Regret accepting offer with owner carry in 2nd position

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

Without all the information, you do not know your level of risk. For additional risk you should get additional price, but it seems you are selling at a discount. In addition, your second loan is below market rate and far below hard money rate. 2nd are typically above market rate due to the increased risk.

Also with the contract being assignable, I question if the purchaser is hoping to wholesale the deal. If you are paying agent commission on a potential wholesale deal that is not good for you. When you see this in a contract it can be an indication that your price is below market rate.

It is my view that your agent should have done more to protect your interest and explain things.

However, you are under contract. If the buyer performs on the contract, you must sleep in the bed you made or you could get sued. I think best case for you could be that buyer does not perform to contract and you keep the earnest money. Worse case is buyer closes but the property declines in value to be significantly underwater and you lose the $450k in the 2nd position. This would basically have you selling a property worth ~$1.5m for $1m.

If the sale falls through, let me know.

good luck

4 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

4y

@Account Closed If it makes you feel any better when I buy on owner-carry I get far better terms than what you negotiated. I haven't paid more than 1-2% (usually 0%) on seller equity in more than 20 years.

I'm sorry that you agreed to 2nd position but that's water under the bridge at this point. I think you're right that the wrap would have been better, both for you and the buyer. You're going to have to wait and see if the buyer closes and then hope they don't default in the next 3 years. You're probably not going to want to breach because they will sue for performance anyway and if they win you'll be out legal fees and still have to go through with the deal.

2 Reply

Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

4y

@Account Closed Yeah, a couple of important things you didn’t consider…

1) the amount of the 1st mtg, and his resulting down payment, is crucial

2) the deal needed to be contingent on you approving the credit/resources of the buyer…without this you have no control on who your ultimate borrower is.

Having said that, your best scenario is if they don’t place the EM in escrow by the deadline. If they are 1 minute late, Immediately send a notice of cancellation, assuming your contract allows this immediate cancellation, or a notice to cure within a certain amount of time, whatever your contract allows.

3 Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

4y

Quote from @Account Closed:

After listing my property (a 4-plex in San Diego) too high in a declining market, receiving no offers after a month even after a 9% price cut, I asked my broker: at what price could he guarantee an offer within a week or two. He brought in a local investor (dual agency) and he gave me an offer that looked ok at first -- close enough on price, with no contingencies. This was very attractive to me because it's a very old property (1914), in good shape but with deferred maintenance, a past electrical fire, and some other issues that are relatively minor.

I had stated I could offer an owner carry. I clarified (to my broker) that I meant a wrap loan. The offer I got was not a wrap but an owner carry in 2nd position. To put some numbers on this for clarity, the property was listed for $1.75M in late August, lowered to $1.645M after 2 weeks, with no offers after 4 weeks, and the offer is at $1.45M. The 2nd position owner carry is $450k. In part, this was attractive to me because of tax efficiency and diversification (roughly half my equity would be split into DSTs and this mortgage paper). My existing loan is roughly $465k. I made the mistake of focusing on the terms of the carry -- rates and duration -- rather than thinking through the risk of being in 2nd position in a declining market. Buyer had offered a 5 year carry at 3%, after I balked he made a minor adjustment to annually adjusted rates peaking at 5%, and then I countered with a 3 year term at annually adjusted rates of 3%, 6%, 9%. The broker said it would be "important" for me to formally counter and put the revised terms in writing. Then I was informed the buyer was accepting... and noticed the purchase is assignable. I had some denial going on and I didn't stop things from proceeding. Now we've just opened escrow and I'm having seller's remorse. The buyer's EMD ($35k) is due by Monday and I don't know yet if it has been received by escrow.

Today I asked the broker to lower the price on the listing to $1.5M and accept backup offers in case the escrow fails. There was robust interest and a lot of people attended the showings at the higher prices. So I have some confidence that I could get another offer at the lower price... but I don't really want to risk going through a tough escrow with a novice buyer trying to shave me down with contingencies and unreasonable demands related to inspections... especially in a softening buyer's market. (But I also don't want to take a bath on my return.) Assuming I am ultimately made whole, the inflation-adjusted sales price ends up being around $1.3M. If I'm not made whole it's closer to $1M.

