BiggerPockets

So I have a seller who wants to know the answers to all these questions?

1) If you are not going to buy the house with your own cash why am I signing a contract with you?

2) I need to let my attorney review this contract right?

3) How much money are you going to sell it for once you find the buyer?

As much as I wanted to say "dont't worry about it, I got you covered. I think her questions were valid?

Has anyone run into the inqusitive seller? How do you handle?

I am assuming that you are buying either Sub2 or with Seller Financing or both...

And the comment above is right on... Something was left out in your presenataion. Objections should always be included within your chat with the seller...

Here is my "Power Presentation and Sub 2 Objection handlers...

REI Statement: "Here is my business card."

Note: Hand a business card to everyone in the room. Include everyone in the conversation, assuming that they are over the age of 16. Only interested and concerned allies of the seller will be at the presentation by default, so you want to include everyone in order to win them all over.

Note: When I knocked on the door at the beginning of the house inspection I introduced myself to the person who opened the door. If there are people at the kitchen table whom you haven't yet met, introduce yourself to them at this time. Look them in the eye when doing so. This shows sincerity and that you have nothing to hide.

REI Statement: "Thank you for inviting me out to buy your house today."

Note: Right from the beginning I am letting them know that I am there to buy their house and that we are going to accomplish that task today. The conversation is already heading in my direction.

Questions: "How did you happen to find our company to call?"

Note: You want to know where your leads are coming from in order to ascertain where your promotional efforts are working. This also reminds the seller that he found you and why he decided to call you instead of anyone else. Often they will also tell me they didn't know who to call, which gives me more positioning power.

SellerAnswer: "We got one of your postcards in the mail."

REI Statement: "You got a postcard in the mail-terrific. I guess it pays to advertise."

Note: If they use broken English, so should you. You will want to mimic your seller every step of the way. I always like interjecting with a little humor, and my statement of "…it pays to advertise," does just that.

REI Question: "When are you hoping to have your house sold?"

Seller Answer: "We are moving into our new house in a couple of weeks."

REI Statement: "You're moving out in a couple weeks. Oh, my!"

Note: You will repeat everything the seller tells you back to them. In the event there is an urgency statement like "We are moving," if you follow that statement with "Oh, my!" you will be planting fear in the minds of the seller that doom is around the corner unless they agree to sell you their house quickly.

REI Question: "So if I can close escrow on this house within a few days will that be okay for you?"

Seller Answer: "That would be great!"

Note: This statement is letting them know that you can solve their troubles.

REI Statement: "Closing in a few days would be great. Fantastic!"

Note: Again, you're reaffirming what they say.

REI Question: "How long have you been offering the house for sale?"

Note: By the way, you already know most of the answers to the questions you will be asking in this presentation interview, assuming you've read my inbound script.

Seller Answer: "We have had it up for 3 weeks now."

REI Statement: "You've had it up for sale for three weeks. Really!"

Note: Again, you're reaffirming what they say. And using "Really!" is putting doubt in their mind that it may never sell or that something is wrong in how they are trying to sell it.

REI Question: "What do you think has stopped it from selling?"

Note: You're only going to ask this if they have been trying to sell for more than one week.

Seller Answer: "I'm not really sure."

REI Statement: "You're not sure-hmmm." [ Pause…] "As an investor, I buy houses frequently and I can say that the number one reason houses sit on the market is because of the price at which they're offered."

Note: I am not going to get into price yet; I just want to instill in their minds that they may need to lower their price to sell their house.

REI Statement: "Let me tell you a little about what I do. I buy houses like yours all the time."

Note: I assure them right from the beginning that I do this all of the time. I always make sure that they can only conclude that I am a complete and total professional, and so should you.

REI Statement: "I pay all the costs - including the real estate commission, the title insurance, escrow fees, transfer tax, Natural Hazard Disclosure, etc."

Note: As I mentioned earlier, I handle the objections in my presentation, and the biggest objection is who is going to pay what. Most sellers are aware that it costs money to sell a house, however, most do not know exactly how much. And most of the time our sellers are too distressed to call a Realtor to find out. Use their lack of knowledge to your advantage.

