Why It's Worth it to Develop Strong Relationships with Sellers

When you have good relationships with your sellers, good things will come your way.

In the terms niche, we're in the business of helping sellers and buyers. We help sellers who are having trouble selling their home or need a quick way to get a property off their hands, and we help buyers who would otherwise be unable to purchase a home through conventional means.

When we do deals, we make it a point to develop good relationships with our sellers and buyers. Why? Because we like to be friendly, first of all, but second of all because these relationships can often result in further deals down the line.

Today, we're looking at a deal from one of our Associates that will show you exactly why it's worth it to develop strong relationships with your sellers.

An off market deal from a past seller

On his third ever deal, our Associate worked with a seller to structure a sandwich lease on a 60-month term. A year later, he got a call from that seller asking if he could help them with another property.

The seller had just refinanced the property and, as a result, couldn't put it on the MLS or sell it conventionally for the time being. So they came to our Associate and, once again, he was able to help solve the problem. He structured a very similar deal to his first one, another 60-month sandwich lease, and was able to quickly get them out of their predicament.

Since they had already gone through the first deal together, there wasn't much explaining to do on this one. The property had around $210,000 in underlying debt and they wanted $105,000 in equity. That means an effective purchase price of $315,000, and at the time, that is far more than they would've gotten on the market after closing costs and realtor fees. A similar thing happened on their first deal, so it's no wonder they came back to our Associate.

Our Associate ended up getting a tenant buyer in the home for a purchase price of $349,900. Payday #1 was $10,500, plus another $14,000 three weeks into the term, as well as the first month's rent of $2,359. (We structure all of our deals to include this! It's written into our agreements that we don't start making payments until 30 days after the tenant buyer moves in, so we capture that first month's rent.) That's a total of $27,039 for Payday #1.

Payday #2 was the monthly spread, which comes from the difference between his payment of $1,989 and the $2,539 in rent coming in from the tenant buyer. That's $550 per month, or $33,000 over 60 months.

Payday #3 is the markup ($34,900) plus principal paydown. There was $325 being paid toward the principal each month, coming out to $19,500 in total. When you subtract the down payment of $24,500 (we remove the first month's rent since that is going right into our Associate's pocket) he's left with $29,900 for Payday #3.

In total, that's $89,939 on this deal if it goes for the full 60 months.

Thinking about the future

This deal was literally dropped into our Associate's lap. Why? Because he had developed a strong relationship with this seller on their first deal. And it's not rocket science! He simply treated them well and worked with them to solve the problem they were facing.

But it doesn't end there. The seller's sibling is a realtor, and during the first deal our Associate referred a buyer to them. They now have a mutually beneficial relationship where the realtor will refer tenant buyers or sellers to our Associate if he thinks they might be a good fit.

The first deal from this seller came in at around $74,000. So, in total, our Associate has made around $164,000 from this one relationship. And that's not even taking into account the many potential deals he may acquire from his relationship with the realtor! We get many deals from our relationships with realtors, and we're confident that he will get at least one deal from this realtor in the next year.

That's why we do our best to develop strong relationships with sellers, and why you should too. We're in the business of solving problems and helping people—when you look at it that way, it's easy to develop great relationships with the people you're helping.

Have you ever gotten any deals from past sellers? Share your story in the comments below!