What can I do with this Prop/Owner - - UPDATE!! Help me land my FIRST deal! - Posted by JB in MD

Posted by Bill K. - FL on June 04, 2000 at 07:55:22:

First of all you have to decide what your plans are for the property. Are you going to live in it or are you going to find a t/ber and ultimately sell it? How long do you want to be involved? Structuring the deal depends on the answer to that ques. That is where you have to start. Also remember in your offers in general, pigs get fed, hogs get slaughtered. Don’t get too greedy/blow the deal by upsetting the seller with low balls unless your paying cash and closing quicly.

What can I do with this Prop/Owner - - UPDATE!! Help me land my FIRST deal! - Posted by JB in MD

Posted by JB in MD on June 04, 2000 at 01:03:45:

Hi all,

I took Brian’s advice and went to see the owner today. As I orginally stated, they wanted 144k for this 3/1 1942 Cape Cod on a nice size lot, which I originally knew was over-priced. They had come down to 139.5k, with no luck. Now sitting at 134k and VERY open to offers (can you say MOTIVATED?). They had a RE agent stop by today and show her goods. They are about to consider her offer to list because they have had no action FSBO. They have made the payment for two months now, and can only do 1-2 more. They are very motivated because they are moving to CA soon and don’t want to leave this burden behind. The have had many people ask to rent - lights went off in my head that said this should be a good OWNER WILL FINANCE deal. So this was the first offer I have ever made; I told him that I owned a small REI company and that the only thing I could do with this property would be to lease it from him for a year and then exercise my option to buy. Actually, I am interested in living in it, but I have not pinned that down yet (nice big back yard for my two Labs!). As I said earlier though, this place does need a reasonable amount of updating. I would guesstimate that $2500 would cover it (bathroom gut and redo, kitchen flooring, appliances and cabinetry, and paint for 5 rooms). This place has gas range, oil heat but no cooling system.

I imagine that I could offer a low number ($120k) and not be haggled back up to much more than $125-126k (6% off).

What would you do? Come on you guys, help me land my FIRST deal!

Thanks all,


Re: What can I do with this Prop/Owner - - UPDATE!! Help me land my FIRST deal! - Posted by Vic

Posted by Vic on June 06, 2000 at 03:07:14:


I think you’d better reconsider your updating costs. Do you really think you’re going to completely redo a bathroom, add kitchen floors & cabinets & paint 5 rooms for only $2500, plus add new kitchen appliances?
I have a feeling you’re looking at considerably more. Just appliances alone can run you $2500 or more.

Seems like you might want to get an estimate so that you don’t end up with a bad deal.


Need more info… - Posted by Mark (SDCA)

Posted by Mark (SDCA) on June 05, 2000 at 11:29:18:

What is the current loan balance? Payments?
What is the fair market rent on a LO?
Subject to might work, depending on how much they owe… It’s worth a shot anyway…


Re: What can I do with this Prop/Owner - - UPDATE!! Help me land my FIRST deal! - Posted by Jim IL

Posted by Jim IL on June 04, 2000 at 13:18:33:

Since this is your first deal, possibly, you may miss a few things in preparing to answer seller objections or concerns.
So, my advice would be to go ahead, try to get the deed, and when/if that fails, keep on the seller about doing a L/O.
Get a term of 24 months minimum, and make it renewable.
Also, look in the archives here, or the articles, and get a copy of Matt Bowmans F.A.Q. sheet for Sellers in a L/O.
This will answer the most common questions/concerns of the seller.
I just used it to get a seller to go along with my plan.
He was skeptical, and after reading the F.A.Q. sheet, (not Matt’s I used his as a template and added my own stuff to it, thanks Matt!), he went along and I now live in the home.

Basically, your job now is to answer all the sellers concerns and give them the confidence to sign with you.
Show them that you are someone who performs.
Give them some references if needed.
They need not be REI references, but some from people who will “Vouch” that you have integrity and will do as promised.

Good luck, and get it signed,
Jim IL

Re: What can I do with this Prop/Owner - - UPDATE!! Help me land my FIRST deal! - Posted by B.L.Renfrow

Posted by B.L.Renfrow on June 04, 2000 at 08:23:12:

Hi Jason,

Glad to hear you took the suggestion to go sit down and talk with the seller! That’s always a good starting point:-)

From what I gather, it appears the seller’s real NEED is to be rid of the monthly payments so they can relocate, as opposed to a need for immediate cash. With that in mind, how about a subject-to offer, where they place the property in a land trust and you “assume” their loan? Although it may sound intimidating the first few times you read about it, that is not difficult to set up and can be done fairly quickly.

To know whether this is a viable option, you need to know the seller’s mortgage balance(s) and the amount of their monthly PITI payments.

If the seller has significant equity, how about seller financing, or a land contract? Or, if none of the above will fly, your idea of lease-optioning from the seller is certainly reasonable…although I would try to get a 12 month term with at least two renewals. If you go this route, you want to be sure your financial situation will permit you to obtain financing to exercise the option down the road.

I don’t recall what you said the comps run in your area, but if the $134k is significantly under FMV, I wouldn’t push too hard on that, especially if you are not offering cash at closing.

Now, it is your job to convince the seller why your offer is better than listing with a broker. You do that by doing your homework, projecting confidence and acting like you do this all the time, even if it is your first deal. Anticipate the questions the seller will ask, and answer them up front. Mostly, they will be concerned about what will happen if you don’t pay, and they will want assurances you will do what you say you’ll do.

You can point out how, by doing this deal with you, they can have this problem solved at once and get on with their move to California…while listing with the broker may mean MONTHS of waiting…and WHO is going to make their mortgage payments while they are waiting for a buyer? Certainly not the broker! And since they don’t want to be landlords, discuss how they won’t HAVE to, if they accept your offer. Describe how you will take care of the property as an owner, be responsible for all maintainance and repairs, and all they have to do is watch their loan balance go down.

Brian (NY)