Seller Won't Budge — Here's the Move We're Making

Because that's your risk. That's why an AO is either good or bad, right? Good that you can get a lot of money with no risk. Bad that you give it half— you're giving the power away to the seller once you have the buyer. Okay, so deal type, it is an AO. Okay, I'm just going to make sure we go through these numbers.

AO.

Okay, source.

It was expired, but then he rented it. When I, when I called him, he was— it was rented.

Okay. Term?

24 months. Oh, term of—

well, yeah, yeah, yeah. Well, that's the expectation. What's the debt we agreed to or the purchase price?

$595,000.

Okay. Did we sell this yet?

No, I'm in my last week and then he wants to co-market it for the additional month. So we'll see how that goes.

What are we marketing it for?

$649,900.

Okay. Expected down payment for payday 1?

$649,999.

Just 10%.

All right.

Are we doing a 50/50 split?

Yes.

All right. So that's what, $32,500? $32,450?

Yeah. Yep.

What's the— what's the rent payment that we're out there for?

$2,575.

To the buyer?

Yes.

How about the payment to the seller? Do we, do we do any of those?

Well, no, I mean, cause it's an AO, so his PITI is only $2,100. So, um, with, with taxes. So when I add the taxes in, he's close to $3,100.

Okay, cool. Uh, anything unique about this deal or?

Um, well, the challenge when it's, when it's got a tenant in there, I, I was in my first real AO, so I didn't foresee that. Like, I didn't—

Okay.

Oh, it's got a tenant in there. But then I realized how challenging that was. And then because he's been a landlord for so long, he keeps thinking of it as a, you know, rental income. And he didn't allow me to lower the rent payment. So that was challenging.

Okay, so expectation is we're gonna make roughly $32,000 off of this. Uh, yeah, tell me, what was the— so tired landlord?

Yeah, he expired last July, and then he, he got another because it had been a rent, a rental for quite a long time. And then he, um, so he rented it again so he didn't have lost income. And then that's where I came in, we discussed it, and he was like, all right, well, I'll give it a shot. Um, and then, but he was, you know, when we, we started the AO, we told him that he had control over the decisions. And so he really leaned on that because when we tried to lower the rent, he's like, no, we're going to leave it at that. I don't want to, you know, lower it. Even though, you know, we were finding him a buyer. I tried to remind him that it was a buyer, not a renter. He still didn't budge. And then he said, the only way I'll lower it is if after the first year. We raise it again. So he wasn't really looking at the big picture because that would have only got him another $3,000. Yeah. You know, so, and I said, I talked with Nick and we said, no, that's not what we're going to do because that's not what we do with our, you know, our buyers.

Yeah. Was this the property we got under contract at Deal Lab as well?

Yeah.

Yeah. So Derek ended up jumping on with this particular property at Deal Lab.

Yeah.

Okay, let me, uh, I'm gonna pull this off, um, because we're gonna make $3,245 off of this. How's your, um, how is your like deal flow going on? Meaning like, uh, buyers, have you been getting a lot of buyers still?

Um, they really dwindled off. I, I'm down to maybe— I just got one, I got 2 this week, um, But I haven't— they didn't respond after, you know, I sent them the video link. Yeah. So I don't know.

And are you able to get him back to his original payment? Like, are we down to like the plus taxes in order to get him back to his original payment?

He hasn't budgeted on his original payment.

No, I know. But have we moved— like, is it his original payment plus taxes when we first started to?

Yeah, his original payment, $2,575, where we started and where we ended with the, with the $507 taxes. He wanted $3,100, which we were just under $3,100 for his total payment. And that's where he stuck to.

Interesting.

Okay.

I mean, if I'm you, I might like lower the payment online. And if you get a good buyer, then you go back to them. I mean, it's just He's not going to say yes unless he's got a good buyer. I mean, if you get a good down payment, then he might budge a little bit more, especially someone that could qualify in a quicker timeframe, you know? All right, well, we'll talk through it, um, and we'll find some good key learning points and we'll go from there.

Signing agreement with his renter broker and we were going to co-market it, which I don't think that's going to go well, but I told him—

Co-market it how?

Like, are you going to be I'm going to continue to do what I'm doing for a month. And then he was going to have it out there for rent. It was not going to work, but I just said it.

Wait, so he wants to do a normal rental and then you're going to do a rent-to-own?

Yeah, we're going to be at different prices and I don't even know if—

Like, how's he going to— how are you guys going to do that? Like, I could see if he was trying to sell it like on the MLS plus rent-to-own. Because what I would have told him is we can, we can find a tenant. We have plenty of tenants. Uh, it's finding the rent-to-own buyer that we gotta work through.

