Posted by Greg(NJ) on June 14, 2005 at 17:15:29:
Randy, thank you so much for your wonderful insights on this and other posts. I learn something new every time I read one of your posts or responses.
Greg
HELP L/O or Land Contract offer - Posted by Mark
Posted by Mark on June 13, 2005 at 10:54:24:
If a seller is asking 199,000 for a property and I want them to do a land contract sale or a lease option sell, what would you make as your offer? would you up the sellers purchase price say to 250,000 since they would be doing the financing, What kind of intrest would you agree to? how or what would you set the payment up too be. HELP need any kind of advise or help on structuring and presenting this offer.
THANKS
Re: HELP L/O or Land Contract offer - Posted by Don
Posted by Don on June 14, 2005 at 08:43:17:
You’re negotiating against yourself. Seller’s asking $199,000; you want to offer $250,000. First question, of course, is how much is the property worth? Second question is: Is the seller motivated? Or visa versa. I’m more familiar with lease options than with land contracts. But try starting off with an option price below fair market value. (Again, don’t negotiate against yourself.) Offer no more than fair market rent, and ask that a chunk of it. (If fair market rent on a $200,000 property is, say, $1,600, ask that $200 be credited toward the purchase price.) Suggest a token $1 option fee.
Now you can negotiate with the seller. If fair market rent is $1,600, slowly raise your offer up to, say, $1,800 with $200 a month credited toward purchase. If fair market price of the house is $200,000, you might begin at $180,000, and slowly go up somewhat above $200,000. The longer the option, the more above $200,000 you might comfortably go…but–really–you shouldn’t count on appreciation. Make your money going in. Option fee? Again, it can go up–a few thousand dollars wouldn’t be unreasonable, credited against the purchase price of the property.
But the point is, you don’t know how little he’s willing to accept until you make an offer. Don’t negotiate against yourself, and make your money going into the deal.
No. 1 rule in real estate… - Posted by Randy (SD)
Posted by Randy (SD) on June 13, 2005 at 11:18:25:
It sounds like you’re violating the No. 1 rule in real estate - “don’t look for houses, look for sellers with problems”! If your seller is asking $199 K. make him a “full price offer” IF he can be flexible on the terms. The conversation would go something like this: "Mr. seller, I don’t think there’s any chance I could pay $199,000 for your property, in the remote chance I did agree to that price let me ask you a couple of questions, is that fair enough? Then I would proceed to ask the seller several questions to gauge his/her level of motivation.
Why are you’re selling?
How did you arrive at your asking price?
How long have you had the property for sale?
Why do you think it hasn’t sold yet?
If you got an “all cash” offer, what’s your bottom dollar?
Would you consider flexible terms if you got your full price? ($199,000) this generally prompts a response from the seller where he says “what do you mean”? Then you proceed to tell him/her what you can do. CRI is like mining for diamonds, you have to move tons of dirt to find a single carrot of diamonds, but don’t go around looking for the dirt.
As for the rate and terms, 8% interest is certainly above average. The rest you have to find out what the seller needs.
Re: HELP L/O or Land Contract offer - Posted by Mark
Posted by Mark on June 13, 2005 at 10:57:34:
I need help by this afternoon if possible