I am new to real estate investing and in learning of different finance techniques, I constantly come back to one question that I was hoping others would provide their insight.
Why would any seller be open minded to the financial scenarios I am reading about? Take it one step further…The current local market is tough on buyers and easy for sellers. Prices climb quickly and as a buyer, time is of the essence. Under such conditions, even if a seller must sell, I don’t understand why they would be open minded to alternative financial packages other than all up front financing from an instution.
Sorry I don’t have time to write a more detailed response right now. However, I will say this. You won’t always know what exactly would motivate a seller to accept a particular offer. But if you have a truly motivated seller, you can get offers accepted that you never would have believed depending on how the offer is presented. One other key point. Do not think for the seller. In other words, don’t fail to present an offer because you think “they will never accept it.” You do not know what they will accept until you actually make the offer.
i’m assuming your talking about lease options, owner financing, etc. true, they are probably less likely to go for them in a market like you say, but don’t assume. you have to talk to the seller (not their agent), and get to know them and what they’re trying to do.
(story time) i thought the EXACT same thing when i presented my first L/O: i thought, there’s no way she’ll go for this, its too “out-there”… her newspaper ad caught my eye only because of 2 words: “FSBO” & “reduced.” i went to see the place, she told me her husband was in iowa working on their new house. so, obviously i asked more… she was leaving colorado to move there in just a couple days. through further discussion i realized she had no one really interested in the place yet. so that adds up to: its time for her to dump the place. i wound up doing a 12 month L/O for about 20% less than what the current comps are, and monthly payments were equal to what she was paying out. it took some good explaining (make sure you can explain it), but they liked the L/O, it made sense to them. not the deal of the decade, but not bad for my first i think.
so, my points about L/O’s, and negotiating in general, are:
1- the worst they can say is “no” (don’t be afraid of them, you’re not ripping them off or scamming them, you’re helping them out of a tight spot). if they say no, consider it practice–which is necessary to get good at anything.
2- you’ll never know if you never ask (applies to lots of things-very important!)
3- build rapport, get to know them, ask questions: direct and in-direct, this will give you the answers you’re looking for to structure a deal (L/O, owc, regular purchase at a big discount, whatever) that fits what they’re looking for, but more importantly, will make you some $!
4- if you talk to enough sellers, you’ll find a deal to put together (worst case, try other markets-not too far from home)
just stay positive, keep an open mind, read, learn from everything you can.