Re: Need advice on potential L/O deal? - Posted by Jim IL
Posted by Jim IL on January 17, 2001 at 16:13:58:
There are several ways you could buy this house.
It all depends on how well you convince the seller to go along with your plans.
Since he is already open to a L/O, I’d try to go that route first probably.
(although honestly, if I was meeting the seller for the first time, I’d go for the deed.)
Since he is willing to let the home go for $3k over mortgage balance, write the L/O that way.
Make the price be “Mortgage balance at time of close plus $3,000.00”.
This way as payments are made, your price goes down a bit.
As for taking over payments right away, I’d explain it to the seller like this.
“Mr. Seller, we make our profit on this type of deal when our T/B’er purchases the home. Therefore we want to get the very best quality T/B’er in the home we can. We want to find a T/B’er who will be able to get a loan and buy the home in a reasonable amount of time, as I’m sure you do as well. Further, we want to find a good quality T/B’er who will take good care of the home until the buy it.
If we are forced to make payments right away, we may feel rushed and have to put in a T/B’er quickly, this not being able to screen them as well as we’d like.
Since neither of us wants to get a sub-par tenant/buyer in our home, we need some time to market the home properly and obtain a quality T/B’er.
I unerstand your need for the debt relief from this payment, and also understand some of your options.
With that said, I am prepared to offer you the price that you have requested, mortgage balance plus $3k, and our payments to you starting in 60 days.
I know you could just list the home for sale with a RE agent, but as they sell the home will they make any payments at all?
We will, and we are telling you now when that will be.”
After this, sit back and let the seller think a minute and then see if they have any other objections.
Remember, you are negotiating with this person, so be prepared to answer objections, and do so without hesitation. Make yourself sound confident and knowledgeable.
I usually tell people that I do this full time (I do), and that based on my experience with deals like this, the 60 days until payments start is the norm.
You may add into the agreement that IF you secure a T/B’er before this 60 days is up, your payments to the seller will start then.
This may help the seller agree as well, because you appear to be compromising with him.
And if the seller will still not play ball, move on.
Unless of course you are confident you can get a T/B’er in quick enough to not have too many payments to make, and that they will have enough option money for you to offset the expense.
Just my $.02,