Asking a Seller to Carry Back – How to Get Owner Financing Investing in Real Estate

Many people are afraid to ask for owner financing when they are buying an investment property, and sellers hardly ever offer it up front. But it can be a great way to sweeten an otherwise mediocre deal. So how do you ask for it?

First, if you can approach the seller face to face, do so. It is always better to avoid passing your request through multiple parties; you are the one who can best present your offer. However, a real estate agent who specializes in investor deals can be a great asset in presenting such an offer because they are already familiar with them and can allay any of the seller's concerns.

Second, the structure of the offer itself is very important. Since investors are looking for deals that work – that have equity and/or cash flow – it can be embarrassing offering a price significantly below asking. But an offer which includes choices for the seller, including owner financing, is the best way to ask for a discount.

Here is an idea of what an offer might look like. For a seller asking $200,000, I would offer $170,000 all cash, OR $200,000 with owner financing. I would explain to the seller that I could give them their full asking price if they could carry back at a slightly lower interest rate than the bank or at a monthly payment amount that allowed the property to cash flow for me as a rental.

Not all sellers will be willing to do this. But if the market is slow, and their house has been for sale for a long time, then they may be more willing to sell with terms in order to get their full asking price and finally have their house sold. But you won't get this type of deal unless you ask for it.

Finally, most sellers will feel better about the deal if you put something down. They want to know that you have something to lose and can't easily walk away from the property – leaving them with the headache of foreclosing on the house to reclaim the title. The down payment, like everything else, is negotiable. But creative buyers should remember that even though they are not using a bank to finance the full purchase price of the property, they can still seek a 10% or 20% first loan from the bank which they can turn over to the seller as a down payment.

So, don't be afraid to ask for owner financing. A seller will probably never spontaneously offer to carry back, but he or she may say yes if you only ask. Good Luck!

Until my next post,

James