FSBO : owner financing? - Posted by todd

Posted by B.L.Renfrow on May 05, 2000 at 08:01:17:

First thing is to talk with them enough to know whether owner financing would even be a viable option. As I said, it depends on their needs. If the seller needs cash for Aunt Lizzy’s brain transplant, there’s no point in discussing alternatives to an all-cash sale.

If it sounds like something which might be do-able, I will tell them there are several ways I can buy their home. I will always discuss an all-cash sale (at a severe discount, of course). I will talk about subject-to, if that is a possibility. I will present owner financing as something which will give them more money than any other scenario, but they will get it over time. I talk about how they will be the bank, and they will be getting all that interest, not some greedy bank. I will actually write down how much they stand to receive over the life of the loan, in big figures, and put the pad in front of them.

Then I shut up. When they ask about the security of their loan, and what happens if I don’t pay, I explain (and they WILL ask. If they don’t, then I bring it up). Of course, I tell them first off that since I am in a small town, if I made promises I couldn’t keep to home sellers, it wouldn’t take long before no one in town would do business with me. That is very true, and they can usually see the point. I tell them how if I did default, they could get the property back and do it all over again and keep whatever they had received. Naturally, I keep hammering the point that that is about as likely to happen as aliens are to land in their front lawn.

The typical response is to say no, or they will think about it. That’s fine. I tell them to call me if they have any more questions. Most do. I will leave them with a sheet from my legal pad with the three alternatives summarized, making sure the money figures appear prominently. The longer they stare at that high figure (the owner-financing one) the more likely at least some of them will go along with it.


FSBO : owner financing? - Posted by todd

Posted by todd on May 02, 2000 at 21:50:48:

I noticed on many FSBO listings, under finance terms, they have “No Owner Financing”.

are these people unlikely candidates to be motivated sellers? or is this not always the case…?

Re: FSBO : owner financing? - Posted by Douglas

Posted by Douglas on May 04, 2000 at 19:07:31:

When explained correctly…it is an interesting option. Especially for those who are having difficulty selling. Some of them fear holding Paper and no cash involved. Like no money down. There are Owner Finance programs available that offer them more cash at closing than they would get via a Realtor. Private Investor groups can Fund for cash and do it quicker and simpler than a Bank. Why wouldn’t they be interested in something that can sell their house in two or three weeks for full Appraisal value? They just need someone to show them the features and benefits.

Motivated sellers? - Posted by B.L.Renfrow

Posted by B.L.Renfrow on May 03, 2000 at 08:07:11:

Maybe, maybe not. You won’t know until you talk with them and find out what their needs are. Many FSBOs just reflexively assume all owner financing is risky, and therefore, bad.

But it depends on their needs. If they have an absolute NEED (not WANT) for a lot of cash right away, it’s probably a waste of time to present an owner financing offer.

On the other hand, if their objection is based on assumptions and biases, not need, then what I will do is sit down with a pad of paper on the table in front of them and describe the owner financing process, and actually write out how much money they will receive over the life of the loan. That tends to get their attention.

Bottom line is, you won’t know unless you spend some time talking with them.

Brian (NY)

Re: Example - Posted by sls

Posted by sls on May 04, 2000 at 09:10:51:

Would you be so kind to give an example of how you describe the owner financing process to a seller?