KNOW THY TERMS WHEN OFFERING SELLER CARRYBACK ON LISTINGS
It seems seller financing is becoming a favorite option when listing homes for sale in your local Multiple Listing Service(MLS). I am very familiar with seller financing since I have been working with real estate investors for the past ten years since I have been a Realtor. However, I have noticed many other Realtors do not understand how to put this type of deal together for real estate investors. That could cost the investor down the road if the contract terms are not written correctly.
I was showing a home this past week that stated "SELLER WILL ENTERTAIN SELLER CARRY-BACK." Great! My clients have the down payment and are willing to do seller financing until they correct their credit over the next couple of years. So, my buyers were ready to pull the trigger. The house is perfect for the entire family. It is close to parks, schools, shopping, restaurants and highways. The home itself has a new roof, new AC and hot water heater. This sounds too good to be true. Now, I place a call to the listing agent.
ME:Hi, I am interested in your listing on 123 Main Street. Please tell me more about seller carry-back terms.
AGENT:Well, most people require 20% down. Do they really want seller carry-back?
ME:OK-I am asking what the seller carry-back terms for 123 Main Street only.
AGENT:Well, just Email me an offer and I will present it to the seller.
I got off the phone with the agent. I heard this hissing sound in the back of my office like a tire was going flat. How can you list a home offering seller carryback and not know the terms? So, I offered the following terms to low ball it
- 10% down
- 9% interest only payment
- 5 year note
- Starting sales price at 80,000 with a 3% bump each year for final sales price
- One year prepayment penalty
So, I Emailed this offer to the listing agent thirty minutes later. I call the agent the next day to follow up on my offer.
ME: Hi-I emailed my offer to you as you instructed. Were you able to present to seller?
AGENT: Well, I will be with the seller later on today. He is a very busy person
ME: OK-I am a very busy person myself. All I am trying to do is to put a deal together. Are you going to assist me or do I need to move on?
AGENT: I will get back to you later. Thanks
I will be sending this agent a TIRE PATCH KIT so other deals do not fall apart.
DISCLAIMER: NAMES AND OFFICIAL ADDRESSES HAVE BEEN CHANGED TO PROTECT THE INNOCENT. TIRE PATCH KIT ON SALE AT YOUR LOCAL WALMART.