owner financing
Hi
I am looking at a deal listed for sale with a realtor. I wanted to ask if the owner would look at doing owner finance. What is the best way to approach the realtor? New to this site
thanks
Tom
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I understand those dealing in areas where a listing agent may not be known, including seller financing in a contract is a turkey shoot. What you can do is request an appointment to present the contract, show up, be nice, meet, have the agents there and then present your deal. It gives you the opportunity to make the impression, solve any problems the seller may have and come to an agreement. All sellers are not in a position to do SF deals, not every owner benefits.....just move on. Chances are much much better if you present your deal than to fill in the blanks and don't have your ducks in a row.
I suggest you get written information from a loan servicer, show what services they provide, it makes life easier for a seller and can overcome objections of a listing agent who is not familiar with loan servicing (and they won't be usually).
Show your aces, that is your strengths in your ability to cover the debt, manage the property, you should be the expert in the room on the topic and if you can't be, get someone with you that can be. Show the exit plan, how many ways can you show the seller they will get their money without a hassle? 3 ways, refi it with a bank, refi it with a private investor, sell it to another investor, a quick cash sale type.
If you are to improve the property, tell them, what money goes into their collateral AND that the work will be done professionally, not by a newbie who has limited skills.
Knowing what the carrying costs for them might be, you can mention that they may get a better offer in 6 months, but what will that cost them? Selling now with a SF deal can be the best option.
Good luck :)
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Great post!
Dealing with agents and presenting a creative offer is not easy.
1. Read Ch 10 of this book Shft - Gary Keller of Keller Williams
http://www.amazon.com/Shift-Estate-Agents-Tackle-T...
Expand the Options - Creative Financing
2. Servicing company - www.NoteCollection.com -
All payments go through servicing company
3. I personally show all of Seller's options
- Sell Traditionally w Agent
- Rent
- Sell On Terms. either Sub2, Installment Sale, Lease Option etc.
Show the "net to Seller" on each
I share the information of my past partnerships and projects to show a track record of finished projects and build trust. Showing you have done this before and have paid as agreed with references is a great way to foster a belief in your ability and demonstrates you do what you say you will do for the owners who have trusted you.
@Karen A. Sorry about the longggggg run on sentence on my previous post . I got interrupted a few times while writing it.
I also forgot the other portion of your question. I write very detailed offers. I don't do letters of intent becasue it is just as easy to write an offer since I use preprinted forms and just fill in the details. I do not write offers on homes I don't intend to purchase so I spend time on the offer. I also do not write offers on homes that I cannot afford or do not have financing already lined up.
Originally posted by @Brian Gibbons:
For new people that want to act as a principal without a license a letter of intent makes a lot more sense than drafting an agreement to have an agent present.
The letter of intent you basically gives the seller a cash price and the terms price and it's valid until a certain date.
Use a lawyer and have the agent involved to get the commission
I would deliver the letter of intent to the seller away from the agent first
As long as the agent is getting his commission and the seller is interested in your letter of intent, the agent has no choice but to look into the situation
I find agents don't present seller financing very well because you're not trained in how to do it unless they're 65 years young
I do a lot of seller financing in on my bigger pockets blog I talk a lot about giving the seller some educational articles from realtor.com, New York Times, Wall Street Journal, money magazine.
Don't depend on listing agent to educate the seller about some financing, ever
Brian, I am interested in accessing the blog and the information that you referenced here. I have gone to the member blogs section but I didn't see how to search for your blog. I may be missing something. Would you please share how I can locate your blog here on BP. Thank you.
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Originally posted by @Sue K.:
Originally posted by @Karen A.:@Sue K. Thanks Sue.
What an experience on that first property!
I am interested in knowing more about how condo financing can make it difficult to sell a condo? Do you mind sharing more about this situation?
You state that you sold the property a few years later. Did you include a clause, in your contract, that allowed for an early pay off, free of any penalties?
I don't know how things work now, but at least back then (1995), banks didn't like financing condos, so buyers had to have large downpayments to get bank financing.