I know he, he doesn't want to lose any revenue. And he said, this is peak rental season. So I'm not gonna— the only way I'll allow you to keep marketing it is if I market it to rent. I don't know how, I don't think, I don't see how that's going to work, but Chris was like, yeah, let him, let him do it. And I don't know, I don't even know if he's going to be able to list it because it's the same property.

Yeah, yeah, that's what I'm saying. Okay.

So it's really in my mind ending this in a couple of days.

Yeah. The only thing I can think of is like you go back to him and say, look, we're going to We're working towards getting a large down payment. Here's what that's going to look like. So we need to play with the monthly payment, which may offset or subsidize against what you're getting anyways. I mean, like, if he's gonna— if he's probably making 3 grand a year and that's the biggest difference, then all you got to do is be able to technically get him more than $3,000 a month or a year in, uh, non-refundable deposits. More.

I know. I— it sounds easy, but he's— he's— and I— we kind of discussed all those angles. I mean, the $649,900, originally when I did up the AO agreement, it was at $625,000. So it's— that alone is getting him more than, you know, more than he originally— we originally talked about.

When's the last time— like, all right, so you and Derek got on the phone with him last, or was it just you that got on the phone with him last?

So I, we had a, I have followed up with him since the 3-way call with Derek, but he reiterated that he was sticking to his, 'cause when he told me that he didn't wanna change it, I said, well, let me go back to my partners and discuss it and get back to you. 'Cause I was like, what the hell? And then, so, you know, they were like, all right, well, if that's really what he wants, then go for it. But tell him, you know, and I reiterated, it's not a— It's not a renter, it's a buyer. But he he just felt like he said, "I will go up on it." I mean, I will lower it.

Just tell me you'll put him on the back end. That's what I would have said. I said like, "All right, what's the difference for next month? Like or next year?" Because I would tell him the number one way in order for us to track rent-to-own buyers because they can't qualify for bank loans is through the rental payment. So we got to we got to drop the rental payment or we're going to keep working with the same pool of buyers. And at the end of the day, you can either choose to accept them or not accept them at that time. Once we have a package, this is all marketing. So once we get there, I would then say, look, and what we can do is the difference is like three grand. We'll just add it on to the six forty nine. We'll sell for six fifty six fifty four nine. He's still gonna get it. It's just not gonna be on a monthly basis. He's gonna get it when the property cashes out.

Okay. But by that point, I would have already had the discussion with the, with the buyer.

I know what I'm saying is once you lower the price, figure out the difference and then just add it to the back end.

So I should market it at that price when they ask me what the price is.

They could say $654,900 as long as you can get your monthly payment down. And you got to be frank with them. Like, look, you asked me to do this, right? We agreed that this is a good idea and then you found that this was going to, you know, be a solution for you, yet you're asking me to do this with one hand tied behind my back. Like, it's just— you're not allowing me to do what I specialize in. Um, because some of this is the marketing component, and we have to be realistic with the monthly payment because we're not just dealing with tenants. We're trying to get— we're working on tenant buyers that are actually going to be buyers and have sizable down payments. And how we get to those, based on a proven method over the past 12 years Is by lowering the price and getting into a different pricing rental bracket.

Yeah, I when I say that, that's when he said, yeah, I allowed you to lower it. Like yeah, but then you told me to raise it. So you really didn't. I mean, gave me one year of lowering it. That's not fair to them.

Well, here's what I would always do in the future. I wouldn't like it's your job to market it. I don't go back to the sellers and be like, oh, we're going to lower it. Just lower. And once you have a buyer, you say, hey, good news, we have somebody that's got 40 grand down right now. The difference that we have to do though is we have to lower it to 2,500 bucks a month or whatever it is. So we're more than helping you accomplish what your goal is because they can't say yes or no until they have a buyer. So once you have a buyer, then it becomes a different— it's like in theory right now in his head. Like, oh, they just— it's in theory. When you— if you have a literal buyer with a down payment ready to close, it's totally different ball game. Somebody's not gonna be like, well, never mind, I don't want the $40,000 or the $25,000. They're not going to say that right now. What they're saying is, this person keeps lowering my price, now I'm losing money if I accept this buyer because they don't have a specific down payment, they don't have a specific plan. It's just theory.

Okay. Um, yeah, I think when we were discussing the AO, I think I thought that that came up where he'd always have say in it. So I think that's—

He has say to select the buyer, yes or no, right?

Yeah. Okay. So I'm learning because when I do my next one, it's not gonna— I'm gonna make sure I have, yeah, better upfront communication maybe.

Well, the way I always say it is Mr. Mrs. Seller, at the end of the day, you're going to be the one that gets to select this person because you're the one who's going to be working with them directly. So we're going to do everything in our power to go get the best particular buyer, and we'll present them to you once we have it. Yeah, we can always say, Maya, we're going to— this is all an example. We're going to do our best to get this or better, right? So if you have to lower the rent payment but you got a better purchase price, or you lower the rent payment, you got a better down payment. Than expected, then you did your job.

