"Motivated Sellers" Back out!!!! - Posted by Jim

Posted by JoeKaiser on February 24, 2001 at 01:00:47:

Close enough.


“Motivated Sellers” Back out!!! - Posted by Jim

Posted by Jim on February 23, 2001 at 11:20:31:

I had a seller, just yesterday call on my I BUY HOUSES ad. The lady was just about in tears telling me how they are 4 months behind on payments on their 1st and 2nd mortgages and that they needed to just get out!. They didn’t want a foreclosure to take place and really wanted help.

I’m thinking YES!!! finally! I got me one of those really motivated sellers who will sign away.

I arrive at the house and check it out. Looks really nice. Needs nothing as far as repairs go and is in a lovely neighborhood.

We go over all of the paper work and they say it all looks good. (I’m even offering them $2600.00) that they said they would need to get themselves into a rental house! (That was a big concern for them) and I offered it.

Then they ask, can we talk this over between ourselves overnight? I granted their wish but scribbled over the numbers so they couldn’t be read (So they can’t shop my offer) and left the house.

We went through everything, from the Purchase & Sale Agreement to the Land Trust, The Deed…Everything! and I asked them many times over if their were any questions that they might have and they said no. They were actually very thankful that I had been available to them to solve this problem.

I get a call this morning. Hi this is Mr. Seller. We sat up all night discussing this offer and we’ve decided that it’s something we can’t go through with right now. WHAT!!! (These people are 4 months behind in their 1st & 2nd mortgages!!! and they can’t do this right now! They don’t want a foreclosure on their record and they can’t do this right now! {{{{{{{WHAT AM I MISSING HERE}}}}}}}}}

SIde Note: The house comps out right at about what their mortgage balances are. They tried listing previously with a Realtor and could not sell because of the markup needed to get their commission.

Is this a weird story or what?

Maybe the good Lord was on my side in this deal as well. Hey, 4 months behind on a $1016.00 payment and 4 monts behind on a $350.00 payment plus the offer of $2600.00 cash to the seller.

That is not really getting in “Light” as a matter of fact, thats $8064.00 plus the added fees and what ever else is addded. The houses comps out at $130000.00. So maybe it was better it happened this way.

What do you guys think?

Still Searchin for Deal #1


Re: “Motivated Sellers” Back out!!! - Posted by Lisa in VA

Posted by Lisa in VA on February 23, 2001 at 22:17:07:

Don’t forget to send them a thank you letter. You know ol’ Joe K. would have had one to them before thier heads hit the pillow.

BTW I am facing a similar situation as you. I was told to present everything up front, but I kinda gotta go with Joe. Feed it to them in manageable portions. You know a realtor only presents to you the offer to purchase with the terms loosely outlined. It is not until you go to closing do you get about 50 different documents to sign. You can read them there. I too do my deals via a Land Trust but have decided to present the offer to purchase with the terms listed below.

Happy investing

Not a weird story at all - Posted by B.L.Renfrow

Posted by B.L.Renfrow on February 23, 2001 at 15:16:46:

Sellers facing foreclosure are often not the most rational people in the world. A common response is to stick their heads in the sand, decline a perfectly good offer, and think a miracle will happen at the last minute to save them.

I’ve had it happen many times. Sometimes, they will call you back in a week or two. (If that happens in your case, I’d tell them you have reconsidered and it does not make sense for you to give them any money. And, I’d try to do as one of the other posts suggests, and buy the second from the lender.)

Other times – not infrequently – they will just sit there until the sale is completed on the courthouse steps and all of a sudden they’re facing eviction.

Why? Who knows? Human nature is funny.

Brian (NY)

Re: “Motivated Sellers” Back out!!! - Posted by Jeffers CT

Posted by Jeffers CT on February 23, 2001 at 14:38:05:

I’d be inclined to think that they may have conferred with a third party (family member, friend, etc.) and they cast a shadow over the deal.

But, you’re right, unless the equity was huge, you were in too heavy.

Re: “Motivated Sellers” Back out!!! - Posted by Nater

Posted by Nater on February 23, 2001 at 12:29:15:


I’ll echo what both Stacy and Joe said. Definately a good deal to learn that lesson on.

This deal is WAY too skinny for me to approach it the way you did…especially with the payments on the first and second being that high. I don’t know about rents in your area, but in mine that deal would be everything I don’t like: money out of pocket, negative cash flow, and no equity. Yuk.

With a deal like this, depending on how much equity could be gained by owning the second, I would look more at the approach of discounting the second for pennies on the dollar, then taking the property subject to, in a trust. Catch up the back payments on the first, and you’ll probably have less in the deal (especially with your offer to put cash in their pocket!) and no second eating up all the equity.

Re: “Motivated Sellers” Back out!!! - Posted by Stacy (AZ)

Posted by Stacy (AZ) on February 23, 2001 at 11:37:21:

Jim, not the best numbers I’ve ever seen. Probably better to skip it. But, you gained invaluable experience presenting your offer. Pat yourself on the back for taking action, think about what you learned from this deal, and get back in the saddle.


No wonder . . . - Posted by JoeKaiser

Posted by JoeKaiser on February 23, 2001 at 11:34:25:


Rule Number One . . . never overwhelm the seller. A one or two page purchase and sale agreement gets signed on the spot. Done deal.

You lay a half dozen documents on top of that and they’ll “have to think about it” almost every time.

Get it signed off today and handle the actual paperwork tomorrow.


Explain Please - Posted by Troy C.

Posted by Troy C. on February 23, 2001 at 18:48:09:

Can you please explain buying the second from the lender and how that would benifit the buyer. I’ve also heard people tell me to get the seller to get another mortgage at the time of sale. I don’t understand why any seller would get another mortgage and why a buyer would want them to.

