Dealing with “Toxic-Homeowner” Syndrome in Subject-To Investing
Once you work with a homeowner to show them just how good a subject-to investing deal can actually be for them as well as for you, you may find that the homeowner becomes a little more demanding. After all, now that you have convinced them of the wisdom of handing over their payments (and their deed) to a third party, they may feel – and understandably so – that you “owe” them. This is a frequent problem that I encounter when I do subject-to deals, and I used to find it extremely frustrating. One minute, a guy would be hugging my neck and thanking me for taking his property off his hands before the bank threw him out and destroyed his credit. The next, he’s dictating to me a list of terms and conditions that I “better” meet or he’ll take his newfound information and walk on to someone who is more willing to negotiate with him. From my perspective, I’ve put in a lot of time, possibly money and energy to a deal. I want to protect my interests. So even though this new “toxic homeowner” is a little frustrating, in most cases I do want to keep his interest. Here are a few ways to avoid toxic homeowner syndrome entirely, or defuse it before it gets out of control:
• Put things in writing
Of course, you need to be sure that you have an exit strategy in place right up to the second that you decide you want that house for sure and certain. However, there are many contracts that you can use that will give you an interest in the property, or at the very least show your intentions. If the homeowner puts their name on one of these, they are more likely to feel that they have made a commitment to you.
• Make sure that the homeowner has it easy, but do not take any flack
The best way to make a deal happen is to make that deal as easy as possible for the seller. That being said, do not go overboard. Make appointments and keep them, but do not come running every time they look at you funny. If you do, you are setting yourself up for unreasonable demands later once they figure out how badly you want the property.
• Be willing to walk away
If a homeowner threatens you with “finding another buyer” and you do not have any legal standing that will prevent them from doing so, it may be best to allow them to try. You can tell them that you have a real offer right now that will take the issue out of their life forever, but you understand that they feel they can do better. You and they had an agreement, but if they want to renege there is nothing you can do. However, they only have a week/2 weeks, etc. before the foreclosure, at which point you really cannot help them anymore. If you are polite but clear and firm about their options, they will likely start singing a different tune.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.
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