Posted by B.L.Renfrow on March 06, 2000 at 20:30:17:
Not all of them are; in fact, the vast majority of callers on my L/Os don’t have ANY money available! However, even the most unsophisticated T/Ber “knows” they can’t buy a house without a downpayment, which especially if they have credit issues, they have probably been led to believe they will need up to 20% up front. So, when they see they are able to get into a house and move gradually toward ownership for considerably less than 20%, they are thrilled.
However, I just did one for 2% option consideration. In that case, the place had been vacant for 3 months and I was about to the point where I would have taken a note for their children’s bicycle just to get someone in the home! At the Creonline convention recently, I was talking with others who have had good results by taking a smaller up front option consideration and the rest in a personal note. I had not previously considered that, but might be worth a try.
Generally speaking, this is a great time of year to have L/Os available, as people have income tax refunds which they will gladly hand over as option consideration.
I also use rent credits - generally $100 per month for every month they pay on time - which my option agreement with the T/Bers specifies will apply either to the downpayment or purchase price, at the discretion of the lender/T/Ber upon exercise.
In any event, I have had good results when “justifying” the option consideration by explaining that the money will be working for them, helping them eventually to buy, either by contributing to the DP or lowering the purchase price. But again, probably 90% of my callers have no money at all available. It’s the other 10% I want to be working with.