Yeah, I feel like the— I think the $649,900 is a little high in my opinion. I had it at $625,000. Nick had said, I think we can do $649,900. I'm afraid that if I go to $654,900, it's really going to be—

What's the difference of $5,000 though?

That's—

and can you negotiate that with a buyer? Sure.

Like, If they're coming in with a strong down payment.

I mean, exactly.

Yeah.

Again, all this is to get the buyer to the table. And once you have a buyer, then it all becomes real. And then at that point in time, you can have a very detailed conversation with the seller. Hey, look, this, this, and this. Because couldn't you technically, if you have a buyer on the line, be like, I'll do a 60/40 split in order to get the deal done? You have negotiating power. You're just acting like he has all the power. It's not true. You have it once you have the buyer. It's just right now you're letting him dictate for the past 30, 45 days your ability to market the property, which is— it's just not gonna— it's not gonna work.

I see. I understand what you're saying. I just felt like, um, because we're supposed to be working with this, working this together as partners, um, he did have a say.

He has a safer selection is the really the way it is, right? Because the one-page document is a projection and allows you to market the property. That's all it is. The contract, once you have everything signed with a buyer and the assignment is the actual acceptance of the buyer.

Okay.

Everything else is marketing.

Yeah. Okay. So, right. He's supposed to allow me to do what I do, and then he can accept what I or or not accept the buyer that I present to him.

The 100%, right? Because that's your risk. That's why an AO is either good or bad, right? Good that you can get a lot of money with no risk. Bad that you've given half. You're giving the power away to the seller once you have the buyer, right? So, right. Um, and I would use your last week or. Couple weeks, and I would at least negotiate with them like, "Hey, we got a week left. We have we have some close people. Can we extend at least two weeks?" And then I would dump the price, or I would get the price below what you guys think is going to be the next tier. And at that point in time, I would try to get a strong buyer in hand, similar to like what Channing did the other day, which is like you just got to be super aggressive.

How do you— how are you super aggressive? I mean, other than lowering the price?

Lower the price. You got to be— all of your conversations with your buyer is going to be like, we're going to be— we're going to be accepting a buyer in the next 2 weeks. You got to get in the home. Here's the dates we have the home. Here's what we need. Like, you're just going to be moving people, just being aggressive on the—

So I had like 10 showings. I only had I had one person was supposed to do the next step, but he got afraid or whatever. He never showed up for the appointment. And then another one that was going through a divorce, she couldn't qualify. Should I go back to any of those people if we lowered it? I don't know. 100%.

Yeah, that's the idea, right? You go back to them, you send an email out to everybody. Hey, great news. We just lowered the price.

Okay. We lowered the monthly price.

Lower the monthly price, right? This is going to go fast. You resend everything, right? If I'm you, then I call on anyone that I didn't get a hold of on the list. Like, I'd spend the next 24 to 48 hours banging through that list and trying to get somebody to the table.

Okay. And, um, I don't think he's gonna extend my contract because he said he was— I can ask, but he said he was signing a contract with the With the— his renter broker, um, last week or this week. So, um, so it was supposed to expire— mine is supposed to expire 8/2, which is Sunday or Sunday. Yeah. Um, so I should—

Yeah, I, I would do your best to try to get an extension on that.

Um, Okay, uh, I'll try again. Extension, like 1 week?

At least like 2, 3 weeks, 30 days at the most. They can anchor him at 30 days and get 2 weeks.

Yeah, he denied the 30 days. He said the only way he would do it is if he could co-market. That's what the answer was to that. So that didn't— I mean, that's where we're at right now. So if I go back to him and say, um, I'd say, look, we have some people that are close.

That's what I would say. I need an extra 2 weeks. And if you believe that the rent-to-own is a better solution for you than a renter, because I have lots of renters that have opted into this, right? We have lots of renters. You just want to rent the property? Well, we can rent it. I can start sending them to a rental application if you want. You don't have to pay a commission to this other third party because we already attract all those. We're already on all the rental markets. There's no need to go sign another contract with somebody that's going to do the exact same thing. It's a waste of money. Like, we already have renters.

I know, I did say that. I had a lot of— yeah, but—

We already, like, we already have been in the rental market for the last 60 days, whatever it is. Like, we have renters. The contention is you believed that a rent-to-own buyer was a better solution. Now, that takes more time to get that across the finish line.

All right, I will see what he can do. See what I can do. If he says he already signed the agreement with the with his renter broker, yeah. What do I say?

I would be very specific in regards to how we want to handle this because again, I don't. It'd be a waste of time. Like we got you got to decide who owns what, and then how does it work if somebody? Like, gets— like, what if he gets a renter but they happen to be on your list? Do you get— do you get half of their commission?

