Hey MC,

I have seller that i found on craigslist. He is wanting to get out of his home and I am doing a CA with him. I know he is not as good as i am when it comes to posting ads. He is posting ads just on the for sale section of craigslist. However, what do you do in this situation? I am posting in the same section but he is advertising less total price than i am bc of my fee being built in. I am not putting the total price on my ads. Are we just arbitraging craigslist here because we are far better at marketing than some homeowner? What should I do? I don't want the seller to see my ads. thanks
tim

If I found a house on Craigslist, then I do not advertise that same house on Craigslist.
Reasons being:
1. People will notice I'm now advertising a higher price/down payment/rent
2. The seller/owner will come across my ad, wanting to know who's pocket that $3-5k down is going to
3. The countless wannabe scam artists that flood my email with ignorant "financial opportunities"
4. Postlets.com, an ad in the local paper(s), directional signs, and yard signs are plenty enough for me.

During negotiations and signing the paperwork, it is now my responsibility to market the house and
take care of things. So their marketing efforts aren't really needed. Sure, they're still welcome to get the
house sold, but there's no need for them to spend anymore time and/or money to get it sold.
Besides, if they signed a contract with you, then they shouldn't be advertising (using different dollar amounts)
anyway. They've already found their tenant/buyer --you (if it's a CA, for example).

I ran into this big time. I advertised a property on CL that I found on CL. The owners saw the ad and demanded I change our contract. Nothing but headaches followed. I'm not saying to avoid CL, but if that's where you found the property then be cautious. Like Jason said, local advertising, especially yard signs and neighbors, are your best bet.

Personally, I think it is a big mistake to avoid Craigslist. I get probably 75% of my tenant buyers from Craigslist. Plus, I build my buyers list pretty rapidly from Craigslist (2,000+ right now). I think it all begins with setting the expectations up front with the seller by telling them exactly what you are trying to do and how much you plan to make. Then you can market the house any way you want.

And by the way, one of my big selling points to the owner is that they can still advertise the house the same time I am. If they find a buyer before I do, good for them. They owe me nothing. Who would say no to that? But again, I do CA's a little differently. With a flex option, I am advertising the home at the same price the owner is. He just knows up front that if I find the tenant-buyer first, I get the entire option consideration.

Hope that helps. Let me know what you think.

Mr. Seller what's up? I've got your house under contract. If you sell your house, I still need my fee.

Have I had a seller sell a house before I did? Yes. Maybe 10%-20% of the time. But I get a lot of deals because of this approach. Do you really want what is in the seller's best interest? I want them to fill the house as quickly as possible. That may mean even letting them list the house with a Realtor. I think my sellers know that about me, and that's why I am doing 4-6 CA's a month.

Not saying that my way is the best way. Just think about it.

Something else about the seller finding a buyer first... I had a seller who found a tenant before I did. The tenant just wanted a 6 month lease and the seller took it. But, the seller agreed that when the lease is up he'll sign another contract with me so we can try again. Better than that, they referred two of their friends, one buyer and one seller, to me. Would I have preferred to get the original deal? Of course. But, I still have that opportunity, plus I got some new leads. It's different if the seller finds a buyer rather than a renter, but still...

I'm with jvmccall on this one. Besides we know how to post on craigslist every day. You to right? Herbster

So if a seller is advertising FSBO on Craigslist for $100k, you'll advertise
that same amount, but shave off for your profits?
The seller was wanting to get $100k, but instead gets $97k? --assuming a profit to you of $3k.
Do you use rent credits with your deals, Joe?

Yeah, most here will bump up the price (to allow for rent credits and the option consideration/profit).
Seller wants $100k, we bump it up to $105k...we profit $3k, the rest is for rent credits.
This is only done if the market allows.

I'd like to see what your Flex Option agreement looks like.
Whenever you assign it, what forms are you using to assign the deal, as well as
your position and liability?

Thanks!

I'd be interested in hearing how you built up that buyers list of 2k from craigslist. What's your secret?

I'd like to know as well. I have a pretty good buyer list of about 40 people just in my local area. My recurring problem is 80% of my buyers are totally unqualified in terms of income. It seems most of the people who are interested in a lease-purchase can barely afford half of what their rent would be. Credit and down payment problems I can work with, but when I learn that they can't afford the rent, I have to pass. These buyers seem to think that a lease-purchase is some trick to buying a house with no money. I can't understand why there are so many foreclosures right now...

I keep thinking that my buyer list should be much bigger, so am I doing something wrong?

Sorry for the late response! The way I do it is really simple. If a seller wants an option price of $100,000 and $1,000/mo in rent for a house, I advertise it for $100,000 & $1,000/mo. The seller understands that I will collect the option consideration (whatever it is - within reason of course) and they will get the first month's rent. When I find a tenant-buyer that the seller approves, I sign the lease option contract with the tenant-buyer, and then assign the lease option contract back to the seller. I collect the option consideration and the seller gets the first month's rent.

