How to prevent this deal from falling through

Question

I have a condo that is under contract.  The buyer is now having some issues securing the financing as they are using stated income.  I really don't want the deal to fall through so I've been kicking around some ideas in my head as how to creatively get it done.  The financing isn't dead yet, but I'm preparing for it...

From what I understand, they might be about 5-10% shy so I'm thinking about lending them the money.

Does anyone out there have any other ideas on how I might get this deal done?

thanks in advance.

Account Closed · Answer

Thanks, everyone.

Jim Gordon · Answer

You could loan them the differance between what they are approved for and the purchase price to get the deal done. You need to make sure that your second mortgage is disclosed to the first mortgage holder before closing.

That said the lender is in the bussiness of loaning money that they think will get paid back. Be careful if you are making a loan that a company that makes their money by getting paid back will not touch.

Account Closed · Answer

Seller financing can be rather common when the commercial lenders are pulling back. As Jim points out the seller has to understand the risks they are taking.

Lending 5% can mean that you get nothing later if there is a default. A 2nd for 5% is worth very little if it turns out there was little to no equity above the 2nd. Be prepared to loose 100%. If you could just reduce the price by 5% vs. take a note, go for the note and then hope for the best. Just remember that if the 2nd goes bad it was the same as having received 5% less for the sale.

John Corey