Subject To: What is Seller's Motivation - Posted by howard-nyc

Posted by Mrs SD on December 11, 2000 at 16:37:55:

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Subject To: What is Seller’s Motivation - Posted by howard-nyc

Posted by howard-nyc on December 10, 2000 at 13:57:05:

Other than desperation and they are motivated, what is the Seller’s motivation to accept a ST deal?

They are still on the hook for the payments. How do you handle that objection? What do you say to them to accept such a deal?

tia,
howard

Re: Subject To: What is Seller’s Motivation - Posted by Jay - (Indy)

Posted by Jay - (Indy) on December 10, 2000 at 19:38:49:

Their motivation may be something good like wanting to get into a new home and they didn’t have any luck moving the property with traditional methods. We also get them to make two to three payments after they move out, especially during this time of the year.

Jay

Re: Subject To: What is Seller’s Motivation - Posted by B.L.Renfrow

Posted by B.L.Renfrow on December 10, 2000 at 19:28:02:

If I’m proposing a subject-to deal to a seller, they’ve already got a big problem.

Usually – though not always – that problem is money. As in, they don’t have enough to make the payments. Or, maybe they’ve just found out their tenants have trashed the place and they’re sick and tired of dealing with deadbeat tenants. Or, maybe they just found out they are being transferred cross-country by their employer. While they COULD rent the property, or list with a Realtor, they know that will take time, and in the interim, they will be obliged to continue making the payments.

Whatever the problem, I am offering a solution. I say something like this:

"Well, Ms. Seller, if I could come up with a way to solve this problem in the next two weeks, and get this property off your back, would you be interested? What do you think the answer will be?

While I don’t give them a mini-course on CRE, I just explain that the loan will remain in their name until the property is sold or refinanced. I will guarantee their payments. They can move on with their lives without the problem property hanging over their heads.

Do they agree? At first, rarely. The usual scenario is they will call me back within a couple weeks, and want some more information. I give it to them. Then, they may think about it some more. Finally, they realize I am offering them a solution, which no one else can or will. Then, we have a deal.

Does it work every time? No. But if you do some minimal phone screening before you ever get in front of the seller, then when you’re at their kitchen table, be able to answer their questions and appear credible, more often than you might think the answer will be “yes”.

Brian (NY)

Re: Subject To: What is Seller’s Motivation - Posted by dewCO

Posted by dewCO on December 10, 2000 at 18:09:20:

Howard, there shouldn’t need to be anything else, other than what you wrote, for them to be motivated to do a ST deal. That the the fact that they can’t see their circumstances changing in time to bail them out.

Check out Joe Kaiser’s “Getting ont the same Page with the SEller” in the How to Articles.

Re: Subject To: What is Seller’s Motivation - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on December 10, 2000 at 16:05:13:

Howard,

Now Mr. Seller, we all know that if we don"t make our house payments that we don"t get to keep the house isn’t that right? They call that process forclosure, don’t they? We don’t want that to happen do we?

Now since I will be taking over the payments, subject to your home loan I will have to make the payments, won’t I? You do understand that you and I will both now have some responsibility to see that your loan payments are paid, but if I do not pay then I can’t stay can I? So of course I will pay the payments until the property is sold or paid off and you will not have to worry about it any more, would this be O.K. with you?

This is a purchase agreement, all we need to get this transaction underway is for you to authorize by signing here, would that be agreeable?

Hand him the pen and shut up…

Re: Subject To: What is Seller’s Motivation - Posted by howard-nyc

Posted by howard-nyc on December 10, 2000 at 21:29:47:

That seems like a scenario that would be more common. Especially here in this city, as it is very transient.

I have not attempted ST deals. But, because I live in NYC,the “town of reality”, it just seems that most sellers here would be way to cynical to accept such a deal.

thanks,
howard

Re: Subject To: What is Seller’s Motivation - Posted by Todd

Posted by Todd on December 10, 2000 at 22:41:15:

I say whoop dee doo. Why buy a house when there ins’t any equity. If you say raise the rent or hold on and hope for appreciation then I say look for a better deal because they are out there.

Thanks. - Posted by howard-nyc

Posted by howard-nyc on December 10, 2000 at 21:22:35:

nt

Re: Subject To: What is Seller’s Motivation - Posted by howard-nyc

Posted by howard-nyc on December 10, 2000 at 21:16:43:

Some have mistaken your words purely as they are written.

I can see how this “hard” closing can work in some situations. Seems it would be most effective for those where you get the feeling you have not broken through the “objection” or the “reality has not been realized” level.

