- Joined
- Aug 31, 2007
- Messages
- 61
Today's post is about purchasing a house using Agreement For Sale and what I say to sellers on the phone before leaving my office to check out their home. Please feel free to add your own comments and let others know what works for you.
When talking with a seller on the phone who has either contacted me or I'm speaking with a FSBO, I start with all the usual info, type of house, bedrooms, bathrooms square footage, garage, etc to get a general sense of their property. I also like to ask why they are selling so that I know whether and Agreement For Sale (AFS) is a viable option or not. For example, if the seller wants to upgrade to a larger home, they likely won't want to do an AFS as they will need all their money for the next purchase.
Once I finish collecting all the data, my conversation goes something like this,
"I buy houses as a business, so I'm not looking to move into your house myself. There are several different ways that I buy houses, but the one I use 95% of the time is where I take over the payments on your mortgage, taxes and insurance, and all maintenance on the house. I use the same purchase and sale agreement that all the Realtors use with an extra page to cover the financing details of your mortgage. Is this of interest to you?"
Notice that I never mention the words "Agreement for sale" - their lawyer can explain that to them.
Depending on the amount of equity left in the house, I may be willing to pay some of it upfront. Here's what I say to sellers who ask me about their equity as well as what I will pay for their home,
"You have approx $_______ of equity in your home. Any equity I pay out to you I raise private money for that comes at a double digit cost to me. Thus, the more of your equity that I have to pay out, the less purchase price I am willing to pay.
Now as this is a business for me, I don't pay retail price for any house I buy and until I see your house in person, I don't know what that will be. However, if I use the example of a $300,000 house, if you were to list that house with a Realtor, you would have to pay about $12,000 in fees. Plus in this market, no one is getting full asking price so let's take off another $10,000. Plus you may have mortgage payout penalties, so lets knock off another $8,000. Now you are already done to $270,000. And depending on how much repair is needed to the house for me to make it presentable, there will be more money taken off the purchase price. Thus I will need to see you house first before I can tell you what I would be willing to pay."
Note if the mortgage value is close to the market value I tell them I will buy it for what they owe. I try not to offer any money or equity upfront and prefer that people wait for it until I cash them out down the road.
If I go to their house and decide to buy it I simply fill out the AREA contract and the financing page right then and there. It helps if you tell them to have updated mortgage and tax info handy so you can fill in the financing page.
When talking with a seller on the phone who has either contacted me or I'm speaking with a FSBO, I start with all the usual info, type of house, bedrooms, bathrooms square footage, garage, etc to get a general sense of their property. I also like to ask why they are selling so that I know whether and Agreement For Sale (AFS) is a viable option or not. For example, if the seller wants to upgrade to a larger home, they likely won't want to do an AFS as they will need all their money for the next purchase.
Once I finish collecting all the data, my conversation goes something like this,
"I buy houses as a business, so I'm not looking to move into your house myself. There are several different ways that I buy houses, but the one I use 95% of the time is where I take over the payments on your mortgage, taxes and insurance, and all maintenance on the house. I use the same purchase and sale agreement that all the Realtors use with an extra page to cover the financing details of your mortgage. Is this of interest to you?"
Notice that I never mention the words "Agreement for sale" - their lawyer can explain that to them.
Depending on the amount of equity left in the house, I may be willing to pay some of it upfront. Here's what I say to sellers who ask me about their equity as well as what I will pay for their home,
"You have approx $_______ of equity in your home. Any equity I pay out to you I raise private money for that comes at a double digit cost to me. Thus, the more of your equity that I have to pay out, the less purchase price I am willing to pay.
Now as this is a business for me, I don't pay retail price for any house I buy and until I see your house in person, I don't know what that will be. However, if I use the example of a $300,000 house, if you were to list that house with a Realtor, you would have to pay about $12,000 in fees. Plus in this market, no one is getting full asking price so let's take off another $10,000. Plus you may have mortgage payout penalties, so lets knock off another $8,000. Now you are already done to $270,000. And depending on how much repair is needed to the house for me to make it presentable, there will be more money taken off the purchase price. Thus I will need to see you house first before I can tell you what I would be willing to pay."
Note if the mortgage value is close to the market value I tell them I will buy it for what they owe. I try not to offer any money or equity upfront and prefer that people wait for it until I cash them out down the road.
If I go to their house and decide to buy it I simply fill out the AREA contract and the financing page right then and there. It helps if you tell them to have updated mortgage and tax info handy so you can fill in the financing page.