REI Statement: "And I buy them in an "as is" condition. I am going to kill the bugs as well as assume the responsibility for all of the needed repairs - whether I have seen them already or not."

Note: By buying "as is", it assures the seller that the "price" is the "price." Although you know that your contract will have contingencies that allow you to renegotiate the sales price if you find repair issues later through an inspection.

REI Statement: "So when we agree on a price tonight, the only thing you will subtract from that price is the principal left on your mortgage."

Note: From the very beginning I want to start talking about the loan and the amount they will receive. I will later turn the conversation from a sales price to a "Money in Their Pocket" price.

REI Statement: "And I can get you your money in as little as a few days."

Note: I am letting them know that I can move as fast as they need.

REI Statement: "I will make all the repairs, and you saw that the items we marked down came to about $(X amount) as we went through your house, and that doesn't even include the items I didn't see."

Note: I want them to know that my price might be better than they should get if I were to have noticed what is actually wrong with the house that they aren't telling me about. And every distressed seller has something in his or her closet that they aren't talking you about.

REI Statement: "One of the positive factors about selling me your house is that you can stay in it for as long as you need to and have the peace of mind of knowing it's sold."

Note: One of the issues of buying a house for most sellers is that they may not have a house to go to. So I let them know that escrow will close when they are moved out of the house but that they can stay there for as long as they need in order to find their next house. The only exception would be when someone is in foreclosure. Because of the pressing time table, they have to move as soon as possible. And, in this case, you should have the policy that you don't provide money until the house is vacant and you have the deed.

REI Statement: "And not only sold, but sold to someone who can afford to buy it."

Note: This is a classic example of an embedded command. I am telling them that I can afford to buy their house. When you do this, you are removing any doubt in their mind as to your ability to buy the house. Some of you may be younger than the seller, and it is important they have confidence that you can perform and that you are not "wishy-washy," flying by the seat of your pants, or just a smooth talker.

Note: The other powerful command is you are telling them that their house is "SOLD!"

REI Statement: "You see, I sell houses too, and many times I have seen buyers make offers on houses, and when we get into escrow and I've spent a lot of money on the process, it turns out the buyer has an IRS problem or child support payments he didn't mention, and he can't qualify."

Note: This is a example of creating a fear in the minds of the sellers that if they don't sell their house to me, the next buyer may be a flake.

REI Statement: "Believe me, there is nothing more frustrating than seeing a deal break down in escrow. That isn't going to happen to you."

Note: Again, a classic example of an embedded command. I am telling them to "believe me." When you say "believe me," point to your chest, tapping your open hand on your chest. This will reinforce this embedded command even further.

Note: When you say, "That isn't going to happen to you," shake your head side-to-side, expressing the no/negative bodily mannerism.

REI Statement: "Another positive factor is you won't have any of the monthly costs that add up while waiting for the right buyer to come along with the right offer, and have that buyer be one who can actually follow through on the purchase."

Note: I am communicating three items in this statement that are important:

•One, I am the right buyer.

•Two, I can follow through with the purchase.

•Three, that my offer is the right offer.

Realize that I haven't yet told them how much I am giving them for their house. I am, however, telling them that it is the "Right Offer."

REI Statement: "And maybe the most important factor is that you can get on with your life and not have this burden hanging around your neck."

Note: Telling a seller that you are offering a peaceful solution, taking away their pain, maybe fulfilling their needs, is a great statement prior to talking about money.

REI Question: "Isn't that really what you want?"

Seller Answer: "Yes it is. That's why you're here."

REI Statement: "Getting rid of this burden is a good thing - fantastic."

Note: I always reaffirm the seller's statement, and I am again embedding in their mind that to get rid of their house and my solution is a good thing.

REI Question: "Let me ask you-I know you have a number in your mind of how much your "walk-away" money was going to be - the amount of money you believe is fair - so you can get on with your life..."

Note: I always ask this before I give them my offer just in case they give me a lower number than the one I was going to offer. I have been surprised more than once by this. Just be sure not to look surprised when it happens to you.

