Bank on Your Neighbor: The Audiobook Podcast
Building wealth doesn’t have to mean Wall Street. In this exclusive audio series, Mel Dorman brings you Bank on Your Neighbor — a practical, people-first guide to seller financing. Learn how to create ethical, win-win deals rooted in relationships and strategy, and start building financial freedom right in your own community.
https://meldorman.com
Bank on Your Neighbor: The Audiobook Podcast
Bank on Your Neighbor: The Audiobook - Chapter 12
What if the best deals in real estate aren’t about winning at someone else’s expense, but creating solutions where everyone benefits? In this chapter, Mel shows you how to spot the green flags of seller financing—equity-rich sellers, tax concerns, tired landlords, and more—and how to avoid the red flags, including the risks of elder abuse.
Through real-world examples like the Coopers’ retirement dream, you’ll see how to craft offers that meet sellers’ true needs while building long-term wealth for yourself. Plus, Mel introduces powerful negotiation strategies like collecting agreements, side-by-side comparisons, and even a compassionate alternative to reverse mortgages called the life estate.
This episode is a masterclass in designing ethical, creative deals that honor community while creating sustainable wealth.
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Hi, friend. I'm Mel Doman, real estate investor, former social worker, TEDx speaker and financial activist. And this, this is Bank On Your Neighbor, the podcast. You're probably here because you felt it too, that the system wasn't built for us. That building wealth shouldn't mean selling your soul to Wall Street or crossing your fingers every time a bank says no. That there has to be another way. Well, there is, and this podcast is my free gift to you. That's right. Free, no paywall, no audible subscription, no gatekeepers standing between you and the knowledge that can change your life. Because here's the truth, just because something's free doesn't mean it isn't valuable. Sometimes the most valuable things, clarity, empowerment, freedom, don't come with a price tag. They come with purpose. I created this podcast because I'm on a mission to decentralize wealth, to take power out of the hands of billionaires and put it back into our communities. Each episode is a chapter from my book Bank on Your Neighbor. Read by me. It's my way of making sure this knowledge reaches the people who need it most without a single algorithm getting in the way. We'll walk through the real strategies I use to go from dumpster diving in my twenties to building a multimillion dollar portfolio in my thirties without banks, without credit, and without compromising my values. We'll talk seller financing, community centered investing. And creative ways to build wealth that actually serve people, not exploit them. But this isn't just a podcast, it's a movement, a radical reclaiming of power, a blueprint for creating more community-minded millionaires and fewer billionaires extracting from our neighborhoods. Every chapter builds on the last, so I recommend listening in order. I'll drop links, visuals, and extra resources in the show notes to help you take action. Not just absorb information and if something in an episode strikes a chord, send it to someone you care about. That's how we spread financial literacy. That's how we grow a movement. That's how we rise together. Welcome to Bank on Your Neighbor. Welcome to the movement. Let's build something together. Chapter 12, discovering a Win-win solution. Win-win is a belief in the third alternative. It's not your way or my way. It's a better way. Higher way. Steven Covey. Imagine suffering from a terrible cold that won't clear up. Reluctantly. You book an appointment with your doctor. When the doctor walks into the exam room, they seem rushed and skip the greeting. Eyes glued to their chart notes, they nod to themselves and proceed to write a prescription for blood pressure medication before you can get a word in. The doctor. Thanks you for your time and sends you on your way. All of this takes about 60 seconds. Tell me, how would you feel? Would you take that prescription? Would you even wanna talk to this doctor again? Likely not this rushed approach. What I call prescription before diagnosis is unfortunately the method that most real estate investors take with sellers, they blast out postcards offering all cash two week close, assuming that's what every seller wants. Just like with that doctor visit, jumping straight into the solution without understanding the person in front of you misses the point entirely. To bring value to a seller, we need to understand their unique problem. Then we can apply the right tools. Let's start by learning to spot what I call the green flags of seller financing, the green flags of seller Financing. As you ask open-ended questions and gather information from your seller, listen for the following clues. Equity to lend owning a property for many years. Mentioning owning a property free and clear or paying cash initially from the investment are all clues that a seller may have equity to lend worried about capital gains. Sellers who've held properties from many years often face significant tax bills. They may mention this directly, or you might deduce it based on how long they've owned the property. Seller financing can delay that tax event and allow them to earn interest. In the meantime, tired landlord. If