Otherwise a “softer” close could be used.

thanks,
howard

This sounds “Snobbish” to me. - Posted by Janet

Posted by Janet on December 10, 2000 at 17:32:02:

I would think you are being pushy at this point and would have my husband physically remove you from the premisis “PRONTO”!!!

I can sell my house to anyone, and if you’re the pushy type then I’ll just simply make another payment and wait for another buyer! I have plenty of cash to wait for my price you see, so pushy people get nowhere in my house!

Janet

Re: Subject To: What is Seller’s Motivation - Posted by JohnBoy

Posted by JohnBoy on December 11, 2000 at 01:25:48:

MOST seller won’t accept such a deal. The ones that are MOTIVATED will accept them if it means solving their problem!

Re: Subject To: What is Seller’s Motivation - Posted by JohnBoy

Posted by JohnBoy on December 11, 2000 at 01:23:31:

Forget about RENTING or waiting for appreciation!

Take the thing and RAISE the selling price to about 10% - 15% ABOVE retail and seller finance the thing at 11% - 12% interest amortized over 30 years with a short term balloon requiring your buyer to refinance and pay you off! Collect $5k - $20k down and sell the sucker on TERMS!!!

THAT is how you buy at retail and make a profit right from the gitgo!!!

Whoop dee doo?? - Posted by B.L.Renfrow

Posted by B.L.Renfrow on December 10, 2000 at 23:10:17:

Who said anything about no equity? Not me. Not the original post either. He asked why sellers would be motivated to sell subject-to and how to answer their objections.

Brian (NY)

Re: Subject To: What is Seller’s Motivation - Posted by Russ Sims

Posted by Russ Sims on December 10, 2000 at 22:49:40:

I beg to differ. While you’re out there looking for a “better deal”, investors like Brian and I will put 3 of these easy deals together: Gross profit? 45k and monthly cash flows of around $600

Janet is an “Authority” type… - Posted by eric-fl

Posted by eric-fl on December 12, 2000 at 09:45:58:

There’s no need to jump on Janet. She’s just an Authority personality type. She would need to be sold on the basis of facts and figures - it might not be out of line to counter her with “I understand you might be willing to make extra payments to get your price and terms. But that might not be cost effective. Let me show you why.” Then, you could show her the cumulative costs of making extra payments, combined with statistics from NAR about how much less likely she is to get her named price, the longer the listing sits. Sort of along the lines of the “your first offer is usually your best offer” philosophy.

Even though you, the investor, are technically buying the house, you are really selling something - ultimately, yourself, but more specifically, the concept of buying subject to the underlying financing.

Now, given of course that you have pre-screened your callers to ensure a level of motivation exists, and you get out there, just because Janet objects to a “hard close” approach, doesn’t make her a bad prospect. It just means she needs to be handled differently, as stated above. In fact, I’d rather the indignant response to the pitch, rather than indifference - after all, objections are buying signals. If she wasn’t considering the idea, she wouldn’t object to it in the first place.

All too often on CRE boards, people are looking for a “magic bullet” scenario, when there is none. You need to have a variety of different tools in your toolbox for dealing with different types of sellers. If all you have is a hammer, every problem looks like a nail. However, someone like Janet is never going to be “hammered” into signing from a hard close - she needs to be massaged, and finessed, into the understanding of the benefits which you are offering.

Re: NOT MOTIVATED - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on December 10, 2000 at 17:46:04:

No problem janet,

If you have money for another payment then you are not motivated, as far as I am concerned. I would have definately determined that before I wasted my time coming to your house.

Snobish, NO. Just prudent. In this business if you are not willing to be prudent, you will soon be broke.

Re: HowTo BuyRetail & make a profit. JohnBoy, - Posted by Mrs SD

Posted by Mrs SD on December 11, 2000 at 11:16:28:

1)Would you sell on a contract for deed, whereby you retain the deed until the buyer cashes you out?

2)If you had the property deeded into trust when you bought it, do you need to deed it out of trust when the buyers obtain financing so as not to raise red flags with the lender?

Thanks,
Mrs SD

Re: Subject To: What is Seller’s Motivation - Posted by Taylor

Posted by Taylor on December 11, 2000 at 01:56:48:

I just love this post. No bull, no crap, no beating around the bush, nothing fancy or complicated. Get in, get out and get on. Thank you Johnboy.
Taylor.

Re: Subject To: What is Seller’s Motivation - Posted by Todd

Posted by Todd on December 10, 2000 at 22:55:32:

Yeah Sure:

Howard never mentioned any numbers. All he wanted to do was buy a house without bank financing. Again not enough information to determine a good or bad deal.