What sometimes makes condos hard to finance is when the HOA is not approved or certified as eligible for FHA loans. If you're selling selling condos in a hot area where lots of cash and conventional loans are happening it doesn't matter so much. But if your pool of buyers is mostly those with tiny down payments and only qualify for FHA financing be careful. HUD maintains a website so you can check which HOAs have certification. In my my farms, only a handful have certs which cuts the buyer pool way, way down on properties under $150K.
Making seller financing offers on condos without certs and where the buyer pool is limited has worked for me.
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Originally posted by @Account Closed:
Originally posted by @Sue K.:
@Sue K. Thanks Sue.
What an experience on that first property!
I am interested in knowing more about how condo financing can make it difficult to sell a condo? Do you mind sharing more about this situation?
You state that you sold the property a few years later. Did you include a clause, in your contract, that allowed for an early pay off, free of any penalties?
I don't know how things work now, but at least back then (1995), banks didn't like financing condos, so buyers had to have large downpayments to get bank financing.
What sometimes makes condos hard to finance is when the HOA is not approved or certified as eligible for FHA loans. If you're selling selling condos in a hot area where lots of cash and conventional loans are happening it doesn't matter so much. But if your pool of buyers is mostly those with tiny down payments and only qualify for FHA financing be careful. HUD maintains a website so you can check which HOAs have certification. In my my farms, only a handful have certs which cuts the buyer pool way, way down on properties under $150K.
Making seller financing offers on condos without certs and where the buyer pool is limited has worked for me.
In addition, I don't like HOAs telling me as an owner I can't seller finance or lease to own my rental or cap the number or rentals vs Owner Occupied, I'll take SFRs or multis w out HOAs any day
Originally posted by @Brian Gibbons:
Originally posted by @Account Closed:Originally posted by @Sue K.:
Originally posted by @Karen A.:@Sue K. Thanks Sue.
What an experience on that first property!
I am interested in knowing more about how condo financing can make it difficult to sell a condo? Do you mind sharing more about this situation?
You state that you sold the property a few years later. Did you include a clause, in your contract, that allowed for an early pay off, free of any penalties?
I don't know how things work now, but at least back then (1995), banks didn't like financing condos, so buyers had to have large downpayments to get bank financing.
What sometimes makes condos hard to finance is when the HOA is not approved or certified as eligible for FHA loans. If you're selling selling condos in a hot area where lots of cash and conventional loans are happening it doesn't matter so much. But if your pool of buyers is mostly those with tiny down payments and only qualify for FHA financing be careful. HUD maintains a website so you can check which HOAs have certification. In my my farms, only a handful have certs which cuts the buyer pool way, way down on properties under $150K.
Making seller financing offers on condos without certs and where the buyer pool is limited has worked for me.
In addition, I don't like HOAs telling me as an owner I can't seller finance or lease to own my rental or cap the number or rentals vs Owner Occupied, I'll take SFRs or multis w out HOAs any day
I haven't encountered an HOA that could prevent seller carry backs or private lending on the re-sale. However, "lease to own" with an option to buy is renting, no matter what you call it. The HOAs with rental prohibitions are going to be all over that.
I have always started the negotiation of a seller financed property with a simple letter saying... My wife and I would like to buy your property.... Simple letter with the terms, character, some humor and reassurance. Interesting the majority of the sellers have been older females.
Frank
Great thread everyone! I have a lead on my first opportunity in a seller-finance deal. I hope I say the right things.... I keep remembering what Brandon and Josh said in podcast 92 about entering the deal with a mindset of trying to solve a problem for the seller. I'm hoping to get good news soon.
I know this is an older post, but what are some typical terms for a multifamily deal? Years? Downpayment? rate? Etc...?
Go to Pete Fortunato's seminar's! He is the best at owner financing deals.
Clyde Wilson and Jimmy Napier also have good stuff on the topics.
The basics are - the best deals are found outside of the MLS. They're made with people before they ever go on the market. Door knocking.
As Pete Fortunato would say "is there any reason why you wouldn't...." Put in hypothetical's directly to buyers. Look up their address through tax records and pay them a visit. Make the offer in person, get to know them. They won't do business with people they don't trust.
Owner financing has such flexibility. It's beautiful.
https://s3.amazonaws.com/CashFlowDepotS3/Media/2013C/12_10Peteroptions.mp3
There's a link to a sample of Pete. He's great!