Would appreciate help with determining seller financing deal.
I'm going to make an offer for a commercial property and ask for $130,000 in seller financing (I'd also be putting $130,000 down).  They've been trying to sell since 2009, but the building is in pretty bad condition.  I'd appreciate information on how to propose dealing with the interest.  I want to propose to do it in 5 annual payments rather than monthly payments.  The local banks are showing 3.81 to 4.18% interest rates.

Also, should I mention that I don't know if a bank would finance the building due to it's condition?  I'm not sure if this is true, but the roof leaks, there is a large hole in the roof of the "awning" over the front door, it's really dirty and full of crap (I'm going to offer to take it as is and clean it out myself).  They know all this, but it's been in the family for a long time and I'm wondering if they still may be offended.  But, I'm also not sure how an appraisal would go and I don't want to pay for it just to get turned down for the loan.  A commercial mortgage broker said I'd have to pay for a business appraisal (for $2k to $5k rather than a few hundred for a standard building appraisal)  even though I'd be changing the nature of the business.
[{"id": "cpiutws", "text": "I'd just ask them.  That sounds like a great seller financing candidate and your terms sound reasonable (fast pay off, half down etc).  \n\nIf they are game then have a lawyer draw it up and deal with the details.  \n\n\"hey I really am interested in your building but I think its going to be really hard to finance due to some of the condition issues.  I can put half down and pay this off in the next five years.  Plus I will be improving the property so you have a lot of security here.  What do you think?'.......\n\nI've pretty much stopped trying to figure out what a bank will or won't finance anymore.  Talk to your actual banker (or several) about your concerns and see what the feed back is.  Make sure they know you are seeking 50% ltv roughly.", "replies": [{"id": "cpiypck", "text": "Thanks for your reply.  Would the paperwork the lawyer drew up determine the interest, though?  For example, if I wanted to ask for a simple 4% interest each year vs compounded interest?  Or is there a set formula?\n\nI know the lawyer would be needed for default language, dates of payments, etc., but I'm not sure if I can play with the interest or if it has to be done a certain way just like a bank would need to do.  I don't want to cheat them in any way, but if I can save a little from a conventional loan and still give them more than they'd likely get by putting it in the bank....then we all win.\n\nAnd I'd need to present it in an easily understandable context - for me and them!", "replies": [{"id": "cpj0a31", "text": "It would but its just a number they put in :).  \n\nThe best way is to agree to all that stuff then the lawyer will draft the mortgage, sales contract, etc.  \n\nWe use what is called a letter of intent for this ushually.  If you google that you can find some examples.  It should clearly state it is non binding.  Or ask your lawyer for one.  You ushuausually put the important terms on this to negotiate them, then when everyone has accepted it you send it to the attorney to draft documents on it.  \n\nSomething like the interest rate and repayment terms would certainly be an item you'd include and want negotiated before you pay an attorney to do a bunch of drafting.  \n\nAs far as what rate, seller financing tends to be a bit above market In deals I've done, but there is no reason it has to be.  It is just another negotiable item.  \n\nDo you know if he has a mortgage on the propertY now?  If so that will have to be paid off, you will have to assume it, or you will have to do a land contract.  You should discuss these options with your lawyer.  Seller financing laws and methods are highly dependant on what state you are in and there are tons of ways to fuck it up.  \n\nIn all cases though, I think a friendly conversation with the seller about their interest level to finance, if they owe on it, etc are where you start here.  There is no reason to have a big legal bill if this isn't going to happen anyways.", "replies": [{"id": "cpj1r5d", "text": "Thanks so much!  The property has been in the family for a long time - 30 to 40 years at least for the business building, probably longer for the land itself.  My guess is no mortgage to pay off, unless they took out a second mortgage.\n\nMy plan was to agree to basic terms and then for me to pay for the lawyer to draft it up (so they don't have that expense).  At most they'd have to pay for their own lawyer to review it and make sure it says what it they agreed to.\n\nI asked the listing broker if they'd be interested in seller financing and he said maybe, but not for much and not for long.  On the other hand, he seems a little clueless.  He's not a commercial broker.  I told him I want to present the offer myself, but he hasn't answered me.  I don't trust him to do more than a basic, here it is take it or leave it.\n\nThey've been trying to sell for 5 years and when I say I want to make an offer he says he's busy getting ready for vacation (I'm not kidding) so that the best use of his time is for me to drive 45 minutes or so to his office - when the property is less than 10 minutes from my house. ", "replies": [{"id": "cpj7rpt", "text": "hire an agent to rep you.  they will handle all this.  I assumed he didn't have one for some reason.  \n\nIf you are worried about how it is conveyed, include a letter with it or even as the first paragraph of the LOI with the details to follow.  Include proof of funds for the half down with it.  \n\nI can't say for sure what the guy will do, but if you do all that I think it will show you are serious and its worth them looking at.", "replies": [{"id": "cpjg6ex", "text": "I am an agent, but I've only done residential and I'm still pretty new to that. The seller's agent, sometimes seems clueless for part of the conversation and then seems on the ball for part - I've only talked with him on the phone a couple of times.  I did get some help today from a woman in my agency and that was very helpful.  I thought I was all set, but now I've found a couple things in the disclosures with the deed.  One thing says about 4 acres, the other says 7 acres.  something else makes it look there are two lots...  \n\nBut hopefully I'll have it all figured out by tomorrow afternoon and we can get moving on it!", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]