Trying to buy with seller financing

[Jesse Holshouser]

I found an off the market duplex, contacted the owner and he is interested in selling. He contacted the agent he usually works with in order to determine an asking price and she is showing me the property on Thursday. When I originally spoke with the owner, I expressed interest in buying the property with seller financing and he said that was a possibility but was concerned about me not having skin in the game and deciding not to make payments on it anymore. I would love some advice on how to negotiate a seller financing deal and I am also wondering where the agent plays into that kind of deal. The house isn't being listed, but can I still buy with seller financing? I intend to make it clear that even if I only put down 10% with seller financing, he could foreclose on the property if I stop making payments, he gets the property back and can keep that 10% down payment. So he wins either way. I would also probably suggest a 5 year balloon and either pay him cash for the remaining balance on the note, or refinance. If anyone has any thoughts or advice, it would be most welcome!

[Steve Vaughan]

Good job finding an opportunity!

Your down payment requirement just went up with the addition of an agent.  So did your hassle factor, convincing and educating a 2nd person. Not your fault, but unfortunate.

My first few were 10%-20% down like you are discussing, but all of mine have been belly to belly, no agents.  Early on it was me painting a vision for the seller about how I was going to operate and manage 'their baby' and how I planned on making improvements to the property.  Now I have references and history.  I still do 10% down, but don't pay higher interest rates a new person may face.  

Remind them what savings accounts are paying these days.  Being the bank, early payments will be like 90% interest and you'll be paying about 6x better than they can get from a bank.  

Prepare to bring more to the table than 10%.  They won't net much at all with 10% down, especially with an agent.

No land contracts or CFDs.  You won't own anything until you pay him off.  Get a mortgage/deed of trust either way.

Good luck and please keep us posted @Jesse Holshouser!