Here are some of the reasons a seller would choose seller financing in a booming market. If you understand these reasons, you will start to see that the market condition doesn’t really affect our ability to get great deals without down payments or bank qualifying.
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Read Transcript for “The Market Is Booming In My Area. Why Would Anyone Do Seller Financing?”
“The market is booming in my area again. Why would anyone want to do seller financing at this time?” – Keate McGuire, Sacramento, California
Joe: There are a lot of good reasons to do seller financing. I do seller financing on a lot of my properties. I do it because it makes me more money or it solves the problem.
Joe: For a lot of people, it’s about solving a problem, e.g. if they can’t get their property sold or if they don’t have enough equity to get their property sold. In most areas, even the booming areas, it’s still hard to sell a for sale by owner. 85-95% of average for sale by owners do not sell; they either take them off the market or they list with a real estate agent. Even in really booming areas, it’s still only 50% of the people that put up for sale by owners who are not able to sell (because they don’t understand the process).
Joe: So, what you can do is you can come in there and you can give them their options. They can sell through an agent or they can sell it to you. If they sell it to you, they’re going to end up making more money in the long run. It always makes you more money if you hold onto these properties as long as you don’t have a lot of negative cash flow, so it makes sense for them to do it.
Joe: What we do is a lot of marketing. The more marketing we do, the more people that come into our process and answer our responses and say, ‘Yes, I’d consider doing that’. Now, if you’re also in an area and you feel like, ‘Oh, it’s not going to work here. I can’t do it here anymore,’ I hear that all the time and it’s not true. I have people working in specific areas where I hear that all the time. But, let’s say you just feel that way and there’s no way that you can get it into your head that it’s going to work in that area – if you feel that way, you’re probably right – it’s not going to work for you there.
Joe: So in that case, what you should do is look in a different area, and with the way that we have our system set up, the “Automarketer” makes it very easy for you to work remotely. I have a lady in Dubai who’s working in Minnesota. I have somebody in Australia who’s working in the United States. I have people in Canada working in the United States. I have people in Canada who are working in Canada. I have people in all kinds of different areas. I have one guy who’s working in eight different states the last time I talked to him (and he keeps expanding, too).
Joe: So, it’s very easy to take this and find some boots on the ground for $8 an hour using a Craigslist ad who can go over and take a picture of the house and put a sign in the yard, and you can do everything else remotely – everything else that we do, i.e. making offers, is done either over the phone, through email, by text blasts, email blasts or by voice blasts, and so it makes it very easy to do it all in one location.
Joe: I find that if I ever leave my office (and right now I’m in my office with a black backdrop behind me) I lose two or three hours, so I try never to leave my office when I’m working because I’m going to accomplish a lot more when I’m here. I can get other people to take care of the things that need to be taken care of on the ground, such as pictures, lockbox on the door, sign in the yard, showing the property if that’s necessary (although we try to show properties remotely) etc.
Joe: I also have somebody else who talks to my buyers and I have somebody who talks to my sellers, so I don’t even have to do those tasks anymore.
Joe: Most people getting started have to do those things. You have to learn it. If you buy a McDonald’s franchise and it’s going to cost you a million dollars to buy it, before they let you take that business, they make you go to ‘hamburger university’ and teach you how to clean the floors and the bathrooms there, how to flip a burger, how to talk at the drive through – they want you to know how your business works.
Joe: I want you to do the same thing. I want you to learn the systems, go through the process and I want you to learn how to put a deal together.
Joe: The most important thing you can learn as an entrepreneur is how to put a deal together. If you learn that skill, you’ll be able to translate that into any business that you do. I have other businesses that I do other than real estate and other than this teaching business that I’m in. The ability to make a deal, the ability to talk to a seller and the ability to speak persuasively is a very, very valuable thing. Most fortunes have been made through that ability.
Joe: It’s not really about the service or the product that you sell – it’s about your ability to sell it; it’s about marketing. Peter Drucker said, ‘The only two profit centers in business are marketing and innovation.’ If you innovate new ideas, you can make money, but you have to market them.
Joe: Marketing is a profit center, not an expense – spend your money on your marketing, and as you do that and as it grows, your business will grow as well. You just have to make sure that you can perform the tasks that you’re paid to do. I hope that helps. Good luck.