Oh, that's a good point.

If you end up getting a rent-to-own buyer, do they have to— do they get like first month's rent as their commission? Like, you know what I mean? Like, these are things that have to be decided because you're going to be in the same pool of people.

I, I think— I thought we had agreed on, um, totally separate That I wasn't entitled to anything because I sent them something that said— I forgot what it said.

The reality, though, is it's not going to be— it's— that renter is going to be on your list already because there's only so many people that want to rent in Hatfield. You know what I mean?

Yeah. Yeah, I think what I sent them would probably said I wasn't entitled to anything. I mean, Even though, because he had he wanted me to send him something that allowed him co-market.

How long have you been on the market for?

Since five two.

So three months, ninety days.

Yeah, that's the longest he wanted.

What I would do is I would today. Let's see what I would do. Maybe before you go back to him, you could have ammo. Uh, I would send out an email to your whole database. I would drop the price. Um, I'd probably have a conversation with Nick. You can say you, you talk to me and figure out what's like the most aggressive we could get for that market. Um, what are we currently at right now? $25,000 plus taxes?

$25,750. Yeah, yeah.

I would ask Nick about like that rung and get aggressive because you could get it up to like What is he losing? $300 a month? Um, no, his initial want, $3,100.

Yeah, he wanted $3,100. Yeah, so with the taxes we're at $3,082. So we're just—

this is what I would say. So I'd go do it, and then if you worst case now, what I'd say to him is I'll take my— I'll take $300 per month off the contract from my side. You know what I mean? $300 times 18 months is Was that like 3 or 4 grand?

Yeah, because $300 times 24 months only is only, uh, $6,000, I think. Is it not?

$7,200. So minus $3,250, it's $25,000 that you could make on this deal. But we might be able to save this deal. So that's what I would go— get aggressive, whatever the number is. Right? And then you can go back to him and say, look, we have buyers, right? I would try to get as many people as possible. I'd drop the price. I would send out a slide broadcast. Like, I would do everything I could possibly do. Then I would see who raises their hand. I would then have the people available to go view the property. And I would do— even if he doesn't give you an extension, if you're going to co-market, I would be doing this as quickly as possible before there was any confusion. In the next week or two, then I would be working those buyers. And then if you get someone that's below that number, then it's just hey, I'll take off the difference from my side. So that way, you know, everybody wins because I know this is going to be extremely helpful for you. You're going to get paid twenty twenty five grand off this deal, right? So that's what I would do.

Yeah, even though I mean technically the example I showed him was at six twenty five. So if that's Split at 625, I'm still getting him more even if I took off the.

I know, but he doesn't. Unfortunately, you have set like a presence where he's the one that's making all the decisions. So now you have to have something to negotiate with.

Yeah.

So at this point, I would say go get a buyer. Go do go go lower the price. Go do all that. Um, because I'd rather be like scolded later than like deal with it now, because now you have a buyer and it's like, oh, this buyer's got X, Y, and Z, they're strong. What I'll do is I'll take off the difference so that way you still make the same amount of money.

Yeah, okay, I'm not asking permission, I'm just doing it right now.

No, no, this is, hey, and I thought about what you wanted and I'm open to taking off the, the difference of the $300 in spread from my side of the deal because I know that this buyer is awesome to, to Buy the home, and I know that you want a solution. You don't want to go back to renting. So here's what I'm open to doing: being creative.

Yeah, it right. And I'm not discussing price with them until that point, until I have the buyer in hand.

And yeah, I don't think you need to waiver with the price. You could say, or you could say one of two things. You could say I can add this onto the price, or later. But if you have a buyer, then I'd already have your price locked in. I would probably just negotiate or say like in the last. The first 12 months, I'll take it off of my side. Like you have opportunities to negotiate at that point in time, right?

Yeah. Okay. I agree. All right. So, um, all right. Re-look at my list, uh, talk with Nick to get the most aggressive price if it's, um, yeah, don't call him yet either.

Just go do it. No, I'm saying call Nick. Don't call the seller. Go do it. Once you have the buyer in hand, then let's set up a time to negotiate with them.

Okay. And I won't even talk about, uh, extending it because I, I already had a conversation. I'm just going to leave it and be aggressive and do my thing, right?

Exactly. Yep. And you have a strong— if you could do it today, right, you have all weekend to like work this.

Yeah. Um, okay. So that's what I'll do. I'll get on it and, uh, perfect. And then hopefully next week I'll talk to you about my sold.

I love it. No, for sure. I thought that this would be better time served for us to just like come up with a game plan and go after it.

Yeah. Great.

Cool. All right.

Okay. Awesome.

Good luck.

All right. Thank you. Be in touch. Take care.