problem since there is only one bathroom per unit.  One unit on top with 4 bedrooms/1 bathroom and basement apartment 2 bedrooms/1 bath.  Rent upstairs is $950 and basement rent is $700.  Owner is 71 years old and is cashing flowing $420/month.  Rents are probably about $50-100 low for both units.

We explained seller financing to her and offered her $30K after giving her an analysis of what she could realistically walk away with if she sold it with a realtor.  She spoke with her 4 kids who thought she was getting taken and now wants $51K for the property.  We were going to have the property inspected but not so sure now we really want to invest in a 100 year old property even if it cash flows well.  Owner owes $164K with $30K at 11% and the rest at 2.92%!!!  Sort of thinking of doing the inspection which will itemize all the things that will need to be updated to show the seller.  We know she wants $36K to pay off her mortgage but she will have to pay 25% in taxes on the sale.

Would appreciate any experience or thoughts you might have!  Thanks in advance.

[Brian Gibbons]

It would be REALLY helpful if people would be CLEAR when they ask of advice.  For me to GUESS is not fun.

Step one: Know what to ask the seller.

Here you go.

Motivated Seller Questions

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?

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Form on EVERY talk with the seller.  Then ask BP with this info.  We can help you better.

PROPERTY INFORMATION WORKSHEET

Address __________________________________________ Date _________

Location / Cross Street _______________________________ Map Pg# _____

Seller _______________________ Ph# ____________ Alt. Ph# ___________

Listing Agent _________________ Ph# ____________ Alt. Ph# ___________

CONDITION

__Occupied / __Vacant _____ Bed/_____ Bath Construction _____________

A/C ___________ Elect. Amps ________ Garage _____ Year Built _______

Roof ____________________________________________________________

Exterior __________________________________________________________

Interior __________________________________________________________

Kitchen __________________________________________________________

Baths ___________________________________________________________

Plumbing ________________________________________________________

Appliances _______________________________________________________

Neighborhood ____________________________________________________

Other Work Needed ________________________________________________

________________________________________________________________

FINANCIALS

1st Lien Bal. $_________ 2nd lien Bal. $_________ In Foreclosure: __Yes/__No

Asking Price $_________ My Offer $_________ Resell Approx. $__________

Terms: __ Subject To, __ Agr. For Deed, __ Seller Fin., __ Lease Option, __ All Cash

Additional Notes __________________________________________________

________________________________________________________________

________________________________________________________________

CONTACT RECORD

Name Date Note

_________________________ _____________ ____________________

_________________________ _____________ ____________________

_________________________ _____________ ____________________

_________________________ _____________ ____________________

_________________________ _____________ ____________________

_________________________ _____________ ____________________