I have no info yet on the terms of the buyer's 1st. If his 1st LTV is 80% I could be underwater on day 1. If it's 60% that's obviously better. If the buyer plans to fix it up, that would help too but obviously can't be guaranteed. I'll proceed to interrogate my broker.

Other than that, what would you do? I'm considering canceling the escrow. What leverage do I have on the broker? (He gets 4.5% instead of 2% with this deal.)

What terms might you offer to sweeten the pot for another buyer without putting me in such a compromised situation? I do plan to do a 1031 exchange.

Thanks for listening.

You’ve analyzed and identified the key concerns. In my mind the biggest problem is the size of the first lien. In any case if the first is sufficiently large as a percentage of market value you risk holding a
junk” second.

these deals rarely come off without the buyer needing some kind of modification from the seller, even if it’s just an extension of time. Just say no! I contracted to sell a property to a buyer and in the 3 months he had to close the market had moved higher- dramatically. The days before closing his agent contacted me and told me I would “need”to sign a 60 day extension. She couldn’t believe it when I said no. I told her I had three back up offers at 15-18% higher. She still couldn’t believe I said no. Like I had some moral obligation to accommodate a buyer who couldn’t fulfill the contract. LOL.

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6 Reply

Jonathan R McLaughlin

Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes

4y

@Tyson Gustus so wait, did the broker push you to sign at the original rate or the one you revised to?

1 Reply

Bill B.

Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes

4y

If it’s not the buyers primary you’re assuming 20-25% down right? So that’s $300k down with a loan of $700k plus your $450k 2nd max. If the property drops another 30% to 1 million and then there’s a foreclosure you can basically buy it back for $700k by offering $1.1million minus your $450k 2nd.

1 Reply

Account Closed

OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

Quote from @Wayne Brooks:

@Account Closed Yeah, a couple of important things you didn’t consider…

1) the amount of the 1st mtg, and his resulting down payment, is crucial

2) the deal needed to be contingent on you approving the credit/resources of the buyer…without this you have no control on who your ultimate borrower is.

Having said that, your best scenario is if they don’t place the EM in escrow by the deadline. If they are 1 minute late, Immediately send a notice of cancellation, assuming your contract allows this immediate cancellation, or a notice to cure within a certain amount of time, whatever your contract allows.

There appears to be an item in the escrow timeline titled 17 Days: Buyer Assignment Request, if any ... 10/17/2022 ... Seller Written Consent required for, Assignee Name, prequal/cash verification, & Monetary Consideration, if any. Assignee to sign/initial All Prior Docs received by Buyer.

Presumably I will have to read what I signed in detail to find what my rights really are and what factors I'm allowed to consider with respect to approving an assignment... or maybe I'll just ask escrow.

1 Reply

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OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

Quote from @Jonathan R McLaughlin:

@Tyson Gustus so wait, did the broker push you to sign at the original rate or the one you revised to?

The latter. The terms of the offer presented to me only mentioned the 2nd. So I only negotiated the terms of the 2nd. Once I negotiated the terms of the 2nd, he said it would be "important" to put it in writing. So he drew up a counter offer and had me sign it. At that point it didn't really occur to me that the negotiation was over and nothing else was negotiable. To be fair, he did say he was going to go back to the buyer and "try to put this deal together" and I didn't stop him and ask more questions. Then I was told the buyer was accepting and the broker was opening escrow.

2 Reply

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OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

Quote from @Bill B.:

If it’s not the buyers primary you’re assuming 20-25% down right? So that’s $300k down with a loan of $700k plus your $450k 2nd max. If the property drops another 30% to 1 million and then there’s a foreclosure you can basically buy it back for $700k by offering $1.1million minus your $450k 2nd.

