How to seller finance this deal ?!

[Peter Bui]

I have a coworker who has a property in Phoenix Arizona and his wife lives there but wants to move to California. He has 5 years left to pay off on his loan, and I am planning to offer him that I can pay off the rest of his mortgage and then do the rest through seller financing. How would I initiate this conversation? To get seller financing, so I need an agent, a bank, or just a simple contract? Anyone have any advice before I approach this? OR, is there a better way to offer on this property? He is a motivated seller and wants to sell to me. Side question: if an agent sends me a property and I want to offer seller financing, would it be the same process? Would I still need to go through agent? Thanks in advanced! Peter

[Tom S.]

@Peter Bui  You still need to agree on a price you're buying it for, and determine if that's a good deal.  So for example, the house is worth $100k and he owes $15k on it.  You give $15k for a down payment, which the closing attorney / title company uses to pay off the bank.  A new note is created for $85k and you make payments to the seller on that $85k (so yes, there's still seller financing involved).  The seller would have a 1st lien on the property.

Whether or not it's a good deal depends on the price of the property, work required, etc.  If it's only worth $80k then there's not much point in pursuing it, if it's worth $130k (and you're paying $100k total) then it could be a good deal.

- Tom