Is vendor take back (seller financing) dead in Canada?

[Robin L.]

Hello Everyone,

Recently I have been testing direct mail marketing to attract private home sellers. Had some success with replies (abt 7% reply rate), the main reason is that I am able to negotiate more fixable terms directly with the owner (vendor take back mortgage), or potentially better deals than MLS...(however I believe this largely depends on the market trend..so far owners generally give way too high price, unrealistic..).

I know someone was able to negotiate lots of Vendor take back deals back in 2002, 04 in BC, she was able to spend minimum capital to expend very fast and was very successful. Now I am trying to do the same. (seems 2020 will see some real estate opportunities)

Does anyone have any experiences with this types of deals? If so, can you share some case studies as well?

I know the common ones involve having the down payment financed by seller, or the have the mortgage with the seller instead of bank. Both saves capital or capacity for mortgages.

Here I am also sharing one email I wrote to the seller, if you have any suggestions would be awesome=)
PS: the seller replied my flyer and asked my background and meaning of "flexible terms" here is my reply

"Hello XXX
I totally understand your concerns. I can provide you with all the background information you need. Once we have an agreement, we can sit together with a trustworthy real estate lawyer to finalize the deal. Hope this will help with your concerns.

By "flexible term", I mean the payment terms can be discussed, such as:

1.) We can make cash offer if price is suitable, for fast closing

2.) Or we make payments in terms + interest to you, to lower the overall capital gain tax..(large payment made within few years, under tax brackets...so lass tax on your side)

3.) Or we can go with the traditional method, obtain a loan from the bank

As a private buyer..I suppose the options are endless, hopefully we can settle for an option that works for both of us.
Thanks for the information, I am very interested to know more about your property! Was wondering if the house has a basement?， would be great to know the floor area of the house as well. If possible, would you please send me some pictures of your house?
I did sent out several letters last week..so I am not 100% sure your address. If you are comfortable, can also let me know the address.
Once I have more understanding of the property, I will confirm a time to come to Merritt, should be in the next few weekends.
Best regards,
Robin"

I was able to have some good discussions with the seller and understood their motivations on this deal, they are quite motivate, however their price is doubled of the BC assessment, I though was kinda unrealistic, so ended up letting this one go.

Sorry for my length posts...hopefully can give everyone some insights or start good discussions, hope you all have a great day.

Take care be safe=)

[Roy Cleeves]

Here is a recent deal that I closed in January with a Vendor Take Back so I could have zero dollars in this deal.

I just bought a 5 plex in Ingersol with ZERO $'s. That was a cool deal. Asking $599,900. I offered $565,000 to settle at $575,000. After inspection a few things needed work so I got them back to $565,000. owner took a 3 year VTB at 3% interest only. And BMO commercial gave me the other 80% at 3.63%.

And it cashflows $1,500 a month or so.

And I received $11,500 commission on it as I am a Realtor and that paid for the legal fees and the land transfer taxes and some repairs.

So truly zero down for a 5 plex - except I do have to pay that $113,000 VTB in 3 years from now.

It was brought to me by a mortgage broker that knew another agent that had this as an exclusive listing. And the listing showed 3% interest on the 20% down payment and I thought - why is that on the page of financials so I asked the agent if the owner would take a VTB for 3%. The agent said that the seller would do it for her and since the agent knows me and likes me - she said - I will put in a good word for you. So the Seller agreed.

The rate from BMO was what they offered on a 3 year mortgage - I wanted to match the VTB for timing.

The deals are still out there with VTB - you just have to ask for them and find the right seller.

Good luck!