Once during a presentation, a seller told me that he wanted $200,000 for his house. On the inbound fill-out script form, what was written looked like $280,000, which happened to be the fair market price of the house. When the seller said $200,000, I asked him when he would like that amount, and he said in 14 days or less.

Long story short, I gave him his $200,000 and resold it within a week for $272,500. It was $20,500 more than the $52,000 I preach about being above.

Note: Let the seller tell you what he is hoping to clear after paying off the mortgage. Usually, the combination of the mortgage and his walk-away money is less than your Worth Value, but more than your Money Value, which is a great starting point.

REI Question Continued: "...so how much do you want to clear above the "subject to" mortgage balance; what I call the â"walk-away' money?'"

Note:Again, I ask them how much money they want in their pocket, not how much they want to sell the house for. I want to be negotiating a few dollars, not a few thousand dollars.

Note: I am not asking them if I can buy the property "subject to"; I am assuming it. And this is the second time I talk about buying their house "subject to" the existing loan. The first time was a question asked from the inbound script when they called and made the appointment for me to come see their house.

Seller Answer: "About $50,000."

REI Statement: "$(X Amount). Great, we're getting closer."

Note: You want the seller to know that you are listening. You're not ready to commit until their sales price is less than your offer. If it is, simply go to the second stage of the script, which talks about terms.

REI Question: "How much of that money do you need to move with, or are you planning to finance any of that amount for the buyer?"

Note: I am putting out a feeler to see if they need all of their money. What they say will determine what my offer is for seller financing.

Seller Answer: "We need it all."

REI Statement: "You need it all. Wonderful!"

Note: The way you use the word "wonderful" will tell them if their answer was a good answer or bad answer. I like to breathe a little heavy and say it like I am thinking, "Damn!"

REI Question: "Do you understand what I mean when I use the term "subject to" the mortgage balance?"

Seller Answer: No or Yes

Note: Whatever answer they give me, I still explain what "subject to" is. I do not want them to think it is a formal assumption and mess the deal up later.

REI Statement: "That means that the existing loan will stay on the house. I will begin paying the monthly payment and making up any back payments and pay you your equity. It is not a formal assumption. It's the fastest and most economical way to get you your money and your house sold."

Note: At the end of this presentation are the objection handlers for this. Practice them so you can repeat them during the presentation if the seller asks you questions. But if you act confident that this is the method for everyone to take, they will agree to this too.

REI Question: "That's what you want, isn't it?"

Note: They are either going to have a ton of questions or be okay with it, depending on their motivation. Both are okay. At the end of the presentation I will still offer them a cash solution, but rarely will they take it over the "subject to". You will find out later in this e-book that the "cash" price is much less than the "subject to" price, and sellers are just as greedy as everyone else.

Seller Answer: "Yes."

REI Question: "Do you have a copy of your most recent payment coupon or statement?"

Note: Wait for them to get the statement. Even if they blurt out the payoff, still refer to the statement.

This is the first time they have participated in the presentation and it is very advantageous to get them to interact with you.

Seller Answer: "Here it is. It's from 3 months ago."

REI Statement: "It's from three months ago. That's okay; the payoff amount won't be too different."

Note: Don't subtract or add any amount to the payoff for recent payments being made. If the statement is within three months old, it is fine to go ahead and use those figures.

REI Statement: "So it says here that you owe $(X Amount) plus your walk away money, so you would like to sell for $(X Amount)!"

Note: I know this sounds like a question, but it is actually a statement. You are just confirming verbally that you heard them and you're doing the math.

Note: On the yellow note pad that I included in the list earlier as one of the items needed for your presentation, draw a horizontal line down the middle of the paper, making two separate right and left sides. (See image below.)

Then write down on the top left of the note pad the following: "Owes $117,600.00", and on the next line below it write "Wants $167,600.00" - do not write "$50,000.00."

REI Question: "Are you aware of how expensive it is and all of the costs involved with selling a house like yours?"

Seller Answer 1: "Not really but that's why we are selling this way."

Seller Answer 2: "We've thought about using an agent if we couldn't sell it ourselves."

Note: I am letting them know that it is very expensive to sell a house and I am setting them up for the review of the expenses. I really don't care what their answer is.

