Need advice on potential L/O deal? - Posted by Ear

Posted by Stacy (AZ) on January 18, 2001 at 12:53:59:

Hi Earl. Jim gave you good advice. It really seems this fellow could be converted to subject-to. Tell him you’ll pay all closing costs, and you can close when he needs to move. Instead of giving him the $3,000 as you mentioned before, tell him that you’ll make his mtg payments from now on, instead of starting 60 days from now.

Then, if he says no, make sure to tell him to call you back if he changes his mind.


Need advice on potential L/O deal? - Posted by Ear

Posted by Ear on January 17, 2001 at 11:38:51:

A seller, who bought a 2 yr. old home 12/29/00 has to move out-of-state in about a month for new job in Florida. He paid $147K, pmts $1350/mo. for home, and he interested in my lease/purchase idea. He is willing to do 4-5 yr. L/O, but he wants me to pay $154K, but I told him I could not do that and make a profit. I also told him that my payments would not begin until I found suitable tenant/buyer for home. But of course he wants me take over immediately.

Now he wants to think about it and possibly let me pay him $3K above the loan balance, when the option his exercised.

I am thinking, that I may have lost the deal. Given his situation he does not have many others options available besides listing it and losing money with realtor and closing costs or leasing it out as out-of-state owner.

Is there anything else I could do with this deal other taking it subject to and then make payments getting the deed. Maybe a PacTrust would be beneficial.

Thanks in advance,


Re: Need advice on potential L/O deal? - Posted by JasonTX

Posted by JasonTX on January 17, 2001 at 17:03:07:

Does he realize that Real estate commisions will cost him >8k?

Tell him you will take over payments in 60 days, period. If you have to, offer to give him 25% of the difference between what you buy/sell for. Make sure, however, that he knows it may be 5 years before he sees that money.

But don’t give him any money. Remember, it will cost him 8k minimum to sell with realtor, not counting payments he makes while the house is listed.

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,
Jim IL

Re: Need advice on potential L/O deal? - Posted by Earl

Posted by Earl on January 17, 2001 at 18:02:31:

Thanks, for the advice Jason. Hopefully the seller will call me back after thinking it over.


Re: Need advice on potential L/O deal? - Posted by Earl

Posted by Earl on January 18, 2001 at 10:02:39:

Jim, the seller sent me the following email:


Thanks for spending time talking to me the other day.
I am thinking of total sale of my house before I leave
for Florida. I am ready to sell it for whatever I
bought it (147,000), provided all costs of closing is
born by the buyer.

Please let me know what you think.

Thanks and have a great day."

What do you think?


Re: Need advice on potential L/O deal? - Posted by Earl

Posted by Earl on January 17, 2001 at 17:58:57:

Thanks for the info. Jim. The seller has to think about it and get back to me. I spoke with over the phone about the possible solutions to his problem. So, I guess I will have to wait and see now.