Seller Financing

6 Replies

Hey guys, I'm a present wholesaler who's looking to think creatively when it comes to real estate acquisition. I make tons of cash offers that tend to get rejected yet i feel that if i approach them differently aside from the normal low ball offer i may get more deals rather than let them burn out.

I presently have a deal in North Philly. The seller is asking 35k for the property but will settler for 30k. He valued it at 65k based on the area. The seller is a contractor who put some work into the house already but didnt finish. All it needs to be rent ready is closed walls, plumbing in the kitchen and bath, windows, doors and flooring.

My initial offer was 20k ALL CASH (which was countered for 30k flat) based on the activity in the area which wasnt much for the last 12mths.

Seller wants to sell but doesnt want a low ball offer due to initial investment he made with the repairs.

I'm not well versed on seller financing but i have a 3 option letter of intent to purchase to present with the following offers:

1) 20k all cash 

2) 5% down, Seller to finance the balance at 6% interest only payments for 10 years (term) with full balance payable at the end of term

3) 5% down, Balance to be paid in 250 equal monthly payments.

My question here is how does the seller financing work and what are the pros and cons??

Im an advocate that all leads get an offer (whether motivated or not). How can I approach this deal and make it a win-win??


@Marc Cesar on the seller financed offer, what is the purchase price? 30K? 35K?  you could sweeten the pot by going with his asking price as someone who wants to purchase the deal on seller financing isn't ask concerned with the purchase price as much as the terms.

The other thing you could do is go for a higher interest rate, however it would be good to understand what his original intention was with the property?  was he going to flip it? or hold it.  If he was going to flip, he may not value the residual income stream and might not be interested in a seller financed deal.

Third option to sweeten the pot would be make the term shorter, say 35K purchase price, 7-10% interest 30 year amortized but ballooned at 24 months.  That gives the end buyer an opportunity to season the title before refinancing into conventional financing.  Unless the place is in such bad condition that a bank won't finance on it at all.

hey Robert is asking price is 35k but will settle for 30k. His intentions are to fix and sell but being that im the 1st to contact him about buying hes willing to sell as-is. But if he cant get his asking price then he'll fix it up and rent it out.

what exactly is 30yrs amortized balloned at 24mths? Im fairly new to these terms. Id greatly appreciate the insight

Hi Marc,

If the Seller needs, or wants, to cash out, a solution might be to offer him his price with a seller carry back for 36 months.  

The Note that is created is a negotiable asset.  My company (and others) will buy seller financed Notes and Land Contracts. 

Properly structuring the carry back is very important in order to maximize the price the Seller will receive for the Note.

Reach out to me if you have any questions.

Good Luck,

Desi Arnaz

@Marc Cesar I am also new to seller financing and learning more about it. I know this was from last summer but I am curious to know, how did this deal work out for you?

All the best to you.

hey tyisha, passed on the deal. 

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