Let me start off by saying that most of the time I will not go into the breakdown of cost to justify my offer price, however knowing how the presentation flows and being able to repeat it, making it your own, is a great back-up when you have someone who needs an explanation.

I have been doing this long enough that I can tell if I need to justify or if I can go from their Walk-Away money right to my offer.

I caution you that if you're unsure of yourself, it will show on your face and the seller won't bite on your offer.

It is extremely important to practice this presentation over and over again.

REI Statement: "If you were to use an agent and have to pay the agent, along with all of the escrow and title costs, those items would run around 12% of the sales price."

Note: When you say the words, "If you were to use an agent," shake your head side-to-side as if you're saying no. Say it like it is not something they want to do.

Seller Reply Question: "What costs are involved?"

REI Statement: "Well, you were originally asking $(X Amount), and 12% of that is $(X Amount). That's just for the agent and escrow and title insurance.

Note: Even if you can do the math in your head you should still use the calculator and write the figures down on the right side of the note pad so they can see it visually. So you write "Wanted $205,000.00," then under that write, "Costs $24,600.00" on your yellow pad.

Note: Don't be too slick by blurting out calculated numbers.

REI Statement: "The items that you are going to save by selling me the house are:"

Real Estate Commission

Title Insurance

Escrow Fees

Transfer Tax

Natural Hazard Report

Termite Clearance

Roof Certification

Water Heater Strapping

Smoke Detectors

Repairs to Bring up to Market Standards

4 to 6 months holding costs, waiting for it to sell

Mortgage Payments

Property Taxes

Property Insurance

Monthly Maintenance

Note: Using abbreviations while writing is okay as long as while you write you say aloud the complete word you're abbreviating. Many times the sellers will pull the note pad over to them after your presentation is complete and review the numbers and they will need to understand what the abbreviations mean.

Note: Only commission, title insurance, escrow fees, transfer tax, and the natural hazard report make up the 12%. The other items are there for effect and you will be putting numbers to them later in the script.

REI Statement: "And the cost that no one thinks they pay: loss of time and fear of loss."

Note: Understanding the value people place on fear of loss is important. I will cover it in a moment.

REI Statement: "Earlier we determined that there are $(X Amount) in repairs that have to be done. That is (X Amount) in costs so far.

Note: Say what you are writing.

Note: Write the amount under the "Costs" amount on the right side. Write slowly enough for the seller to understand what you're writing. Don't be in a hurry. Then add the two.

REI Statement: "In today's market it could take between X-Y months to get a home sold, close escrow, and money in your pocket."

Note: If your market is slower or longer, adjust the timeframe. The timeframe I'm speaking about is the timeframe from now to the close of escrow; not from now to when they find a buyer. As I have explained, they may need to find several buyers before their escrow closes.

Note: Again, you're building the value of your offer tonight and of them accepting it.

REI Question: "What is your monthly mortgage payment?"

SellerAnswer: "$1,100 per month."

REI Statement: "$(X Amount) - Ouch!"

Note: Using words like "Ouch!", "Really!", and "Oh, my!", build considerable fear in the minds of the sellers; fear that they have to continue to make those payments or what ever you want them to start thinking about in a serious way.

Note: You already know what their monthly mortgage is from the payment coupon the seller gave you earlier and the inbound script from when they called. But you want the seller to verbalize the amount so everyone present can hear the amount out loud, and you take the opportunity to instill that "Oh, man! That's not good!" fear factor into the seller and his entourage.

REI Statement: "$(X Amount) times let's figure 5 months, equals $(X Amount)."

Note: You will be again writing this down as you say it under the right hand column of the note pad. You will write "monthly payments $1,100 x 5 payments = $5,500.00".

REI Statement: "$( X Amount) plus $(X Amount) equals $(X Amount)."

Note: Again, say this and write it at the same time under the right hand column.

REI Statement: "Typically, taxes and insurance run about two times what the monthly payment is, so I always figure another payment should cover that expense."

Note: This isn't a question about the cost of property taxes and house insurance and I am not waiting for a reply; I am assuming. Again, write as you speak.

