Educating the Seller
Have you ever found a great deal, only to find out you weren’t dealing with a great seller? Well, as a real estate investor, educating is sometimes part of the job. It’s not to say that you are smarter than some sellers, but rather, you need to help them see the deal through your lens.
This is especially true when getting into more creative financing strategies. Maybe the seller has never heard of seller financing, lease options, or loan assumptions. Or maybe, they have never sold a house at all. That’s ok! It doesn’t mean those aren’t options. It just means it’s going to take some coaching.
Here is a list of things you may have to help a seller understand:
- Closing costs. A great strategy that many real estate investors use it to give the seller the asking price (when fair), under your terms. As a cash flow investor, the goal is to use as little out-of-pocket money to get into a deal. So your terms might be that the seller pays your part of the closing costs. However, many sellers don’t realize that this is not an out-of-pocket expense for them, but rather is taken out of the final sale price. If you can overcome this concern, you could be into the deal for significantly less.
- Contract terms. When dealing with a motivated seller, often times there is not a buyer’s agent. This is when you learn the value of dealing with those agents. Sale contracts are a heap of legal jargon, not easily understood by your everyday seller. However, given that you have likely seen a sale contract before, you should be able to help the seller along the way.
- The deal. Helping the seller understand the deal from your perspective is an extremely important skill. By doing so, you can dispel a lot of issues from the start. If the seller understands that you want to get into the property for as little down as possible, they’ll understand why you’re using a creative financing strategy. If the seller understands that you intend to rehab the property, rent it out, and then refinance, they’ll understand your terms and conditions better.