In last week’s episode, we discussed the most common misconception believed by wholesalers.
For those that missed it You Don’t Need a Cash Buyer to Wholesale Real Estate.
This week, we will discuss another popular misconception that involves licensed Realtors.
Some Realtors tend to believe that much of what investors do is somehow shady or illegal. In my own experience, I have had at least two dozen Realtors tell me that they believe Seller Financing was illegal. When pressed for more details on why they believe this, they often shut down.
The real issue here is that fear can easily overcome someone’s emotions when they don’t understand something. Also, when they realize that they should be better versed on a topic than the general public embarrassment kicks in. If you keep pushing the issue the conversation can go downhill fast.
Rest Assured, Regardless of what your Realtor says, Seller Financing is NOT illegal.
In cases where you are shut down by a Realtor when trying to offer seller financing, you have a few choices to solve the problem.
- Fire the Realtor if they are representing you as the buyer’s agent and find another who is versed in seller financing.
- Move on to another property if the listing agent is the problem
- Write the offer anyway and politely insist that the agents present your offer as written.
- Wait for the agent to fail by the listing expiring due to it not selling and only then go directly to the seller. (Please do not try to go around a Realtor, direct to a seller on a listed property)
It’s important to note that quite often Realtors will make it challenging to proceed with any offers if you go against what they tell you. To overcome this you will need to build some rapport with the agent in your way so they don’t see you, or your methods as a threat to them.
Larry Harbolt said it best when he taught me “Seller’s don’t need cash, they need whatever they feel cash will do for them”
Make no mistake, they don’t want a pile of dirty cash to paper their walls with, all sellers plan to spend that cash on something else they want more. Your job is to learn what they value more than cash so that you can possibly provide that to them. In many cases, value can be added by making it easier for the seller to do whatever they intended to do with the cash.
Here is an example:
Let’s assume the seller has an unpaid medical bill for $20,000. Because you are a great negotiator you tell the seller that if they give you credit for a $20,000 down payment, you will take care of that $20k medical bill for them. The seller would then give you a limited power of attorney so that you can negotiate with the medical billing company on their behalf. You then negotiate that debt amount down to $10k and make payment arrangements directly with the medical billing company. By accomplishing this, you just cut your down payment in half. You will only have to give $10k up in order to get the benefit of a $20,000 down payment, see how that works?
This method can be applied to just about any situation if you have built a rapport with a seller and they believe you will follow through with solving their problem. Does the seller want a boat? Cool! What kind, color, size, etc. now go find that boat and make arrangements to buy it in such a way that as the buyer, you can get the boat at a steep discount or on terms. Then, give the boat to the seller in exchange for a down payment. Presto! Win/Win created! Want more ideas? Take a listen to this week’s episode to learn more…