How to ask for vendor finance?

[moyjos]

Hi all,

Advice please...

Hubby and I looked at a commercial property today (asking price $495K)

I have done my figures and we can afford to service the loan BUT in the current "conservativeness" of the time I know we are not going to get either the shed or our unit that we live in up to value to end up with a 85% LVR for the commercial borrowing. (might be close)

Sooo my (1st) question is.. how do I make an offer to the vendor to offer 1/2 the money now and 1/2 in 3 years. I would be prepared to revalue in 3 years and pay 1/2 of that value.
2nd question is .. Is there a MB on here that has had experience in something like this. (I am on the sunshine coast, Qld)

Thanks
Sue

 

[Peter_Tersteeg]

The vendor finance is usually described in an anexure of the sale contract. The people I've seen make successful vendor finance offers usually make quite a few offers and are prepared for a number of rejections.

The vendors often initially reject the offer, but may come back to the offer after several months when they've been unable to sell the property. In most cases the price on offer is an generous one.

 

[montana]

Ask yourself first why the owner would want to give you vendor finance.
Is the property free and clear ?
Is the owner in financial trouble ?
Is the property a dog ? etc etc

I bought a bit of improved property and a lot of land on vendor finance in the late seventies mainly because it was hard to sell and I could hold it without a problem.

If an agent is involved speak to him to test the owners reaction......just at the moment without any details I think you have buckleys.......in fact if an agent submitted it to me I would be most unhappy.
Also why would an agent possibly dilute his commision and complicate matters to help you and maybe offend an owner ?

Then again in a year or so this could all be reversed.

 

[montana]

Ask yourself first why the owner would want to give you vendor finance.
Is the property free and clear ?
Is the owner in financial trouble ?
Is the property a dog ? etc etc

I bought a bit of improved property and a lot of land on vendor finance in the late seventies mainly because it was hard to sell and I could hold it without a problem.

If an agent is involved speak to him to test the owners reaction......just at the moment without any details I think you have buckleys.......in fact if an agent submitted it to me I would be most unhappy.
Also why would an agent possibly dilute his commision and complicate matters to help you and maybe offend an owner ?

Then again in a year or so this could all be reversed.

 

[Peter_Tersteeg]

I can't see how vendor finance would dilute the agents commission. They're paid on the purchase price, usually regardless of how the finance for the deal is organised.

 

[dash11]

Hi There

From experience, I think this is the best time to be asking for vendor finance. The market is slow and most are in a negative frame of mind in terms of sales. We usually type up 3 offers on the one sheet when trying to obtain vendor finance. The first offer is usually very low with no terms and then increase our price along with terms. The problem you will encounter is that getting the vendor and agent to entertain the concept is easier than getting the vendors legal advisors to do so. In fact nearly 80% of our offers fall over at the solicitors table. It's purely a numbers game and the number one rule we have is even if the vendor will give us terms, the deal still has to stack up in worse case scenario terms. In other words, don't do the deal just because there is terms.