I'm assuming the buyer will get a 1st somewhere between 60-80% LTV. Assuming an appraisal at $1.5M, the first could be between $0.9M and $1.2M. My 2nd is at $450k. So total debt of $1.35M to $1.65M

1 Reply

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OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

Quote from @Don Konipol:

Quote from @Account Closed:

After listing my property (a 4-plex in San Diego) too high in a declining market, receiving no offers after a month even after a 9% price cut, I asked my broker: at what price could he guarantee an offer within a week or two. He brought in a local investor (dual agency) and he gave me an offer that looked ok at first -- close enough on price, with no contingencies. This was very attractive to me because it's a very old property (1914), in good shape but with deferred maintenance, a past electrical fire, and some other issues that are relatively minor.

I had stated I could offer an owner carry. I clarified (to my broker) that I meant a wrap loan. The offer I got was not a wrap but an owner carry in 2nd position. To put some numbers on this for clarity, the property was listed for $1.75M in late August, lowered to $1.645M after 2 weeks, with no offers after 4 weeks, and the offer is at $1.45M. The 2nd position owner carry is $450k. In part, this was attractive to me because of tax efficiency and diversification (roughly half my equity would be split into DSTs and this mortgage paper). My existing loan is roughly $465k. I made the mistake of focusing on the terms of the carry -- rates and duration -- rather than thinking through the risk of being in 2nd position in a declining market. Buyer had offered a 5 year carry at 3%, after I balked he made a minor adjustment to annually adjusted rates peaking at 5%, and then I countered with a 3 year term at annually adjusted rates of 3%, 6%, 9%. The broker said it would be "important" for me to formally counter and put the revised terms in writing. Then I was informed the buyer was accepting... and noticed the purchase is assignable. I had some denial going on and I didn't stop things from proceeding. Now we've just opened escrow and I'm having seller's remorse. The buyer's EMD ($35k) is due by Monday and I don't know yet if it has been received by escrow.

Today I asked the broker to lower the price on the listing to $1.5M and accept backup offers in case the escrow fails. There was robust interest and a lot of people attended the showings at the higher prices. So I have some confidence that I could get another offer at the lower price... but I don't really want to risk going through a tough escrow with a novice buyer trying to shave me down with contingencies and unreasonable demands related to inspections... especially in a softening buyer's market. (But I also don't want to take a bath on my return.) Assuming I am ultimately made whole, the inflation-adjusted sales price ends up being around $1.3M. If I'm not made whole it's closer to $1M.

I have no info yet on the terms of the buyer's 1st. If his 1st LTV is 80% I could be underwater on day 1. If it's 60% that's obviously better. If the buyer plans to fix it up, that would help too but obviously can't be guaranteed. I'll proceed to interrogate my broker.

Other than that, what would you do? I'm considering canceling the escrow. What leverage do I have on the broker? (He gets 4.5% instead of 2% with this deal.)

What terms might you offer to sweeten the pot for another buyer without putting me in such a compromised situation? I do plan to do a 1031 exchange.

Thanks for listening.

You’ve analyzed and identified the key concerns. In my mind the biggest problem is the size of the first lien. In any case if the first is sufficiently large as a percentage of market value you risk holding a
junk” second.

these deals rarely come off without the buyer needing some kind of modification from the seller, even if it’s just an extension of time. Just say no! I contracted to sell a property to a buyer and in the 3 months he had to close the market had moved higher- dramatically. The days before closing his agent contacted me and told me I would “need”to sign a 60 day extension. She couldn’t believe it when I said no. I told her I had three back up offers at 15-18% higher. She still couldn’t believe I said no. Like I had some moral obligation to accommodate a buyer who couldn’t fulfill the contract. LOL.

Interesting. The timeline from escrow suggests the buyer has only 17 days to assign the contract. (see above) The terms of the original offer dictate a 45 day escrow with an optional 15 day extension.

1 Reply

Account Closed

Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes

4y

pull out. What are they going to do? Sue you for specific performance? Possible but not likely.

2 Reply

Bill B.

Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes

4y

Quote from @Account Closed:

Quote from @Bill B.:

If it’s not the buyers primary you’re assuming 20-25% down right? So that’s $300k down with a loan of $700k plus your $450k 2nd max. If the property drops another 30% to 1 million and then there’s a foreclosure you can basically buy it back for $700k by offering $1.1million minus your $450k 2nd.

