Got my first seller signed up

[moveright 0]

Just so I'm clear, a series of quick questions:

 

1) The house doesn't get shown to any TB until they have (i) applied and (ii) been approved by the seller correct?

 

2) Once I've got an approved TB who wants the house, do they have to sign the Lease and Option agreements as I did?

 

3) When is the TB down payment check due? at move in or in advance to allow it to clear?

 

4) When is my kickback check to the seller due?

 

5) The seller lives in FL but the house is a good hour or longer drive from me PLUS, I currently have a JOB so, is it reasonable that the current tenant show the house?

 

6) Now that the seller has signed the Lease and Option agreements do I need to send them a check for the $1 earnest money or can that be included with their kickback(the portion of the fee I am giving them)?

[MichaelC 160]

1) The house doesn't get shown to any TB until they have (i) applied and (ii) been approved by the seller correct?

Incorrect. How will any t/b be able to make a decision if they don't see the house?

 

2) Once I've got an approved TB who wants the house, do they have to sign the Lease and Option agreements as I did?

Incorrect. The t/b only need sign the Assignment Agreement.

 

3) When is the TB down payment check due? at move in or in advance to allow it to clear?

What "down payment" check? Are you referring to option money? If so, I require that when they meet me to sign the Assignment Agreement.

 

4) When is my kickback check to the seller due?

"Kickback"?? Is that you, Uncle Tony? Are you referring to giving the homeowner a portion of the down payment, er, option money? When I get paid, they get paid.

 

5) The seller lives in FL but the house is a good hour or longer drive from me PLUS, I currently have a JOB so, is it reasonable that the current tenant show the house?

Someone has to be available to show the house. What arrangements have you made?

 

6) Now that the seller has signed the Lease and Option agreements do I need to send them a check for the $1 earnest money or can that be included with their kickback(the portion of the fee I am giving them)?

It should have been paid to the homeowners at the time they signed the agreements with you.

[speedingpenguin 19]

1) The house doesn't get shown to any TB until they have (i) applied and (ii) been approved by the seller correct?

You could do it however you want, really, I have heard of people making potential tenant/buyers fill out an application before seeing the house to make sure you're dealing with really serious people, but I just make them jump through a hoop or two before showing it to them, to weed out the tire kickers and make sure I'm dealing with someone who's serious. I have them drive past the property to see the area and the house from the exterior, they also get a video tour and a bunch of pictures emailed to them, and only after that do I set up an appointment to see the house.

 

I feel like part of my responsibility is to pre-screen the tenant/buyers before telling the seller about them. If everything looks good on my end, I assume the seller will be OK as well. After the tenant/buyer fills out an application and I get their background check / credit scorecard back, I'll share the results with the seller and get their opinion/thoughts before proceeding with the assignment.

 

2) Once I've got an approved TB who wants the house, do they have to sign the Lease and Option agreements as I did?

Technically they only need to sign the "assignment of agreements" form, along with the seller. But I have had tenant/buyers initial/sign the original agreements that I signed with the seller.... I don't see it as hurting anything, and it's further acknowledgement on their part of EXACTLY what they're getting in to.

 

3) When is the TB down payment check due? at move in or in advance to allow it to clear?

Learn from the mistakes of others (like myself) and only accept a bank check... It's not a good feeling when you deposit a personal check and have it bounce a few days later, after everything's signed and done with. You could collect a deposit when they apply and the rest when you sign the agreements with the tenant/buyer and the seller, or you could just do it all when you do the assignment of agreements.

 

4) When is my kickback check to the seller due?

Kickback to the seller? If you're splitting the option money with them I'd say on or before move-in, though it's really between the two of you so decide what works for the both of you.

 

5) The seller lives in FL but the house is a good hour or longer drive from me PLUS, I currently have a JOB so, is it reasonable that the current tenant show the house?

The cool thing about cooperative assignments is that there are no rules set in stone for this kind of stuff. I've driven an hour to show a property, and even though I probably had 10-12 hours total invested in driving back and fourth to the property and showing the property/signing paperwork there.... still worked out to $500/hr! and I don't mind driving so I didn't TRY and get the seller to show the house, though he probably would have. Do what you can do and work with the seller/tenants that are living there now to make it work!

 

6) Now that the seller has signed the Lease and Option agreements do I need to send them a check for the $1 earnest money or can that be included with their kickback(the portion of the fee I am giving them)?

hahahaha! Nice! You could do either I guess, though honestly I have a hard time getting sellers to take the $1-10 earnest money from me!

 

 

Congrats on the contract man! Get'er sold!

[moveright 0]

I've only got a quick sec, it's my wife's birthday. Thanks for the answers. so I need to send the seller a check for the earnest money like, right now. ?

[MichaelC 160]

I've only got a quick sec, it's my wife's birthday. Thanks for the answers. so I need to send the seller a check for the earnest money like, right now. ?