REI Statement: "$(X Amount) plus $(X Amount) equals $(X Amount) in costs so far."

Note: Write this and say it at the same time under the right hand column.

REI Question: "How much it is worth to move on right now rather than waiting for a buyer?"

Note: They haven't thought of this question before and you may have to help them with a suggestion.

REI Follow-up Question: "Is it worth $4,000 to be done with all of this right now? $4,000 is a small enough number."

Note: Just wait for them to say "Yes." They will look at each other and one of them will give in. Just wait. Don't say a thing until they reply.

Seller Answer: "Yes."

REI Statement: "$4,000 plus $(X Amount) equals $(X Amount)."

Note: Once again, write this down and say it at the same time under the right hand column.

REI Question: "Now we are at $(X Amount) in costs that we can see, and I still have to kill the bugs and repair all the items that come back on the buyer's home inspection report."

Pause…

REI Question Continued: "Have you ever seen a buyer's Home Inspection Report?"

SellerAnswer: "No."

Note: You pause so they can take in everything in that sentence. First you want them to understand that the cost to sell so far is $40,600 and that you are planning to get a home inspection. You build fear of the unknown.

REI Statement: "My goodness, they write a 3-inch book about how bad your house is."

Note: This is instilling more fear and discomfort with this statement.

Note: If you have never seen a home inspection done, you should call a local home inspector and ask to witness their next inspection so you can obtain an idea of their thoroughness.

Note: This statement is reinforcing the idea that it is better to sell to you than take their chances on the open market.

REI Statement: "I know that on average I spend about $2,500 in repair items besides termite control, roof certification, wiring the smoke detectors, reaching minimum standard requirements and other usual costs, and that's just an average."

Note: This statement is again building the costs of selling and reinforcing the idea that it's better to sell to you.

REI Statement: "$2,500 plus $(X Amount) equals $(X Amount) in seller costs."

Note: Again, write this and say it at the same time under the right hand column.

REI Question: "I take on all of this responsibility and risk so that at the end of the day I can resell the house after I fix it up, and I have to make something and I have determined that my minimum is $10,000. I don't think earning $10,000 over a four or five-month period is too much to ask for, do you?"

Note: Wait for the reply

Seller Answer: "Yes, $10,000 is too much."

REI Question: "$10,000 is too much to earn? Really? How much would you consider is fair?"

Note: Just wait for the answer. Most of the time they will say $5,000.

Seller Answer: "I think $5,000 is enough."

REI Statement: "I never allow less than $7,500 for a possible profit."

REI Question: "So if I agreed to buy your house and only make $7,500 profit, that would be acceptable to you? I'm not saying I can do it, but if I could, we would have a deal?"

Note: They almost always say "Yes."

Seller Answer: "Yes."

REI Statement: "$7,500 plus $(X Amount) equals $(X Amount) in seller costs. If I subtract that from your asking price of $(X Amount), that leaves $(X Amount).

Note: Again, write it down as you're saying it and again use the calculator to do your math.

REI Question: "Therefore, if we subtract the $(X Amount), the amount you owe, from $(X Amount), I am putting about $(X Amount) in your pocket - this week if you want. Would that be okay?"

Note: I'm diverting their attention from the topic of what "I'm" going to get in profits is to what "they" can put in their pocket.

Note: Wait for the "YES." If you need to encourage them, ask if they need more time to move and a longer escrow? Don't ever ask them if they need time to think about their decision.

Note: If they do need time, simply stand up, and tell them that you are going to go make a call in your vehicle, check in with your wife, call the office, something that tells them that you're going to be right back but gives them a chance to talk. But never put this off to another time, another day. Their desire for "more time" is a way of not confronting this issue. Giving in to their request is certain failure.

REI Follow-up Question: "When would you like to close escrow?"

Seller Answer: The reply will likely be either, "30 days." Or "We're not sure about the price."

Note: If they say "30 days," continue on. If they say they aren't sure of the price, simply go over the numbers and justify your position.

REI Statement: "Let me tell you how I buy houses, and the terms under which I can buy your house."

Note: Absolutely keep your cool with them, but let them know that you're not playing games. You're a professional, and this is what you do for a living.