I'm assuming the buyer will get a 1st somewhere between 60-80% LTV. Assuming an appraisal at $1.5M, the first could be between $0.9M and $1.2M. My 2nd is at $450k. So total debt of $1.35M to $1.65M

If the purchase price is $1.45 they can’t have debt of anything over $1.45m minus their down payment you assume 20-40% so max debt is $145 x .8 or $1.45 x .6. So $870k - $1.16m. Most lenders won’t count your carry as a down payment. So if they are borrowing $870k-$1.16m minus your $450k loan or a total first of $420k - 710k. So if they make zero payments and it goes to foreclosure you can buy for that much by bidding $450k more than that.

1 Reply

Matt Devincenzo

Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes

4y

Quote from @Account Closed:

Quote from @Bill B.:

If it’s not the buyers primary you’re assuming 20-25% down right? So that’s $300k down with a loan of $700k plus your $450k 2nd max. If the property drops another 30% to 1 million and then there’s a foreclosure you can basically buy it back for $700k by offering $1.1million minus your $450k 2nd.

I'm assuming the buyer will get a 1st somewhere between 60-80% LTV. Assuming an appraisal at $1.5M, the first could be between $0.9M and $1.2M. My 2nd is at $450k. So total debt of $1.35M to $1.65M

It's highly unlikely anyone is getting a CLTV of greater than 100%. Your buyer's lender is going to have a cap on that at some threshold that preserves equity. So assuming they used say 90% CLTV you still have some protection no matter how minimal. Also it's much more likely that whatever their chosen method of financing that they are more likely to not meet DSCR on their loan which is also a probable underwriting criteria the lender will evaluate based upon. So I'm guessing it is at least somewhat likely this deal falls apart anyway and you get out of it without needing to carry your 2nd as planned so far.

3 Reply

Account Closed

OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

Quote from @Matt Devincenzo:

Quote from @Account Closed:

Quote from @Bill B.:

If it’s not the buyers primary you’re assuming 20-25% down right? So that’s $300k down with a loan of $700k plus your $450k 2nd max. If the property drops another 30% to 1 million and then there’s a foreclosure you can basically buy it back for $700k by offering $1.1million minus your $450k 2nd.

I'm assuming the buyer will get a 1st somewhere between 60-80% LTV. Assuming an appraisal at $1.5M, the first could be between $0.9M and $1.2M. My 2nd is at $450k. So total debt of $1.35M to $1.65M

It's highly unlikely anyone is getting a CLTV of greater than 100%. Your buyer's lender is going to have a cap on that at some threshold that preserves equity. So assuming they used say 90% CLTV you still have some protection no matter how minimal. Also it's much more likely that whatever their chosen method of financing that they are more likely to not meet DSCR on their loan which is also a probable underwriting criteria the lender will evaluate based upon. So I'm guessing it is at least somewhat likely this deal falls apart anyway and you get out of it without needing to carry your 2nd as planned so far.

Thanks for the feedback, Matt. I really appreciate it.

Apparently this guy is a whale with access to funding sources unavailable to most. He has no financing contingency in the deal because he's not concerned about getting financing.

With that said, it does give me significant peace of mind knowing a traditional lender is likely to use a max 90% CLTV. Does this change if he gets a HML for the 1st? (Or a Daddy War Bucks loan)

Pretty sure he could close with cash if he needed to, or just get a smaller 1st. (Then I'd be fine.) But if he gets a private lender to write him a 1st at 80% LTV with no conditions, then I'm in bad shape.

0 Reply

Matt Devincenzo

Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes

4y

In theory if he has that sort of funding resource it's possible that the underwriting isn't focused on the metrics a lender might otherwise rely on. But you still have the actual security instrument and conditions etc that need to be negotiated. So in getting your draft promissory note prepared, make sure it alleviates your risk as much as possible.

2 Reply

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

4y

Quote from @Account Closed:

Quote from @Matt Devincenzo:

Quote from @Account Closed:

Quote from @Bill B.:

If it’s not the buyers primary you’re assuming 20-25% down right? So that’s $300k down with a loan of $700k plus your $450k 2nd max. If the property drops another 30% to 1 million and then there’s a foreclosure you can basically buy it back for $700k by offering $1.1million minus your $450k 2nd.

