What do you call this kind of deal?

Question

Hi,

I'm wondering what the official term for this type of deal. Say we buy a property for $1 million, but we structure it so it's 0% down but a bank/note buyer is in place at closing to buy the note from the seller at 80% value so they walk away with 800k in cash.

What's the official term for this kind of deal?

Brandon Croucier · Answer

Wheres the 20% coming from?

It's just a seller carry & the seller sells the note.

Chris Seveney · Answer

@Jerry Zhang

Odds of someone buying that note are slim to none because it appears shady. Why would someone sell a note at 20% discount at closing?

Atleast 1 of 2 things would set off red flags

1. Borrowers ability to pay and afford this home since they had zero down

2. Property is not worth $1M and was over inflated to appear note holder has 20% equity.

To answer question this is seller financing but this end result rarely if ever happens

Seller would be better selling it for $800k+ cash and end up in better place

Landon Mizuguchi · Answer

A good deal :)

What do you call this kind of deal?

What do you call this kind of deal?

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