the seller complains about managing property, they may be indicating that they want a more passive form of income, which seller financing can provide for them. Enjoys passive income. Perhaps they express that their initial desire for rental property was to create passive forms of income. Over time, they found managing properties to be too bothersome. But they don't wanna give up the monthly stream of income mailbox money for the win. Seller financing can be the bridge to an even more passive income existence for them not interested in a 10 31 exchange. Some landlords know about doing a 10 31 exchange, but want out of the landlord game. If they say they don't want to buy another property just to defer taxes, seller financing may offer them a better alternative. No better investment vehicle. If the seller doesn't know where to park their funds post-sale, you can present seller financing as an option that's secure income generating and familiar. They're still investing in a property. They understand often you can offer a higher and more stable return than the alternatives like stocks, bonds, or CDs. Familiarity of seller financing. A seller who already understands or has done seller finance deal before will be easier to work with. You won't have to overcome fear or confusion. Just start the conversation. Concern about a large windfall. Some older sellers are wary of too much cash at once because of fraud risk, financial aid, disqualification, or family pressure, monthly income from a note may feel safer and more manageable. Pro tip, summarize these verbally with the seller. Here's what I'm hearing. You wanna retire, avoid taxes and keep some income flowing. Did I get that right? If you're hearing several green flags, you're likely looking at a strong seller financing opportunity. If not, you may be dealing with someone who isn't a good fit. Red flags and the risk of elder abuse, seller financing isn't for everyone. Watch out for these red flags. The seller needs all the money upfront. They owe nearly as much on the property as it's worth. They're anxious, confused, or have never heard of seller financing and seem unwilling to learn. They want to buy more properties, not retire. The property is tied up in an estate that needs to liquidate and divide proceeds, and one serious red flag. Lack of mental capacity. It is considered financial abuse to sign a contract with someone who doesn't understand it, and whether you meant to take advantage of them or not, doing so can lead to legal consequences and worse broken trust in your community. Here are the red flags of impaired mental capacity. Notice, an inability to comprehend the contract or the consequences they have. Mental illness, memory issues or confusion, coercion or outside pressure, influence of drugs or alcohol. Nearly 37% of US seniors experience financial abuse over a five year period. Even if your deal is ethical, if the seller's children feel left out or suspicious, you may be accused of wrongdoing. Best practice involve family members in negotiations. If you see any signs of confusion, slowness, or vulnerability, generally do this. If you're working with an older person, if it's truly a win-win involving others shouldn't be a problem. A little upfront work will save you the legal nightmare of facing elder abuse accusations. After closing meeting, Mr. And Mrs. Cooper, imagine this, you're sitting in a cozy living room of a couple in their sixties. The walls are lined with family photos. A golden retriever dozes at your feet. Mr. And Mrs. Cooper have owned their fourplex for over 20 years, and now they're ready to retire and roam their dream to buy an RV and visit their grandkids across the country. They called you after receiving your letter. They don't want to be landlords anymore, especially not from the road. They've already tried hiring a property manager, but the calls still come. It's time for a change. Over coffee. You ask what they plan to do with the proceeds from the sale. Mr. Cooper says, well, we need about$50,000 for the RV down payment. The rest probably a CD at our credit union. It's not glamorous, but it's safe. As you keep listening. More details unfold. They're debt free on the building. A cousin of theirs recently sold a property with seller financing, so the concept isn't foreign. They're worried about the capital gains tax, but don't want to mess with the 10 31 exchange. Too old for that. Mr. Cooper jokes. By now you're hearing several green flags. A free and clear property equals equity to lend retirement goals and landlord fatigue equals a desire for passive income. Tax concerns equal openness to deferred capital gains, and the familiarity with seller financing equals less friction. You ask about the property's performance, they share that the current rents bring at about $5,000 a month after taxes, insurance, and routine maintenance. They're left with roughly$3,900 per month in net income. Now, you know what? They really need $50,000 in upfront cash, a reliable monthly income stream, close to $3,900 a month, and minimal involvement going forward. In other words, they don't want to sell. They want to retire. They want peace of mind. Your job isn't to pitch seller financing. It's to show them that it's the obvious solution to the life they're already imagining. You are not just buying a building, you're solving a seller's problem. Listen carefully match your offer to their needs, not your assumptions. Crafting the proposal, the