Seller financing deal for buy and hold or wholetail. Am I nuts?

[Brian Huber]

Hi, I contacted a homeowner on Zillow who was trying to rent out their house. I asked if they'd be willing to sell the house and if so, accept seller financing.

Surprisingly, I got a call back from the homeowner.  He said he's willing to do lease to own or seller financing.  I asked what down payment he wanted. He said $900. I asked about terms, he didn't know so I said we can address that later. Also, there seemed to be a bit of a language barrier. I did my best to be clear in my talk with him.

I noticed he bought the house for $80K in 2013. Now he's selling it for $60K. I asked why that is and he said his son has cancer and just needs to unload:-(

I looked up the county records on the property and it's owned by an LLC. I asked him who I should list as the seller and he said he'd fill it in.

So I filled out the contract, left the seller info blank PDF'ed it and email it to him.  I instructed him to complete his info, sign it and PDF it back to me. I'll then give it to the title company with the deposit to open up escrow.

I guess I'm shocked that he wants to move forward so quickly and for below retail. I have clauses in the agreement to cancel it if inspection isn't favorable or the title isn't free and clear.

Is there anything else I should be watching out for in this?  I guess I'm being extra cautious because this was through Zillow and it's my first potential deal. Do I have my butt covered?

I know @Brian Gibbons and @Michael Quarles so any help would be eternally appreciated:-) Thanks!

[Brian Gibbons]

Brian when I first started I tried to force deals through and when somebody signs in agreement and breaches their contract are used to threaten to sue.

Don't do that.

Refer them to someone and get rid of them.

Seller financing financial planning where you need to stay in the deal for a while either on subject to or wrap.

I think perhaps how you're approaching the seller and I for a possible solutions might need some improvement

You're either trained or untrained in showing the seller what his options are.

There's a primer on what I do negotiation with the seller

I booked the appointment if the property fits the profile, I do not try to sell over the phone and talk about solutions over the phone

Will biggest mistakes rookies May is the book appointments to go see properties without all parties present, whoever is on the Deets on the mortgage you need to see it. Otherwise you have to come back or they're going to talk it over with their partner or wife or husband and you gonna waste your time and you will not be over close on the first appointment. To avoid no-shows or only one party showing up I always call 30 minutes ahead to confirm that everybody's there.

Next to knock on the door and walk around the property and have some questions about where the electrical outlets are where the gas where the water etc.

It's important to ask a lot of questions about the property so they think that you want to buy it

Have a clipboard and look like you know what you're doing

Next to the walk-through with both parties there is only one party there don't do the walk-through simple you need 2 signatures on every offer in person.

On the walk-through make sure you do it really fast you can start you have it and we're down the basement work and then end up at the kitchen table

Where you sit at the kitchen table is important. Make sure you're on one side of the kitchen table and both of them are sitting directly across from you so that you don't have to turn your head very far look at both of them.

If they fight you for encore proves for where they're sitting, say something like hey you know it would really be helpful for me to discuss this if you both sat right there and he said here you have a problem with the could we do that?

A note on being polite and assertive you can do that what you just have to smile and watch your tone and don't be too aggressive.

And if you shy or nervous just get over it and do it anyway

This next step is the Up Front Agreement where you basically getting the sellers to agree that they need to be 100% happy with the solution you're going to talk to them about or you're not going go forward and you don't want them to go forward just call it hey so I can work for us conversely if they are 100% happy then we're gonna get the paperwork done and move forward as we can keep coming back over and over and over again it's a waste of time and money and it's very frustrating on all parties.

Different agreement does not always work but we are using it works most of the time meaning over 80to 90% of the time.

What's your phone agreement has agreed to then we go through the motivation step which is basically try to find out the real motivation and what they're willing to do and how they view agent versus renting it out

Discovering their real motivation does take some time for a 60 minute sometime once you do that step really really well then the next step is really easy

A note about terms deals....doing terms deals you really need to connect with the Sellers as far as your repore

if you don't have good repore you're not they are not gonna trust you enough to move forward

There is a post on bigger pockets about be the doctor when you're talking to the seller , do search the doctor

The last step after you do the motivation stop discussing many possible solutions would be subject to lease-option assignments etc. you want to go through a couple of "What If" steps

Here is a what if step

Mr. and Mrs. Seller, we have been through a lot of different possible solutions, from listing it with an agent, renting it out with the property manager, and seller refinancing in the state of (your state)

I want to throw out a question to you and if you absolutely need it that's fine just tell me know so I can work for me and will just take it off the table okay?

What if and I'm not sure my business partner would agree to this but what if we could pay you a payment over a time period of 24 to 60 months that would be approximately your PITI and then pay off your loan balance whatever that is.

Would that be even a possible solution to even talk about or maybe not?

That what if question sequence avoids a straight out rejection.

Please PM or Colleague me if you want an audio that goes over negotiating with Sellers.