This is the kind of seller financing that gives creative financing a bad name and gets Realtors served lawsuits.
Why the listing agent would ever consider letting his client put this deal together, I'll never know... all I can think was that they were obsessed with double ending a high-end listing 48 hours after it was up on the MLS, NOT what was good for the seller, and NOT what was good for their E&O insurance.
The buyer was offering full price, $820,000, but he would be making NO down payment. He would be putting a $420,000 first HML (hard money loan) on the property, and asked her to carry the remainder of her equity in a 2nd for $400,000. He said he would pay it off within 120 days.
All of the risk was on the seller.
When I suggested the seller switch to a lease-option, the guy who was so in love with the property suddenly couldn’t put it together when he needed to come out of pocket with a paltry 5% to control this $820,000+ asset.
I told the seller she could proceed with the offer originally submitted if she asked for 3 important modifications to the agreement.
I will discuss these in detail in Transaction Review & Calculator Practice on September 3, 2013. Owner financing is a great tool and I believe in it 100%, but there are things you definitely have to watch out for.
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