four levers of negotiation. By now, you've done the most important work, listening. You understood the Cooper's financial needs and emotional goals. It's time to craft a seller financed offer that feels tailor made. But first, let's revisit their situation. Purchase price. They expect around $800,000 monthly net income, $3,900 from the fourplex. Immediate need $50,000 to buy an RV investment plan. CD earning 3% interest. Preferred outcome. No more tenant headaches. To build a win-win deal, we'll pull from the four levers of seller financing, lever one price. This is often the seller's focus, and while price matters, it's the least important lever for you, especially if you are not planning to sell soon, because the longer you hold, the more appreciation does the heavy lifting. You might gladly offer 10,000 or even $50,000 over market value if the other terms work in your favor. In this case, we'll honor their ask of $800,000 to stay competitive. Lever two down payment. They need about $50,000 for the rv, add about $5,000 to account for closing costs, and the down payment becomes $55,000. This ensures they walk away with what they need and trust that you understand the assignment. Lever three interest rate. This lever unlocks the real magic. Coopers plan to invest their proceeds in a 3% bearing cd. That becomes your benchmark. If you can offer double that, say 6.25% interest only payments, they'll receive the same monthly income they're getting now and keep the property secured against an asset they trust. Let's run the math purchase price.$800,000 down payment, $55,000. Seller finance note, $745,000. Interest rate, 6.25% interest only payments, monthly payment to the seller, $3,880 and 20 cents. Just like that, you're matching their existing cash flow without the burden of being a landlord. Lever four loan term. Here's where strategy meets safety. A five-year balloon payment is the bare minimum for weathering real estate cycles, but 10 years is far better. Why? Because longer terms equal more time for appreciation, more exit options, and more time to refinance safely target at least five to 10 year term. Depending on how far above market value you're going, the higher the price, the longer the term should be. Now you've got a deal that solves the Cooper's need for upfront cash Delivers steady tax. Advantaged monthly income honors their desired sale price. Reduces their workload and protects you from short-term risk. In the next section, we'll look at how to present this proposal using psychological techniques like collecting agreements and comparable offers to guide the seller to their own. Yes, presenting a winning proposal, you've crafted a thoughtful offer. Now it's time to present it in a way the seller can truly receive. Most sellers aren't just evaluating numbers, they're evaluating trust. That's why how you present your proposal matters just as much as what's in it. Here are two strategies I rely on most, one, collecting agreements before I ever share numbers. I walk the seller back through what I heard from them. I confirmed their goals, concerns, and motivations one by one until I've gathered at least three yeses why. Every small agreement breaks down subconscious resistance. Each yes, builds momentum towards the final one. You want to feel like your needs were understood, so does your seller. Here's how I might use this method with the Coopers. Thanks for meeting with me today. Before I share my proposal, would it be okay if I quickly check that I understood everything we talked about? You mentioned your dream is to travel the country in an RV and that you'll need about $50,000 for the down payment, right? You also said you're tired of managing tenants and want to move on from the landlord role. Right now, you're bringing in about $3,900 a month in net income from the fourplex, and you're planning to put the proceeds in a CD earning around 3% interest. Is that correct? Each Yes. Builds connection. It tells them you listened, you care, you get it. Two, let the seller be the hero. Instead of telling them what to do, let the proposal feel like the neutral outcome of their own words. So once I've gathered those confirmations, I say something like, the more I thought about everything you shared, the more it felt like you were already pointing towards the perfect solution. Here's what I'd love to propose. Then I walk them through the numbers, $55,000 down payment for their RV and closing costs, full price offer at 800,000. 6.25% interest only payments $3,880 per month matching their current income. No tenants, no management, no midnight phone calls. Then I would say instead of parking your proceeds in a CD after taxes, this lets you earn double the rate on pre-tax dollars secured by the fourplex you already trust. Then I stop talking. Pro tip, don't explain your way outta the yes, let the silence work. It's powerful. Three, provide a side-by-side comparison. When I present an offer, I don't just ask for trust, I bring clarity. I come prepared with two proposals, one seller financed, and one conventional bank financed. Why? Two? Because the numbers do a better job than I ever could of explaining why seller financing isn't just another option. It's often the better one for everyone involved. Let's return to the Coopers who want a sales price of around$800,000 and monthly income close to their current net of $3,900. As a buyer, I wanna preserve that $3,880 monthly payment, my target, to ensure positive cash flow and healthy reserves. But here's the key insight. If I use a bank loan, I can't offer $800,000. The payment would be too high. To make the numbers work, I'd have to lower my offer price to stay within the same monthly obligation. Seller financed offer purchase price.