REI Statement: "I offer sellers four options regarding the terms I can offer, and any one of the four are okay with me."

Note: I pull out a contract and use one of the blue pens that I mentioned earlier that you should have for your presentation, and start writing and filling in the agreement. I use the blue ink so everyone in the future knows that there was nothing altered on the contract. And using colored ink is your best proof of a non-altered contract.

It also indicates which document is the original in the event you have to produce the original document.

REI Question: "Are you both on the title of the house?"

Note: If the couple is married or if there is more than one owner of the house, all owners/parties must sign the purchase agreement. Don't let someone "sign for Mom" who isn't there.

Seller Answer: "We are both on the title."

REI Statement: "You're both on title, great."

REI Question: "May I see your driver's licenses so I can spell everything correctly?"

Note: More times than I care to remember the property profile has misspelled someone's name, and I have embarrassed myself copying the profile spelling and created more work for myself by having to redo the agreement, so I ask for the driver's licenses to get it correct. I also jot down on my pad their license numbers, as I may need them later.

Note: If I have a positive response to my question regarding my offer price, I begin filling out the contract before I talk about terms because I want them to be comfortable with the fact that they have sold their house and now we are in the paperwork stage.

REI Question: "The address is?"

Note: You know the address but by asking this question you are requiring the seller to participate along with you. The more they participate, the better the outcome.

Seller Answer: "123 Any Street"

REI Statement: "123 Any Street, thank you."

REI Statement: "Anytown City and we are in Anystate state. And the zip is 99999."

Note: You're just saying what you're writing down so everyone is comfortable with the process and knows what you're doing.

REI Statement: "The Assessor's parcel number I have on the property profile is...."

REI Statement: "The stove in the kitchen is an appendage to the house and included in the sales price. What about the washer/dryer and refrigerator? You're going to take those, aren't you?"

Note: I want to give something to the seller at this point and convey to them that I am not a bad guy by taking everything. These two items- the refrigerator and the washer and dryer-are not appendages unless they are built-in, so the seller has the legal right to take them anyway. Sometimes the free-standing stove is an heirloom, and you will need to ask this question at contract so when you do your walkthrough prior to closing, the seller knows it needs to be included with the house and not removed, or what was otherwise agreed upon.

REI Statement: "Earlier I spoke about the terms I use to buy houses. The $(X Amount) figure is based on buying your house subject to the existing loan." Pause...

Note: I have already explained what "subject to" is; I am just waiting to make sure they are fine and I do not want to appear like I am skirting the issue. You want to appear settled and confident throughout the presentation.

REI Statement: "I can, however, offer you more money if you are willing to finance the difference between the "subject to" amount and the sales price for 6 months."

REI Question: "You are planning to offer me seller financing arent you?"

Note: The preceding statement is an attempt by me to build their interest in seller financing.

Seller Answer 1: "How much more can you pay us if we offer seller financing?"

REI Reply: "If you're willing to finance the seller proceeds, I can increase the offer by $(X Amount) plus you will earn (X Amount)% interest and the entire amount will be paid to you within six months."

Note: During my questions of, and conversation with, the seller, I have already determined where they are going to fall within the four terms that I will offer them. Thus, my price is based on that term. Most of the time it is buying "subject to" and the balance is paid to the seller. If there isn't a large difference between the "subject to" amount and seller financing, I won't even broach that subject. I will still give them the option of an "all cash" offer.

Here's an example of what I mean: Let's say the existing loan in this case only offered the seller $3,000. For that small of an amount, I would not ask for financing. I will only ask for financing for amounts over $25,000. Your amount may be different, depending on your reserves.

I use a formula for both sides of one figure in order to determine what the cash price will be or what the seller-financing price will be. I always figure for an all cash offer a minimum of 96% of the original price, and I offer to pay the seller 2% more, or 102% of the offer price, if they provide seller financing on the amount between the "subject to" and purchase price.

EXAMPLE: Let's assume that I will pay $100,000 for a house by buying it using "subject to" terms. My "all cash" to the seller offer will not be greater than $96,000, and my "seller financing" offer will not be greater than $102,000.

