About two years ago, a friend called to ask some advice on a sale. She had an offer on an income property she had been wanting to sell for some time. The property had been recently appraised at $550,000 and the offer was for $750,000 with the buyer paying almost all closing costs, including the sales commission, although the property was not listed and never had been. The offer was too good to be true but the only real problem was the financing. The buyer needed my friend to carry a note for $600,000 at 7% with a balloon at 24 months. Should she go through with it? She was very worried about having to foreclose if something went wrong. After looking over the buyer’s financials and his personal history, I advised her to proceed. Her brother, a very successful businessman advised her not to. I plainly told her that the greatest risk was the buyer’s potential unwillingness or inability to maintain the property in good condition in order to guarantee its insurability and its value during those two years. Six weeks ago she collected her balloon payment. I found out through the grapevine but I was happy for her anyway. Knowing I provided good advice was its own reward.
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