Re: Kind of motivated. - Posted by JohnWe (NoCA)
Posted by JohnWe (NoCA) on May 18, 2000 at 21:30:01:
Not very nice, Howie. Rich, don’t pay attention to comments like that. We all have to learn from somewhere.
Get the deed basically means get title to the property. In other words, I’d rather own a property than lease it. Your problem seems to be, if the owners sell it to you, then they want a down payment that you don’t have.
You still need to figure out what their motivation is. WHY do they need the 15% down? Do they need the money? If so, what are they going to do with it? Maybe they just want to feel like you have something in the deal, and they don’t feel comfortable with a “No Money Down” deal. Don’t offer suggestions to them, but in a round 'bout way you need to know what they want. Don’t just accept “We need 15% down”. Dig deeper.
In this situation, I think I’d pitch a subordination. Here’s how it works. Let’s say they’re asking $100K for the house. You said they’d take $15K as a down payment, and carry $85K at 7-1/2%. Okay, tell them this…
“I’d be willing to give you $30K cash, would that work for you?” (Appeal to his sense of greed. At this point his mind is thinking about what he could do with $30K), He’ll probably agree. You say,
“The only way I could make this work, however, is if you agree to a subordination clause. Are you familiar with this term?”
He’ll probably say no.
“Basically it means that you are allowing me to take out another loan on the house, and your $70K loan would then be a 2nd mortagage instead of a 1st. Does that sound okay with you?”
If the seller agrees, then you get a new 1st mortgage for $30K, and give the money to the seller. The 1st mortgage is a no-brainer, and any bank will do that loan since it’s only $30K in 1st position.
If that doesn’t work, try to get the seller to agree to a Land Contract with no money down. I don’t have time to explain what that is, but it’s a better legal position than a L/O.
Hope that helps.