Real Estate Investment Financing Strategies : How to get Seller Financing

January 30, 2008 | By | Reply More

Real Estate Investment Financing Strategies : How to get Seller FinancingWhen negotiating a deal, it is usually beneficial for us to get a seller to take back financing on a portion of the purchase price. If you are working with a motivated seller, all you have to do is hold your mouth right.

There are two parts to every negotiation: price and terms. By getting a seller to take back financing, we are working on the terms side of the deal.

Whenever you get to a price that is mutually agreeable, ask “How much of that will you need at closing?” Make sure to emphasize the word “need.” It is not how much they want but how much they need that we are interested in. Next, you set up the payment plan.

We bought a house last summer in Sumter, South Carolina. We made an offer where the seller would be receiving $22K for her equity. We asked her how much of that she would need at closing, and she said $5K. She said this would pay for her move and new apartment. So we told her that she would get $5K at closing and $3K a year towards her balance of $17K until the loan was paid in full.

This saved us from bringing an additional $17K to the table when we bought it and lowered our holding costs. Every payment of the loan goes straight towards principal. That’s my favorite kind of loan.

“Must Know” Tip: Never use the words “seller financing” or “owner financing” in your negotiations. Most sellers will not understand these terms. Once you put someone in the state of confusion, the answer is usually “No!” Get to a price that works and say, “How much of that will you need at closing?” If they want to much at closing, the price is coming down.

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Category: Real Estate Investment Financing Strategies

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