I'm assuming the buyer will get a 1st somewhere between 60-80% LTV. Assuming an appraisal at $1.5M, the first could be between $0.9M and $1.2M. My 2nd is at $450k. So total debt of $1.35M to $1.65M

It's highly unlikely anyone is getting a CLTV of greater than 100%. Your buyer's lender is going to have a cap on that at some threshold that preserves equity. So assuming they used say 90% CLTV you still have some protection no matter how minimal. Also it's much more likely that whatever their chosen method of financing that they are more likely to not meet DSCR on their loan which is also a probable underwriting criteria the lender will evaluate based upon. So I'm guessing it is at least somewhat likely this deal falls apart anyway and you get out of it without needing to carry your 2nd as planned so far.

Thanks for the feedback, Matt. I really appreciate it.

Apparently this guy is a whale with access to funding sources unavailable to most. He has no financing contingency in the deal because he's not concerned about getting financing.

With that said, it does give me significant peace of mind knowing a traditional lender is likely to use a max 90% CLTV. Does this change if he gets a HML for the 1st? (Or a Daddy War Bucks loan)

Pretty sure he could close with cash if he needed to, or just get a smaller 1st. (Then I'd be fine.) But if he gets a private lender to write him a 1st at 80% LTV with no conditions, then I'm in bad shape.

if you feel like he has all the financing or cash that he would need I’m not so sure why you’re afraid that he will default. One thing that many lenders in second position failed to get is an authorization to release from the buyer so they can verify that the first is current at all times.

I found that out the hard way about 12 years ago.

3 Reply

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OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

Quote from @Joe S.:

Quote from @Account Closed:

Quote from @Matt Devincenzo:

Quote from @Account Closed:

Quote from @Bill B.:

If it’s not the buyers primary you’re assuming 20-25% down right? So that’s $300k down with a loan of $700k plus your $450k 2nd max. If the property drops another 30% to 1 million and then there’s a foreclosure you can basically buy it back for $700k by offering $1.1million minus your $450k 2nd.

I'm assuming the buyer will get a 1st somewhere between 60-80% LTV. Assuming an appraisal at $1.5M, the first could be between $0.9M and $1.2M. My 2nd is at $450k. So total debt of $1.35M to $1.65M

It's highly unlikely anyone is getting a CLTV of greater than 100%. Your buyer's lender is going to have a cap on that at some threshold that preserves equity. So assuming they used say 90% CLTV you still have some protection no matter how minimal. Also it's much more likely that whatever their chosen method of financing that they are more likely to not meet DSCR on their loan which is also a probable underwriting criteria the lender will evaluate based upon. So I'm guessing it is at least somewhat likely this deal falls apart anyway and you get out of it without needing to carry your 2nd as planned so far.

Thanks for the feedback, Matt. I really appreciate it.

Apparently this guy is a whale with access to funding sources unavailable to most. He has no financing contingency in the deal because he's not concerned about getting financing.

With that said, it does give me significant peace of mind knowing a traditional lender is likely to use a max 90% CLTV. Does this change if he gets a HML for the 1st? (Or a Daddy War Bucks loan)

Pretty sure he could close with cash if he needed to, or just get a smaller 1st. (Then I'd be fine.) But if he gets a private lender to write him a 1st at 80% LTV with no conditions, then I'm in bad shape.

if you feel like he has all the financing or cash that he would need I’m not so sure why you’re afraid that he will default. One thing that many lenders in second position failed to get is an authorization to release from the buyer so they can verify that the first is current at all times.

I found that out the hard way about 12 years ago.

Thanks Joe, this is great advice. I will be sure to get that release.

WRT the buyer defaulting, note that the offer is also assignable... and even whales can get over-extended in a downturn.

1 Reply

Matthew CrivelliBusiness Member

Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes

4y

@Account Closed

I don't know what to do here BUT.... I wanted you to know I'm rooting for you and hope you can get out of the contract as I can tell you already learned your lesson. It sounds like your broker is more worried about his own pay check rather than your well being. (it happens)

[email protected]413-348-8346

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Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

4y

@Tyson Gustus

As a lender you still need to qualify the borrower.

