Crucial Conversation with a seller

I have pasted an email conversation below that transpired between Chris Carlson (a friend of mine from California) and the owner of a duplex in Ogden, Utah. Start at the bottom and read up from there. This seller wanted $129,000 with 10% down and the balance payable at 6% amortized over 360 months due in 120 months. This is the real email that when back and forth.


Dear Wanda:

I appreciate your consideration. We are always in the market. Call us if your terms/price change to reflect the economic realities I spoke of in my last e-mail.



P.S. If cash Is what your father needs we have plenty, but we would need to talk about putting several of his holdings together in a package deal in order for us to give you more cash.



Chris
Thanks for sharing your concerns. We have talked about it and right now these are our terms. Maybe we can do business in the future when the market does rebound. Thank you for your interest.
Have a good day
Wanda


Dear Wanda:

I have no problem signing a QCD provided I am convinced of the neutrality of the title company holding it. Put yourself in my position. Would you want to have the Seller and note holder in possession of a QCD if you were the Buyer? Based on your security concerns, I doubt it. I also have no problem with using a collection company for the payment and impounding the taxes and insurance.

A $15,000 down payment is doable so long as your father understands that we must revisit the sale price and interest rate which I did not negotiate at all because of the terms. At the current time there is almost no liquidity in this multi-family market in Ogden so any cash I put into a deal is not going to be coming back into my bank account any time soon. It is invested for the long haul. This means I must be very selective as to how it is allocated since I do not have a bottomless supply of cash. My cash is worth more than gold these days so it has to buy me a lot of equity or cash-flow in order to convince me to part with it. Since $15000 seems to be the magic number there is an appropriate sales price and interest rate which accompanies that down payment. It is not $129,000 and 6%. I already had a conversation with your father relaying this concept but no numbers were discussed.

We recently acquired a similar property on Adams, 2 houses one lot, rent was similar, down payment was $8750 sales price was $87,500. I’m not suggesting that you need to match that price and terms for me to be interested but we have some work to do to make this come together. All my offers are based on economic realities that are present i.e rent, debt service, vacancy factor, maintenance, taxes, insurance, property condition, and current tenancy.

Cash is limited and my opportunities are many. I will do everything I can do to make a deal but I have to keep safe as well. Too much money has been lost by us not being careful. I’m the only one in this transaction that can lose money because I’m the only one with money.

It would be helpful if you could speak with your father and show him the original paperwork and get a bottom line price and interest rate so we can say yes or no and be done. I know this is an inconvenience for you. I appreciate all your help.






Chris
A downpayment of $15,000.00, a QCD from the buyer back to seller in lieu of default, the payment would also include escrows for house insurance and taxes. An escrow company in the area would collect the payment which would be an additional charge of $14.00 per month paid by the buyer, QCD held by the escrow company and they would disburse.
Thanks
Wanda





Dear Wanda:

I did not negotiate the price at which is more than this property is worth in exchange for a modest down payment and terms that allow it to cash-flow. If you have any questions do not hesitate to call.