Five Important Tips for Investors Wanting To Buy With Seller Financing

Seller financing is made out to be the holy grail of real estate investing. Green real estate investors thirst after a seller financed deal. There are plenty of reasons why—having the seller participate in the financing can sure be easier than working with a bank, and it can certainly be cheaper than using a hard-money lender.

Yet most investors are either too afraid to ask a seller if they are open to seller financing, or they simple don’t know how.

I sincerely believe this is the case because they believe that seller financing is out of their reach. They automatically assume that property sellers want cash with a quick close. But is this really so?

Sure there are always sellers out there that would prefer to be paid out immediately at closing. These sellers may have bigger plans, debts to pay off, or want the “security” of money in the bank. But this is not always the case for all sellers.

I think that it is important for investors to flip this script and realize that the seller also receives tremendous benefits by seller financing their property. There is no need to timidly beat around the bush and wait for the benevolence of sellers to bring up their desire to do seller financing. You need to give sellers the opportunity to participate in the financing.

I don’t pretend that this is as easy as it sounds. At the core your job is to ask, listen, learn, interpret, and educate. If done correctly you will be able to craft a customized transaction that could quite potentially include seller financing. If fully educated and propositioned, the chances of buying using seller financing go way up.

Here are five great tips that you can use to close more deals with seller financing:

• Understand the seller’s goals, motivation, and needs. Do this by asking lots of questions so that they can paint you a vivid picture of their reality.
• Build rapport and credibility. No one wants to be in a lending relationship with someone they don’t like or trust.
• Educate yourself on how capital gains taxes are calculated, when they are applicable, and how this will affect your seller.
• Learn how to structure Promissory Notes and Trust Deeds that give you and the seller protection.
• Demonstrate the value of seller financing by calculating interest income that seller would earn.

Seller financing can be a fantastic solution for buyers and sellers. It may not be for every seller, but I guarantee that if you will find much more people are open to it once they understand how it can be a huge benefit to them—not just to you.