easing a seller's mind - Posted by Bryan H (ny)

Posted by Jim K on July 17, 2001 at 18:26:32:

Steve, do you take over loans subject-to if the second is a Home Equity LOC? I’ve asked this question up above (here’s the link).


I’d be interested in what you do in these cases.


easing a seller’s mind - Posted by Bryan H (ny)

Posted by Bryan H (ny) on July 16, 2001 at 12:52:27:

After talking to a not so motivated seller this weekend, I have a question for those who have been through this a lot:

What assurances can we give to sellers that they are protected? Especially concerning sub-to deals. These deals are designed to protect us, the investors, but what can I tell a seller about the chances of me screwing up and making something come back to haunt them?

This seller I talked to wants NO possibility of having anything to do with his properties ever again. I told him that, if for whatever reason, something went wrong and the bank didn’t get paid, that he could ultimately still be held responsible.

How have you guys broken this news to your sellers? I’m not the salesman type and have a tendancy to be too honest, so I think I’ll probably end up scaring off quite a few deals unless I can explain away the possibilities. My main concern is how do I convince sellers that these methods aren’t scams without any experience and references to back up my claims? It seems to me that even motivated sellers will want some kind of assurance that they aren’t being ripped off.

Or are there really people out there who are so desperate to solve thier problem now, they don’t care about the possibilities down the road?

Re: easing a seller’s mind - Posted by SteveC_GA

Posted by SteveC_GA on July 17, 2001 at 08:08:30:

One great avenue to ease the seller’s mind is the Internet. Many mortgage companies have a program setup via their Internet site where they will send an email once a payment is received. I have several “subject to” deals with a Countrywide loan underneath. If a seller is still worried about the payment being made, I simply explain to them that we can set it up where they will receive an email from Countrywide everytime a payment is received.

This has helped me close two deals at least.

Hope this helps. Good Investing!

Steve Case

Re: easing a seller’s mind - Posted by Jim FL

Posted by Jim FL on July 16, 2001 at 16:15:18:

Another approach would be to let the seller know that you make your living this way, and you would never let just one deal jeopardize your livelyhood.
Surely if you were to default, the seller, could sue you, and also spread the word that you are not a good person to do business with. They could file complaints with the BBB, the county, the city, and anyone else who would listen, thus destroying your business.
And having ONE deal kill your whole business would simply not be worth it.
When it comes to the seller who STILL objects, or has “Concerns” I may offer them some sort of a backup plan.
First, we explain (this is for subject to deals mostly) the reason for the trust. One of them is to protect the home from further liens etc.
Since the home will be in a trust, I sometimes offer to have the trustee sign a quit claim deed to be held in escrow with language stating that it may only be executed IF I fail to perform according to our agreement.
I also add language to the purchase and sale agreement to cover this.
I usually add something that says essentially that I will maintain the payments, and the seller can check up via the lenders 800 number or website as to the account status.
I go further, and place in the agreement that IF I get 60 days behind on payments, the seller must notify me IN WRITING within 30 days of that, giving me 30 days to correct the problem and bring the account current, or the home gets deeded back to the seller.
99% of the time I’ve done this, the seller has left the “quit claim” deed with me, and I do have them.
The seller is really just looking for re-assurance that you will perform, and if you show them you are willing toback yourself up, they will relax.
Bottom line is that the want re-assurance, but they really do not want the home back either. Just talk to them and address the concerns with honesty. If you really feel you cannot perform, then do not sign the deal up in the first place.
And if this does not ease the sellers mind enough…NEXT! they were not motivated to start.

And on some occassions, a “performance mortgage” is a good tool as well.
Check out www.legalwiz.com for info on that.

Jim FL

Re: easing a seller’s mind - Posted by Jay - IN

Posted by Jay - IN on July 16, 2001 at 14:03:42:

You might also tell them that in a worst case scenario that you could hand the deal over to another investor who is in a better financial position or you could just lower the price and sell to your tenant buyer for the loan balance if you got real desperate and just had to move the property quickly. Another option would be to refinance the property into your own name if you wanted to save the deal.


Re: easing a seller’s mind - Posted by Tom

Posted by Tom on July 16, 2001 at 13:02:48:

I tell them that if we do this deal, I’m going to sleep at night. And if we don’t do this deal, I’m still going to sleep at night. And if they can’t sleep at night, then they shouldn’t do this deal.

I also explain that my payday comes when I close out the house in the future. Why would I work all week and not show up on Friday to pick up my paycheck?

Yes, Virginia, there are people out there who are motivated, and who won’t ask this question.