7 Reasons to Avoid Seller Financing (& When to Use it)

[@williewill167]

This information is very helpful Walker, thank you for sharing!

[@BuyThenBuild]

Thanks Willie!

[@michaelvanportfliet6334]

Thanks, Walker! Would you suggest seller financing for a partial buy-in for ownership? Etc: looking to buy-in for 10% of business. Thank you!

[@BuyThenBuild]

It's all in the details, which is why we work through deals in the Lab. In this instance, my gut is that if the seller wants you to have it, they can help you "vest" the first 10%, sure. But they also may be thinking that they are "financing" the 90% and need you to have something in it. Depends on your relationship and their desires. Do they want to retire and get cash? Lean into that!

[@nosecreekphysiotherapy6682]

Hey Walker, All great points! One quick dumb question, what does SBA stand for? I am from Canada. Thanks, Blair

[@Luke_Mitchell]

Small Business Administration

[@nosecreekphysiotherapy6682]

Thanks Luke.

[@BuyThenBuild]

No SBA in Canada unfortunately,@@nosecreekphysiotherapy6682

[@ibikunlegbenga6687]

What if I am Looking at businesses in Uk and Europe

[@BuyThenBuild]

Different story. The SBA here in the US solved that issue.

[@DrBestforyou]

I find two ideologies that dominate this days. First, promoted the idea that brokers stop business from selling, they call it SPD - sale prevention department. That around 80 percent of businesses don't sell in US, that is ehy its easy to find a desperate retiring desperate business owner who will be willing to finance without personal guarantees. Second ideology is the one Walker promotes in his book also. That you need to seek connection through brokers, because " people get stuck by lightning" very rarely. I am confused...Wlaker sound realistic but he would have more credibility if he wasn't a broker himself.

[@BuyThenBuild]

Thanks for your comment, DrBestforyou! And your observation is a good one. Please let me respond. Please keep in mind that I acquired 7 companies over 12 years BEFORE practicing as a broker, and these days I only do it on a limited basis to stay sharp and current. The reason I wanted to broker in the first place was because: 1) After almost 2 decades of practice, and hundreds of industry interviews and connections, I firmly believe it's the best way to get deals done. 2) I knew I would be great at it and there is a clear opportunity to bring excellence to this unregulated practice. 3) Most importantly, as someone who educates at scale around this area, I wanted a statistically significant exposure to deals that were not mine (as buyer or seller role). After about 100 transactions, I really pulled back. My busy broker period was 2018-2021. Also, we have 10's of thousands of buyers on that email list. I'm picky about what I take on and our average deal get 2-3 offers. I understand one could use KZbin to gain buyers, but that is not the purpose of my Buy Then Build work (I don't even own the brokerage, I'm a partner firm--but I do own Buy Then Build and Acquisition Lab--the #1 largest vetted buyer membership in the world--and we are closing about $100,000,000 a year in my non-broker, educational business). As for why brokered deals have a high percentage of not selling, I have different thoughts on that underscored here: kzbin.info/www/bejne/qqG3fnVoaaZpqNU Regarding, the first school of thought you underscored; that which includes a general, "brokers are no good so find desperate buyers" approach. In my experience, the business is the single most valuable thing an entrepreneur has and, at scale, typically doesn't let it go. If your strategy is to find a diamond in the rough they are out there--but I've very rarely seen a first time buyer actually land one of those. Maybe once or twice in 18 years--it's the people already doing deals. This is buy a large, in my opinion, a "let's pretend" approach, borrowed from real estate investors. It's a different asset class and typically doesn't work effectively. Just talk to any traditional search fund. Off market is inefficient and takes years. It also generates, often, the most risky situations for buyers. I hope this helps friend! I appreciate you watching. Good luck on your search! Walker

[@JB-or3vi]

It is common for SBA lenders to require a seller’s note.

[@diegoserna5481]

Man, not everyone has 10% for a down-payment . I feel like your videos are for people who are wealthy already.

[@BuyThenBuild]

I get it, Diego. However, I teach people who can get deals done how to get deals done. If you have no cash, you are going to waste years of your life, and a lot of people's time, trying to execute a deal that is outside what actually happens. I can make headlines and click bait, just like others, but instead of lying to you, I focus on how deals actually get done. If you don't have the ability to put skin in the game, I actually think you are not ready yet. The discipline it will take you to save $100k is exactly the same discipline you need to run a business. You know how you can't buy a house without a down payment? Same thing. If I told you you could go out and use seller financing to buy a house... imagine what seller would go with you. None. They'll pick someone with a bank loan. You're welcome.

[@diegoserna5481]

True, thx!!!

[@fizeekpoaster]

Nor should everyone. Just save though and you'll get there eventually.