Dear Steve
Thanks for the lunch invitation. Do you know that I now live in North Carolina?
You want to know how to find a seller to hold a mortgage for for you. The truth is it is harder to do than it was when I was young. The reason it is harder today, is because it is harder to talk to sellers than it was then. It is still very possible. I know it is still possible because I sold a house that I owned six months ago. We were happy to hold the mortgage. I recently sold a lakefront lot in Carolina to earn a commission. The owner held the mortgage.
https://www.youtube.com/watch?v=Dbg8GFXH2To
If you are buying a house through a Realtor, they usually do not understand. If you want to find a Realtor in your area that does understand, go to www.biggerpockets.com . You can learn a lot at Bigger Pockets.
If you ask a Realtor,"Do you think the seller will hold a mortgage?", nine out of ten Realtors will reply ,"No". They won't ask the seller. They have never asked the seller. You have to learn how to ask the Realtor. You ask the Realtor,"If I put $100,000 cash down on this $150,000 house, do you think the owner would hold a mortgage for the other fifty thousand?".
Most laymen and most Realtors assume that, if you ask about owner financing, you want the seller to hold 100% mortgage. They also assume that you do not have the financial wherewithall to go to the bank. Neither of these assumptions are necessarily true.
The best thing to do is to talk to the seller directly. If you are dealing with a forsalebyowner, this is easy. Use the same technique when talking with them.
Idle chit chat is a wonderful thing. Is your house paid for? That is a nice question. Oh, it is not. How much do still owe? Just chit chatting. Is making payments on this empty house a financial burden for you? Where are you probably going to invest the proceeds of this sale? Chit chat.
What do you think? If a couple is living in a free and clear house, do you think they are broke? Do you think they probably have a lot of money invested elsewhere? If this is a vacant rental house that the seller owns, why would he NOT want to hold a mortgage for you? There is only one reason I can think of. He is trepidatios about you making the payments. How can we make the fear go away? Ask him. More down payment is the most common answer.
Talk to Mr. Seller. Ask about his kids and grandchildren. Shoot the breeze. Ask him about his hobby. Ask him if he owns other investment property. Ask him if owning investment property and being a landlord has been a pleasant experience. Ask him how he got started. If you own other rentals with owner held mortgages, mention that in conversation. Make him a firm offer. Offer him an interest rate that he can not get at the bank. A savvy investor will understand that 5 or 6 per cent is pretty good rate in today's world. An unsophisticated investor may still want "the cash". What are they going to do with all that cash? Whatever it is, they can do the same thing with your payments. Which inheritance would be more beneficial to your twenty year old grandson , $50,000 cash or $350 a month for the next thirty years? That fifty grand would not last two years. Explain that gently to Mr and Mrs. Seller.
Often, when a house is listed with a Realtor, it is hard for you, a layman, to talk with the seller. A listing Realtor and a selling Realtor are bound by MLS rules and Association of Realtors code of ethics. You, as a layman, are not bound by any such rules. Talk to the seller. You are not breaking any rules. That is how Kathy and I bought the house that we currently live in in Carolina. We rode past the house and saw the Realtor's sign in the yard. The sellers were sitting on the front porch drinking Busch Light beer. We stopped. We drank a Busch Light. Rick and Murl and Kathy and I negotiated the deal right on the front porch. We called the listing agent. She drew up the paperwork. We all went to closing.
Realtors discourage their sellers from talking to buyers. Some listen. Some do not. You, as a layman, can talk to to the seller directly. Why would you not? Most Realtors do not want the seller and the buyer talking to each other directly for fear that the transaction may happen without the Realtor getting paid. You be certain that that does not happen. The listing agent has earned his commission as soon as the listing is signed. Do not suggest to the seller that that commission does not need to be paid. That will get you sued. It will not get you where you want to be, a house owner with owner financing.
You, Mr. Layman, are violating no law or rule to talk to the seller directly. Your real estate agent would be violating the rules of the MLS if he talked to the seller. The listing agent may discourage the seller from talking to you directly. I do not understand why. If it is my listing, I just want to go to closing. Every Realtor does not feel that way. The good news for you, as a layman, is the listing agent would have no reason to call or contact you directly. That would be a violation of the rules of the MLS.
Show the seller this article.
http://rondclimer.blogspot.com/2015/01/can-owner-finance-house-in.html Let the seller know that your payments will will be on time every time. Get the seller to like you and trust you. That is another article.
Remember this. Some will. Some won't. So what? Next. You may have to talk to a lot of sellers to find one. You may find the first seller you talk to is ready. You have to kiss a lot of frogs before you find a handsome prince.
Also, you need to educate yourself. Read about owner held financing. Study it. Talk to people that own mortgages. Ask them how they like it. Almost all will tell you they like it. If interest rates go back to 12%, that might change. In today's economy, holding a mortgage is a good idea for any seller that doesn't need the money to pay next month's bills. You need to be able to explain the benefits of holding a mortgage to the seller. Unless you are in Hendersonville, North Carolina, you will not have me as your Realtor. If you can find a Realtor that does understand, your problems are over. Good luck with that.
http://ronclimer.blogspot.com/2014/03/where-do-you-find-sellers-that-will.html
You need to believe in holding a mortgage. Start looking at houses and talking to sellers. You won't believe where it leads you. Call me anytime if you need or want specific advice.
www.ronclimer.com
