How to Convince them that we will pay them?

General Real Estate Investing
1

I am having a lot of trouble closing some people on a Lease Option.

They seem to be worried that we will not pay them, even though we will not make any money until our Buyer/Tenant (who we are subletting to on a Lease Option basis, too) cashes everyone out.

They are afraid that since the mortgage is in their name, and if we do not make the monthly payment, that they will be stuck with the payment.

Any ideas on how to overcome this objection?

2

Howdy Tom2nd:

This is a strong objection to overcome. Even highly motivated sellers want some protection all the way to the courthouse steps for some that I have dealt with. I have always been told that the deposit of one months payment would help with this or maybe 2 if you can afford it. If that doesn’t work you may need to move on to the next deal.

LOL

3

Hey Tom,

Also ontop of what Tedjr said, another thing you could do is increase the option money. Also, Remember if you sign a lease contract with them, it is hard to get out of. You will be obligated to pay the lease for the term of it if you abandon the property. That might be something how you can convince them!!!

Good luck with that!!!

MONEY!!!

4

Thanks to both of you. I will give it a shot!

5

That was a great Question. I just got off the phone with a friend of the seller and he was so concerned about how do we know that the payment had been made to the mortgage company. I told him that you and I could be notified by the Mortgage company if a payment was missed. Still how do we know that you’ll pay? I kept telling him that it is a contract and I am obligated to pay or I loose. This is a hard one I know. I’m not sure how we are to overcome this objection but I finally told him that I wouldn’t be able to help your friend with his problem (selling his home) due to the fact that the trust wasn’t there. He did back off a bit but the bottem line is that I wont be doing a deal with these guys because I don’t work with people like that. Next deal please.

6

Rather than increase the option money you have to establish a little more rapport with the seller. A third party collection service would help. A contingency fund of several months held by the servicer would help them believe the payments are going to be made. And a give back clause if the payments weren’t made could nail it.

I would rather that addition money be under my control or in my hands rather than the sellers.

7

What do you mean by a give back clause? If you miss a payment you give back the property to the owner and cancel the contract??

8

A lot of the people are just afraid of keeping the mortgage in their own name, while we either lease option it or take it “subject to”.

I think it is just a trust issue, they are concerned about their credit.

Any thoughts on this aspect of it?

9

Good point Bud,

But when your making 100 or even less on a cash flow property, do u really want to pay out a 3rd party on this?? I wouldn’t… not in the least… so i’d rather pay the seller more now, than the 3rd party on my return… its all on how u present the offer now and later!!! :wink:

good luck with your investing :smiley:

MONEY!!!

10

You can explain to them that this is your business and you don’t make a profit, which is why you are doing the deal, unless you follow through on making the payments.

11

Tom2nd,

For many years I have used a scripted presentation, which covers questions before they become objections.

During my presentation at a certian point the seller must convince me to purchase their property and when you think about what I just said, they must convince me, it only makes sense I am the Buyer and isn’t it the Sellers job to convince the Buyer to purchase what they are selling not the other way around.

When you are purchasing a car do you have to convince the salesman to sell you the car? Not in any car dealership I have been in does this happen.

  1. Cover all the possible questions you feel that are holding you back and present them to your seller so they are not objections later on. (see Zig Ziglar’s Secrets of Closing the Sale about $10 bucks.) Zig sold pot’s and pan’s, all I did is subsitute real estate for pot’s and pan’s.

  2. Turn the table around and have the seller sell you the property by what you say.

  3. Probably the most important is a slogan I have used for many years and this is accomplished in your presentation.

“If people like you, they’ll listen to you, but if they trust you; they will do business with you.”

John $Cash$ Locke