Seller Answer 2: "We need all of our money."

REI Statement: "You need all of your money, great."

Note: At this point I do not want to come across unhappy, so the word, "great" is said with an upbeat tone. I want to come across very pleased and grateful that they've allowed me the opportunity to help them.

REI Statement: "Well, it looks like the $154,400 is the term option we should go with."

Note: From here, I finish off the contract and I am done. I keep the copy of the payment coupon and let them know that certain people will be calling them and introducing themselves. I want the seller to feel like they have done a great job in negotiating, and leave them with a handshake and the words, "you guys beat me up tonight"

Sub2 ObjectionS

Does the loan stay on my credit?

Yes, it does. Let me tell you how this will actually help you. You told me earlier that you were two payments late on your mortgage; being late on a mortgage payment, as you know, lowers your credit worthiness. By us making the payments on time, we will actually raise your credit rating by re-establishing an on-time payment history.

With the loan staying in my name, does it hurt my credit?

With us making the payments on time, it will actually increase your credit rating. Did you know that when you pay off debt it actually lowers your credit rating? You don't want that to happen do you? There's no better way to raise your credit score than to keep on-time, regular payments with your mortgage. The loan remaining in your name will do just that.
Can I buy a new house with this mortgage on my credit?

Yes, you can. There are many lenders that will look at this transaction no differently than if you had a rental property. We will show the new house lender, that we have been making the payments with copies of our payments; much like someone who bought a house with a former spouse.

How will I know that the payment is being made?

We pay all of our mortgage payments at the beginning of the month and you will receive a notice of payment made. One of the steps we take to make sure the payments are always made is to have a reserve fund of four months worth of payments, and we set up these payments to automatically come out of that account. It's extremely important to us that we honor our commitments.

I don't want to deal with it. I just want to sell normally.

I understand your concern. If we were to buy your house, by putting our own loan on your property, it would not allow us to pay you as much for your property. I am offering you a solution to selling your home and you making the most amount of money, without it costing you anything to sell your home.

I can just sell it normally?

Yes. You may be able to sell it without someone buying it Subject To the existing loan. However, my offer gives you many more advantages. It…

• pays you the most amount of money.
• re-establishes a positive payment history, or keeps your credit rating from dropping.
• doesn't require you to bring money in to close the transaction.

With my offer, we don't have to worry about whether the house will appraise for the sales price.

By buying "Subject To," there won't be a lender involved telling us that certain repairs will have to be done before they will fund the financing. This alone could save you thousands of dollars.

You get peace of mind knowing that the borrower doesn't have to qualify for the loan. I have seen a number of deals that fall out of escrow because either the borrower didn't qualify or the property didn't qualify.

With my offer, we can close as fast as 2-3 days from now rather than waiting and having to make another house payment.

What if you don't pay the mortgage?

It would be extremely foolish for us to not make the payment. We would lose everything we have put into the deal. You will get a notice from us every time we make a payment to the lender so you will know that they are being paid. Our reputation is the only thing we have and I value it more than anything else.

Is it legal to do this?

Yes, it is legal. The lender's only recourse is to accelerate the Due-on-Sale clause. But it is my experience that they will not accelerate the DOSC. Lender's have reserve requirements they are obligated to have for loans on properties in which they initiate foreclosure procedures on.

OR YOU COULD SAY THIS:

In fact, it could be argued, once they create a pattern of accepting my payments, they can't even accelerate the Due-on-Sale clause.

OR YOU COULD SAY THIS:

Yes, it is. In fact, it is the number one method we investors use to help house sellers like yourself sell their houses.

Occasionally, I have sellers who want to confirm that buying "Subject To" is okay and that everything is on the up and up. This is why I use a title company to handle all of the paperwork.

That's also why I say, "Let's go ahead and open up escrow and they will take care of everything from there."

Why don't banks want you to buy "Subject To"?

When banks loan money at 6% and five years later the interest is much higher, they are losing money. Banks want us to pay off those lower interest rate loans so they can make higher interest loans on the same property, and that just doesn't make sense.

