Several people have asked me questions on how to birddog for terms deals. A terms deal is a deal where the seller is participating in the financing. This could be an owner carry, a lease option, a subject to, or any other method of buying a home without getting a traditional or bank loan. This is becoming increasing important as our portfolios grow and it becomes harder to get conventional financing. This is the reason these types of deals have allowed me to build a large rental portfolio.
It is important to talk to someone that is highly motivated to sell their house for them to be open to this type of creative offer. It is important that you deal directly with the owner and that you take some time to qualify their motivation before spending too much time with them. In this article, I am going to assume that you are marketing for sellers to call you and that your phone is ringing off the hook with seller leads. If you are unsure how to get sellers to call you be sure to check out our blog or come to one of our upcoming subject to classes.
I believe it is best to always answer the phone. If you cannot answer the phone, be sure that you have a very pleasant outgoing message so that people feel comfortable with leaving a message. Here is a sample of how your phone call should sound:
You: You have reached Kevin, thanks for calling.
Seller: Yea... I saw a sign on the side of the road that says you buy houses.
You: Yes, I do. Do you have a house for sale?
Seller: I do.
You: Great. Go ahead and give me a little information about your house.
Seller: Well... it has 3 bedrooms and 2 bathrooms. I just recently painted the living room this really cool blue color. I have also recently painted clouds on the ceiling in my kid's rooms. They seem to like it.
You: Sounds like a great house. Why are you considering selling such a nice house?
Seller: I lost my job a few months ago which is causing me to fall behind on the loan.
You: Awe.. I am sorry to hear of your misfortune. What do you think your house is worth?
Seller: probably $125,000.00.
You: And how much do you still owe on the loan?
Seller: See that is the problem. I owe too much to sell it. I still owe $120,000
You: That's ok. What are your payments every month?
Seller: $825
You: Are ทาวน์เฮ้าส์มือสอง ราคาถูก taxes and insurance included?
Seller: Yes.
You: Is it a fixed rate loan?
Seller: I think so.
You: I would be interested in coming out and taking a look at the house if it is alright with you.
Seller: Sure. When would you like to come see it?
You: I have a little flexibility. Are you the only owner or is there another borrower listed on title with you.
Seller: My wife.
You: When is best for both of you to meet me?
Seller: Evenings are better.
You: OK which works best; Wednesday or Thursday at 6pm?
Seller: Thursday is better.
You: I just need the address and I will see you Thursday at 6pm.
There are a some things I want to point out here. It does not matter what they say about the house when you ask them about it, what is important is that you use this to start the conversation. Your screening process starts with one very important question. "Why are you considering selling?" The answer to this will tell you if you want to move on with the conversation or not. If they give you a reason that makes you think they are motivated than you need to dig into the details of their current loan. You don't need to follow this script word for word and honestly the conversation may take you in a different direction but I wanted you to see how a typical conversation might go. It is important to get as much information about their loan as you can.
If it appears they are motivated enough to say yes to a creative offer AND you can think of a solid exit strategy, than it makes since to go meet with them. You will of course want all decision makers there, so it is important to make sure everyone that is on title can make your appointment. Finally, it is a good idea to offer a few suggested times so it appears that you are busier than you really are. If you are busy you are in demand and which will help make them want to work with you.
Now go get that phone to ring.
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