Check This Out Joe! - Posted by Jim

Posted by Jim on February 23, 2001 at 16:44:57:

This is what I don’t understand. There are so many mixed opinions.

I really truely respect them all but what is one to believe?

Check it out.


I’m totally confused! - Posted by Jim

Posted by Jim on February 23, 2001 at 13:27:15:

Some people on this forum say get everything signed NOW!

You’re saying get em all signed TOMORROW!

I respect everyones great advise here but what’s right and what’s wrong?



If not now then when…? - Posted by osirus

Posted by osirus on February 23, 2001 at 13:10:15:

If you intend to put the property into a land trust then when is the appropriate time to speak with the seller about it if you do not want to overwhelm them when they are signing the purchase contract?

Re: Explain Please - Posted by B.L.Renfrow

Posted by B.L.Renfrow on February 23, 2001 at 19:53:03:

Sure. Let’s pretend you’re Larry Lender. Binky Borrower owns a house worth $100,000. He has a first mortgage with a balance of $70,000 and a second mortgage for $20,000. Binky loses his job, goes to Vegas, and promptly falls behind on his payments. He misses 3 payments on each note. The first is about to begin foreclosure proceedings. You, Larry Lender, know that if the first forecloses, your second mortgage will be wiped out. You’ll get nothing. Zilch. Irma Investor comes along and calls you up and offers to buy your second, with a balance of $20k, for, say, $2000.

What are you going to do?

Well, $2000 is better than $0. So you tell Irma you’ll sell your note to her and she sends you $2k. Now, what does Irma Investor have?

Answer: she has a house worth $100k on which she owes $70k. She has spent only $2k (of course, she will have other expenses, but we’ll disregard those for this illustration) and she gets $30k instant equity. She has Binky deed the property into a land trust and assign her beneficial interest. She brings the first current and sells the property to a buyer for $110k on a land contract.

As for having a seller get another loan at the time of sale, here’s another illustration: Binky Borrower has that same house, worth $100k, but now let’s say he owes only $60,000. His pregnant girlfriend has just moved across the country to star in the latest Hollywood masterpiece. So Binky is definitely a motivated seller, since he can’t wait to join her. Binky is willing to sell Irma Investor his house for $70,000. He needs $10k cash to move to Hollywood. But Irma doesn’t have $10k, and if she did, she has better uses for it than giving it to Binky right now. So she suggests Binky go get a second mortgage loan for $10k. She will then take title subject to both the existing first AND the $10k second. Binky has his $10k, and Irma has a house worth $100k on which she owes only $70k – with NONE of her own money out of pocket.

Hope that makes sense. If not, let me know and I’ll try again.

Brian (NY)

Re: Check This Out Joe! - Posted by Rick(CA)

Posted by Rick(CA) on February 23, 2001 at 18:18:34:


It’s not unusual, what just occurred. It’s called the Ostrich Syndrome. It happens all the time with people falling behind. It’s happened to me.

Sometimes we get so excited about getting a deal that we get “married” to the deal. Unfortunately, what you had was a nervous “bride”. Dont’ fall in love with the house or the deal. If it works, terrific! If not, Next!

It sounds like they got scared. Just relax, and keep looking for your next deal. Who knows? They may come back to you in another month and then you can change your numbers (offer them less) since they waited.

I think what Joe was referring too, was they may have been overwhelmed with all the paperwork. I believe he was just suggesting that you get the initial contract signed right then and there before they back out. THEN, you can present all the other paperwork after you do your due diligence.

Hope this helps. I know it’s not easy losing out on a deal like this when you’re hungry for your first one. But, this board has many archives about sellers who come back later and say OK when you thought the deal was dead.

Re: I’m totally confused! - Posted by Matt B

Posted by Matt B on February 23, 2001 at 13:31:17:

While I am not be on the same page as Joe here, I think I understand why he said what he did. If the seller is going to sign right now, go ahead and get all the paperwork taken care of. However, if they want to look over the paperwork and “think about it”, you should give them the purchase agreement only. This is less for them to read and get confused or worried about. Feel free to correct me if I’m wrong, Joe.

later . . . - Posted by JoeKaiser

Posted by JoeKaiser on February 23, 2001 at 20:44:03:

Once you have a signed off purchase and sale agreement, you advise the sellers that they’ll be receiving the transfer documentation within the next few days.


Re: I’m totally confused! I’m not Joe but… - Posted by evelyn (FL)

Posted by evelyn (FL) on February 23, 2001 at 14:15:40:

I think you’re right. I’m that way also. The more you have to look at, the more you have to ponder over.


purchase agreement - Posted by AWWMi.

Posted by AWWMi. on February 23, 2001 at 23:25:31:

Joe, so by getting the purchase agreement signed first this also ‘ties up’ the property to you for however much said time? This leaves you time to research your’due diligence’ and if you don’t like it, they get their $10 earnest deposit and you go skin another bear? Am I close? …

Re: I’m totally confused! I’m not Joe but… - Posted by Terry (Houston)

Posted by Terry (Houston) on February 23, 2001 at 15:01:41:

My thoughts are that you get the offer accepted.

That is a two or three page form. It is assumed at this point and time you have discussed that you are going to make the payments etc…

You leave, with the signed contract, after you set up the ‘closing’ date. Go do your your due dillegence and
then return with the rest of the paperwork. At that time the contract is signed.

If it is a real motivated seller then yes you may try to do everything then. But if they are that motivated they don’t care.

one problem - Posted by David S

Posted by David S on February 24, 2001 at 19:42:27:

it’s YOUR 10.00 consideration, not theirs.

David S