Remember this is 2 transactions one on the purchase and one on financing. You could review the package and just note that he does not qualify whether it’s because of their income or maybe with you in second you require still no more than 80% ltv.

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OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

Quote from @Chris Seveney:

@Tyson Gustus

As a lender you still need to qualify the borrower.

Remember this is 2 transactions one on the purchase and one on financing. You could review the package and just note that he does not qualify whether it’s because of their income or maybe with you in second you require still no more than 80% ltv.

Interesting... So you're saying I could still perform on the terms of the owner carry ($450k) as agreed, but dictate my own terms for CLTV?

This would totally salvage the deal. (If it doesn't blow it up)

1 Reply

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OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

UPDATE... Buyer has provided his EMD.

Broker contacted buyer, and apparently his intention is to get a max 70% LTV 1st and he named the lender. Appraisal is tomorrow.

Broker said buyer does not intend to do anything "funky" with the assignment -- just his own trust or LLC may be assignee.

Broker also offered (to "convince" the buyer to provide) a personal guarantee, in case the buyer closes with an LLC or trust as the assignee.

Buyer seems to be planning on ~100% CLTV since I'm at ~30% LTV.

At 100% it is risky, but the overall structure is still more tax-efficient than realizing the gain... Even if I never see a dime from the 2nd, that entire balance would have gone to the IRS and FTB anyway. And I'll get access to "half" the equity within 3 years rather than 5-10 years with DSTs... The balloon will be taxed, but taxed at a lower rate and can then be deployed wherever makes sense, including internationally (not an option with a 1031 exchange alone). My CPA has confirmed that IRS & FTB will still tax the balloon payment even if I move to the Caymans.

Now if I can dictate 90% CLTV, I'm in much better shape. (Pretty sure 80% would blow up the deal... EMD is $35k, 10% is ~$150k and 20% is ~$300k) I will wait until after the appraisal to gauge how much I need to be the bad guy.

Once that's settled, the next challenge is scraping together the cash to fund the owner carry so it's not considered boot in my 1031 exchange.

Overall feeling a lot more at ease with the deal now. Many, many sincere thanks to the BP community and everyone who contributed to this thread so far!

1 Reply

Jonathan R McLaughlin

Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes

4y

@Tyson Gustus so I withdraw my concern: you gave him your numbers and he said we should get it done quickly…very appropriate. What did you want from him?

Sounds like sellers remorse? Not his job to understand your financials. Not saying you are blaming him btw…just thought he was pressuring you to numbers you didn’t want

0 Reply

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OP

Rental Property Investor · San Diego, CA · Member since 2016 · 44 posts · 16 votes

4y

Quote from @Jonathan R McLaughlin:

@Tyson Gustus so I withdraw my concern: you gave him your numbers and he said we should get it done quickly…very appropriate. What did you want from him?

Sounds like sellers remorse? Not his job to understand your financials. Not saying you are blaming him btw…just thought he was pressuring you to numbers you didn’t want

The broker is trying to put together a deal and get paid. He bought the listing. He glossed over the terms & size of the 1st. He still seems to think he's going to pull off 100% CLTV for his buyer (with whom he's done multiple other deals). In my opinion, the broker is not fulfilling his fiduciary duty to the seller (me, the guy who hired him). I've had to enlist the help of an entire community of RE investors just to navigate this.

With that said, mistakes were made. And you can call it "seller's remorse" if you want to. Tongue-in-cheek humor is your right as an American. It's in the Constitution.

2 Reply

Doug Coup

Member since 2020 · 10 posts · 5 votes

4y

@Doug Pretorius why would an owner do 1 or 2% or zero. Am i missing some tax benifit?

0 Reply

Doug P.

Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes

4y

Quote from @Doug Coup:

@Doug Pretorius why would an owner do 1 or 2% or zero. Am i missing some tax benifit?

Because most people are terrible negotiators. Let the seller give their numbers first and ever remain the reluctant buyer. If they're motivated they will talk themselves down, sometimes to terms you would have felt embarrassed to offer them.

2 Reply

Regret accepting offer with owner carry in 2nd position

Regret accepting offer with owner carry in 2nd position

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