What does the contract between you and the homeowner say? Does it mention the amount of option money you paid and the date? If so, just follow that.

[moveright 0]

I've only got a quick sec, it's my wife's birthday. Thanks for the answers. so I need to send the seller a check for the earnest money like, right now. ?

What does the contract between you and the homeowner say? Does it mention the amount of option money you paid and the date? If so, just follow that.

 

 

Fair enough.

 

You know, as far as showings go, the reason I assumed that you would want a TB to be approved is to avoid tire kickers and also buyers who just don't qualify for this program(or couldn't get a loan otherwise).

 

So, I figured no sense in showing a house to someone who can't qualify anyhow. totally insane thoughts?

[MichaelC 160]

Regarding showings, what Chris wrote above. Explain over the phone what the Rent To Own entails, including a mention that there is that something called option money that will be required. If they are still interested give them an address so they can drive by the house first. If you don't hear from them again, they just told you that aren't interested or don't have the money. But if they do call back, you can pin them down at that time regarding move in requirements.

[speedingpenguin 19]

Also, it's probably a good idea to team up with a mortgage broker who you can work with to screen potential tenant/buyers.

On the first phone call, find out if they're working with a mortgage broker already or if they're taking action to fix their credit or whatever their issue is, that will give you an idea of the quality of that prospect as well. If they're working with a mortgage broker (or at least have met with one), they're somewhat pre-qualified (now whether or not they'll be able to GET a mortgage, that's another story. But it'll at least tell you that they're serious if they have), if not, you might tell them that the FIRST thing they need to do is call your mortgage broker and have a chat with them to figure out what they need to do to get a loan further down the road. Your mortgage broker will love you for the leads you're sending them!

 

Again, let these little stepping stones weed out the tire kickers and save you the hassle. If your mortgage broker calls and thanks you for the referral and/or gives you an update as to the buyers status, they're serious. If you tell them to call and they don't, well... they couldn't be that serious, so don't show them the house!

 

If I've got an appointment to show the property to somebody who's passed those little pre-qualifcation steps, I don't mind showing the property to people who call before the appointment, just schedule them a little before or a little after the appointment with the pre-qualified(ish) tenant/buyer... because when they see a couple pulling out of the driveway as they arrive, and another buyer or two show up as they're leaving, guess what they're thinking? (Oh sh!t, there's a lot of other people who want the house too! I better act quick if I'm serious!) And if it only means staying at the property a little longer and not making another trip, it isn't costing you much for that sense of competition. Plus, they just might wind up being the right people for the property anyway!

 

(Last one I sold was to a couple who called me while I was driving to show the property to someone else!)

[moveright 0]

Also, it's probably a good idea to team up with a mortgage broker who you can work with to screen potential tenant/buyers.

On the first phone call, find out if they're working with a mortgage broker already or if they're taking action to fix their credit or whatever their issue is, that will give you an idea of the quality of that prospect as well. If they're working with a mortgage broker (or at least have met with one), they're somewhat pre-qualified (now whether or not they'll be able to GET a mortgage, that's another story. But it'll at least tell you that they're serious if they have), if not, you might tell them that the FIRST thing they need to do is call your mortgage broker and have a chat with them to figure out what they need to do to get a loan further down the road. Your mortgage broker will love you for the leads you're sending them!

 

Again, let these little stepping stones weed out the tire kickers and save you the hassle. If your mortgage broker calls and thanks you for the referral and/or gives you an update as to the buyers status, they're serious. If you tell them to call and they don't, well... they couldn't be that serious, so don't show them the house!

 

If I've got an appointment to show the property to somebody who's passed those little pre-qualifcation steps, I don't mind showing the property to people who call before the appointment, just schedule them a little before or a little after the appointment with the pre-qualified(ish) tenant/buyer... because when they see a couple pulling out of the driveway as they arrive, and another buyer or two show up as they're leaving, guess what they're thinking? (Oh sh!t, there's a lot of other people who want the house too! I better act quick if I'm serious!) And if it only means staying at the property a little longer and not making another trip, it isn't costing you much for that sense of competition. Plus, they just might wind up being the right people for the property anyway!

 

(Last one I sold was to a couple who called me while I was driving to show the property to someone else!)

 

Very good point from both of you.

 

I do have a mortgage guy and he's totally on board. When I talk to a potential TB, even if they have a mortgage person, etc, etc, in MY program, we use my mortgage broker. This is to ensure accuracy and consistency. My broker knows my program inside and out and, he understands that the goal is to secure financing for actual purchase of the property. I remember in one of my other posts about the option money counting towards the mortgage downpayment, it was suggested that this is mostly the mortgage broker's protocol. That's another reason why everything has to go through my guy.

 

I appreciate the help. This will become easier after a few deals completed. You know, despite how frustrating learning can sometimes be, no matter how many times you read the book, when it's time to DO THE JOB, it's like total amnesia.(at least for me)

 

I learn by doing.