Sub-to Dealing With "seller Concerns"
I have 5 potential sub-to deals in the works with VERY motivated sellers, most of whom were transferred out of state. All of the properties are nice homes in nice areas, on the upper end of the median home price for my area. My question is - they are all getting REALLY hung up on the "what if you don't pay - then what" issue. I want to think out of the box, and was considering offering them a land contract or lease-purchase instead. Any ideas on how to REALLY handle this objection or do you think I'm on the right track with changing the program? I prefer to do the sub-to for obvious reason, but don't want to get "tunnel vision" if there's a good deal to be had. Oon all properties, my exit strategy is to L/O to tenant-buyers.
Thanks!
Points to touch on:
-use a loan servicing company
-reserve at loan servicing company
-you'll refinance the house if need be
you are likely not dealing with sellers modivated enough.
on the "then what" if they want the loan closed at some point nego. a time frame that is acceptable to the seller and you. if the deal is sweet enough.......km
OK, What happens if you don't make the payments on a L/O or CFD? They start a legal procedure to remove you from the property, and get it back.
They are not asking you to teach them about how the legal system works, or the procedures to follow in the event that this happens. They are really asking you if they can trust you to do what you are saying you will.
All of the above answers are excellent. Don't forget to get testimonials from former clients as you take care of people. They are a valuable tool for you to use along the way.
It's interesting though. The more confident you become in this business, the less this will come up as an issue.
All - very good advice! One of the sellers is asking for me to make a down payment. Another wants to know why I don't just go out and get a "traditional mortgage" and buy the property. Perhaps the issue is truly motivation. Previous testimonials are a concern because this would be my first "true" sub-to deal. I have been landlording in all other transactions, and obtained traditional financing. I have taken the attitude that " I don't need to buy - you need to sell" but of course have not presented it in that way to the seller. Does the loan servicing company make a big difference? They all want to know what their recourse will be - they have a mortgage with no property as collateral.
Oh one more thing - if I decide to cash them out in a specific time frame - would the bank consider it a refi? I assumed they would but want to verify. Thanks!
"Why WOULDN'T I pay? This is my profession and is how I feed my family. "
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Yes! That is exactly the statement I used - this one deal, that I prefer above the others because of the price and location, is one where they are having a house built and need to know their house is sold. I asked that question "why wouldn't I pay?" and you can imagine, "yes but what if you don't... blah blah" and we have no collateral. etc.....
I have told all of them that it sounded like they were uncomfortable with the deal, that I didn't want that, and that they should continue listing their home and hope it sells. Three of the four are still calling, wanting me to somehow "guarantee" that I'll pay. Obviously I can't do that, but..... what IS their recourse? They wouldn't be able to sell the property then, correct? Can I include a clause in my agreement of sale that states that if I don't pay, the trustee of the Land Trust is directed to quit claim deed the property back to the seller?
Never give the Seller the impression that you have to do this deal. Sometimes saying, "Here's my card. If you change your mind, give me a call" and walking to your car will do the trick. If not, call the Seller back in 30 days.
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"if i can do this and truthfully i am not sure its a good deal for me and if i can't i'm sure you have other options at this time right?" keep control remember you can walk away they can't. lead them to answer your questions the way you want ......km
I don't have Locke's Course, but I hear it can't be beat, especially to learn about "negative selling."
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Wow, another one dropped off this morning. The guy called his mortgage company, who talked him out of the deal. I did purchase Randy and Charlie France's Subject-to course and thought it was great - but right now I think I need to give myself a pep talk. I know I just need a few successful deals under my belt, and I can see how this business is not for the weary-hearted.
Thanks all, for the advice and encouragement.
When you sign the purchase contract stating you are taking over their payments, you are guaranteeing payment on their mortgage. Their recourse is to sue you for breach of contract.
Tell them what will happen if you don't make the payments.
1. The lender will take the house away, so you lose all the money + time you have invested in the property.
2. The sellers will sue you.
3. The tenant-buyers will sue you.
4. Your companies' reputation is severely tarnished.
Then tell them: you want the mortgage paid off even more than they do because that is when you make your profit (when the tb's refinance). Also use an LSC where they can go online and immediately see their payments being made.
I feel your pain BRO, sub2 deals are sometimes hard to do. Evan with a motivated seller. I lost out on a nice deal in Georgia, because this lady refused to do a sub2 on her home, and this was the best option for her at that time. She had less then five days before the auction was to be www.done.Guess what happen next, you gut it, she lost her home. After her home was gone, she called me back to say sorry and I should have done the sub2 deal with you!!!! Oh well, live and learn, Best of luck to ya!!
I want to think creatively..... locking myself in to purchasing only via sub-to I believe will limit me. Bear with me here - my objective is to obtain control of the property to market it to L/O tenant buyer at above market price. I get a 3-5K deposit from tenant buyer, (NROC) and 250+ positive cash flow per month. I am dealing ONLY with nice homes in nice subdivisions - no rehabs or flips. So - with no maintenance hassle, I make 3-5K up front, positive cash flow, and a decent back end if'when the tenant buyer buys. I also have a mortgage co guarantee that with 12 cancelled checks of on-time payments he will give an A paper mortgage. So - why wouldn't I consider a CFD if it's the security that the seller is worried about? Don't I reach my objective either way? Any comments are more than welcome - thanks again!