It isn't something that lenders want the public to know a lot about. They want us to spend all that money it costs to get a new loan, points, appraisals, title insurance and escrow, to loan the same amount of money on the same piece of property, just at a higher interest rate.

What if the lender does accelerate the Due-on-Sale clause?

It is my experience that they will not accelerate the Due-on-Sale clause. Most of the time when we buy "Subject To", we are actually better at paying the mortgage than the original borrower, so lenders like us.

If they do accelerate the Due-on-Sale clause, you are at the same place as you would have been if I didn't step in and buy the house. For me to buy the house this way can only help your credit, not hurt it.

You said your interest rate was higher than today's interest rates. Ask yourself, why would the lender want their higher interest loan paid off just to lend the same money at a lower rate? It doesn't make sense, does it?

Why would a lender call in a loan that is in a positive payment status? The answer is they wouldn't. Lenders are not in the business of calling in loans; they are in the business of making loans.

When will the loan be paid off?

The loan will be paid off either when the property is refinanced or the last payment is made.

Will the loan be paid off when you sell the property?

Occasionally when we sell the property we will pay off the loan, but not all of the time. Sometimes we will manage the loan payments from the new buyer, making sure that the lender gets paid.

I want my attorney/real estate agent to look it over.

That's a great idea! Let me have their name and I will have my attorney call your attorney. They probably know each other very well.

OR YOU COULD SAY THIS:

That's a great idea! Please keep in mind, I am here to help you sell your house, I am not trying to trick you or take advantage of you. Do you think I would do that?

Does the insurance have to stay in my name?

Actually, I will have my insurance agent contact your insurance company and work out their requirements. Therefore, I am not sure what they will want. Your policy staying in place is going to be fine.

Can I set a time limit as to when you will have my loan paid off and out of my name?

IF YOU WANT TO SAY "YES," THEN SAY THIS:
Yes you can, but that may mean that I will not be able to pay as much for your house.

IF YOU WANT TO SAY "NO," THEN SAY THIS:
No. I don't buy houses that have loan payoff time limits on them because I just can't predict the future. I know it sounds harsh, but I don't want to commit to something that may be out of my control. I know that the terms I have laid out are terms I can honor.
What about the pre-payment penalty, do I have to pay that?

No. Actually, we will ask the lender for a payoff amount including all past late fees, payoff fees, and any pre-payment fees. We'll assume all of those costs and pay you the difference between that amount and the purchase price.

OR YOU CAN SAY THIS:

No. That is what makes buying Subject To the existing loan so advantageous for you. We are going to assume those costs as part of the sales price. But if you were to sell your house and pay off your loan, you would have to pay those costs.

What about my credit line? I still have some credit available.

We will call the lender and have them freeze the credit line and take the property Subject To the existing amount. Just make sure you void any blank checks you have - just in case.
Note: You can ask them to pay to you the balance of the credit line as a method of taking money out of the transaction. Then freeze the credit line.

I remember the day a Superior Court judge sold me a house Sub2.

I guess I should have kept the crap to myself...

I agree with Brian. You could also answer #'s 1 and 2 a bit differently (I totally agree with Brian's 3 and thus have no alternative answer). FIRST, I usually tell them on the phone that I buy properties to fix up AND find properties for other investors in my network (which is true). So the condition of the property, price, etc. usually determines if I bring one of my "partners" in to buy the property or if I buy it myself. Keep in mind Mrs. Seller that my partners pay me. You don't have to pay me a dime (which is true of assignment fees - they come from the buyer's side not the seller's). When they asked me about an attorney I answer with an "of course" tone usually starting with....."of course - definitely have your attorney look at this. Then have him give me a call. I'd love to answer any questions he may have". By now I'm so confident with my answers that she will rarely take the contract to an attorney but even if she does, that's fine. My contracts are straight forward and as honest as I am.

I think you WANT the opportunity to answer questions in a presentation. All of the great salesmen out there will tell you that it's one of the ways to build trust with your customers/sellers.

Now these are good responses! That's what I needed! I usually get phone calls from sellers after I send them marketing peices. 9 times out of 10 the questions are the same 3 questions I mentioned along with some other questions that you guys have covered.