Again, this is different than what MichaelC teaches. Not saying it's better. It's just the way I learned to do it a long time ago. Hope I am not confusing anyone. Listen, keep using what works! MichaelC's method of CA's works great! I am not trying to reinvent the wheel. I am a little worried that sharing what I am doing will confuse people. So if you are confused, just ignore what I said above.

If you want to see the flex option contract I use with the seller, send me a PM and $10,000. ;)

Well, I wish it were a secret. Maybe I could sell it and make a ton of money!

It's simple really... I use Constant Contact to collect the email addresses of everyone who contacts me. I do that two main ways:

1) I have a section on my website where the can "opt-in" to join my buyer's list & "be the first to be notified when hot new properties are added to my website!"

2) Everytime I get an email from a tenant-buyer (from a craigslist ad, a vflyer or postlet contact, etc), I add their email to Constant Contact.

By the way, you should have your virtual assistant do all this for you. It's real easy once it's set up.

Not all the buyer's on my list are qualified obviously. But I get at least 30% - 40% of the people on my list that open the email and look at my new properties. Maybe 10% - 20% of my homes that I sell come from my buyer's list. They also sometimes send the emails out to their friends. I also remind them in the emails of my referral fees.

Makes sense to me

"Sorry for the late response! The way I do it is really simple. If a seller wants an option price of $100,000 and $1,000/mo in rent for a house, I advertise it for $100,000 & $1,000/mo. The seller understands that I will collect the option consideration (whatever it is - within reason of course) and they will get the first month's rent. When I find a tenant-buyer that the seller approves, I sign the lease option contract with the tenant-buyer, and then assign the lease option contract back to the seller. I collect the option consideration and the seller gets the first month's rent."

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So you contract with seller for $100k and advertise for T/B for $100k?

The option consideration fee is non-refundable and goes towards purchase price if T/B buys, right?
So if T/B buys, then Seller will get $97k, and not their $100k they wanted, right?


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Confused...

The way I understand it there are 3 main ways to do a CA??
What's the best and easiest way to do this? Seeem like there
may be problems if buyers see tw different prices for the same
house on the market.

Thanks!!

A.
1. L/O ( You and Seller) ex. $100k
2. Advertise at $103k
3. Find T/B, collect assignment fee, ex. $3k, sign assignment agreement to T/B
4. Assignment fee does not go towards purchase price if T/B buys??

B.
1. Flex Option (You and Seller) ex. $100k
2. Advertise at $100k, find T/B
3. Write up L/O contracts (You and Seller)
4. Assign to T/B after you collect $3k assgnment fee...does not go towards purchase price??

C.
1. Flex Option (You and Seller) ex. $103k, seller wants to net $100k
2. You and Seller both advertise at $103k, find T/B
3. Write up L/O contracts (You and T/B)
4. Assign to back to Seller after you collect $3k option consideration fee from T/B.
5. Option consideration fee non-refundable and goes towards purchase price??

Yes to all the above. Do it any way you want. Just tell the seller what you're doing. 

If he wants $100k, tell him you will advertise it for $103k and you will keep the $3k. 

Or, tell him you really don't think the house will appraise for $103k and you will have to advertise it for $100k. Which means the seller will only get $97k at the end.  You will get $3k at the beginning.  

Just ask them what they would prefer. Tell them how much you are trying to make. If you think it will kill the deal if they find out how much you are making, they probably aren't motivated enough & you need to move on.   

Question:
Trying to get a clear vision on this.

If one did not want to confuse the end-buyers when seeing the same property advertised with two different purchase prices, what if:

Other than bumping up the purchase price when advertising, to include your profit,
would it make sense to:

Advertise the monthly payment and maybe the term of the lease but NOT the purchase price.

When the end-buyers asked about the purchase price, then tell them it depends upon the amount they have down for option consideration. Get them to mention how much they have down first before you tell them the purchase price.

If they have $3k down then the purchase price would be $103k or if they had $5k down, then the purchase price would be $105k, assuming there were no rent credits. (If there were rent credits, say $3k for the term, then the total purchase price would be $108k).

Then write up a L/O contract with T/B for $105k and collect the $5k for option consideration (non-refundable and goes towards purchase price). Assign contract back to Seller. Seller would net $100k as they wanted.

Thanks!

I really don't think it is that big of an issue; but, I have had t/bs say "Hey I saw a lower price than what you are asking." My reply is that was before the property was offered as a rent to own and it was a straight sale. If you want to buy the property straight out with no lease I can get you a better price; if not, this is the rent to own price. In-addition, after rent credits and the option consideration the price drops anyway.

Not sure why you are wanting to assign to the seller. Assign to the tenant/buyer and be done with it.

What Steve said.