$800,000 down payment, $55,000 loan Amount or note, $745,000. Interest rate, 6.25% interest only. Payments, monthly payment,$3,880 and 20 cents. 10 year interest income for the sellers.$465,624. Principals still owed after 10 years, $745,000. Total seller earnings after 10 years, $1.21 million compared to the bank financed offer at 7.25% amortized on a 30 year loan. To match that $3,880 a month payment with a bank loan at 7.25%, the loan must drop to approximately $600,000. That means my purchase price would be 655,000. The down payment, 55,000 capital gains tax, or approximately 25% on 255,000 of profit would be $63,750. The net proceeds after the tax to the sellers would only be $591,250. If they invest that in a CD and they get a return of 3% over 10 years, they'll get 177,375, which means their total earnings over 10 years is only $768,625. With seller financing, the Coopers earn nearly 450,000 more over 10 years with less tax burden, no tenants, and a fixed monthly income that matches what they're used to. This isn't just an offer, it's a financial upgrade, and when I walk them through this logic pen to paper, the numbers speak louder than any sales pitch ever could. I'm not asking you to accept less. I'm showing you how to earn more by structuring the deal creatively. Reverse mortgage versus life estate. Let's talk about a fork in the road. Many elderly property owners face the reverse mortgage. At first glance, it can seem like lifeline. Your house starts paying you no more monthly payments, and the lender even helps you cover property taxes and, and insurance. It sounds as cozy as a cup of tea on a rainy day, but there's a catch that negative amortization schedule. It's just a technical way of saying the bank slowly eats your equity. Over time, the balance grows, not shrinks, and when the homeowner dies, the house usually goes to the bank instead of their family. The legacy they spent decades building dissolved into fees and fine print. It doesn't have to be this way. Let me offer you a different option. The life estate, a community centered alternative with dignity built in. Here's how it works. Let's say your elderly neighbor, grace owns her home outright, but is struggling to cover her living expenses. Instead of selling her house or handing over control to the bank, she sells it to you. Through seller financing, you structure the deal with 0% interest, freezing the balance so it doesn't grow over time. Grace retains a life estate, which means she has the legal right to live in the home for the rest of her life. You agreed to cover the property taxes, insurance, and perhaps some light maintenance, and those costs gradually reduce the balance owed on the note. No rent payments, no bank foreclosure threats, just grace living peacefully in the home. She loves. When grace passes away or moves out of the home for any reason, the life estate ends and the note unfreezes and the 10 year note timeline starts, interest kicks in, save at 4% with terms already built into the contract. The heirs now have a few choices. They can continue receiving monthly payments just as Grace did. Or they can sell the note to an investor or you for a lump sum. Unlike a reverse mortgage where the family is often left with nothing, this approach preserves equity and family wealth. Let's look at the math frozen note scenario. Home sold at 500,000, 10 years of taxes. Insurance paid 60,000, reducing your balance. The new note balance after life estate has ended is $440,000. The interest rate 4%. The total income to the heirs over 10 years is $176,000. The home value after 10 years, over $750,000, the family walks away with $616,000 instead of zero. You gain $360,000 in equity and a decade of steady cash flow, all because you chose to care for a neighbor instead of letting a bank take their home. It's ethical, it's smart, and it's deeply human. The life estate isn't just a clever workaround. It's a radical act of financial compassion. You help your neighbor live out their life in peace, preserve intergenerational wealth, and create a long-term investment that benefits everyone involved. If you believe in community-centered investing, this is one of the most beautiful, powerful tools you can use. When you approach a seller with empathy strategy and clear options, you're not just trying to get a deal, you're offering a partnership rooted in mutual benefit. That's what sets seller financing apart. It's not a loophole or a last resort. It's a higher path. One that rewards creativity, care, and long-term thinking, because here's the truth, a win-win deal isn't found. It's designed, it's crafted through listening, built on trust, and held together by terms that make sense for everyone. When you master this approach, you stop chasing transactions and start building a reputation, one that brings opportunities to your door. In the next chapter, we'll go from conversation to contract. I'll walk you through the key components of purchase and sale agreement, what each clause means, and how to negotiate the terms that protect you while respecting the seller. The deal may begin with a handshake, but it's sealed in writing, and I'll show you how to do it right.