When buying real estate, you do not need to get bank financing or offer all cash. Sellers are very often open to seller financing. To get them to say yes, you will need to determine what their true needs are and what they are willing to trade to get what they need.
People are forever trading off one aspect of a property or transaction for another, depending upon their needs, prior experience, and personal goals.
Some of the things they trade off include:
- less cash now for higher payments later;
- lower interest for higher payments;
- lower payments for more interest;
- the right to continue to occupy a home for interest and payments;
- lower cash for a balloon payment in a shorter time;
- higher cash down payment for a longer payout period.
Discovering “needs” instead of “wants”
For me, the single most important thing I can discover is the real motive for selling or buying. Sometimes sellers, when asked what they want to achieve act like a kid in the candy store who wants some of everything.
Anytime I perceive that the most important motivation for sellers is to make a profit, I usually refer them off to a Broker or another investor and try to glob on to some kind of referral fee or a future “favor”. There's no point in both buyer and seller scrapping like dogs over the same profit bone.
On the other hand, when I can see that there is a real problem that the seller is willing to sacrifice to solve at the expense of his profit, I will work hand and glove with him or her to find a workable solution. In doing this, it's important to sort out WHAT sellers really NEED — and WHEN it's needed –from what they WANT.
Only by getting sellers to trust you will they open up. When sellers begin to finally explain why they're really selling it's crucial to be empathetic if you can, and non-judgmental. Your questioning will attempt to find a path through this morass of variables so that you can structure an acceptable transaction.
Let's start with DIRECT QUESTIONING. You may find it useful to use some form of checklist that you can routinely fill out and which will act as an un-intimidating entree into more sensitive questions.
You'd surely need to know who owns the property and who makes decisions, the details of financing, legal description of the property and the specific personal property that is included in the sale. With rentals, you might want occupancy factors, operating costs, warranties, property tax bills, zoning, insurance data, and technical data relating to any more sophisticated heating and cooling systems.
Best of Luck finding real estate deals and working with Sellers & Buyers who want to negotiate!