Saving a deal

[John Matthews]

Ok, so there's this one property I've talked about on other posts before. I put an offer on it before I found out it had structural issues. With the help of the SE who looked at the place, I gave myself a hard number that I was in or out on. If they reduced the price by 20k, I'd buy it, otherwise, the deal was dead.

So they came down 16k. I said ok, but only if they hold a note for 6k for one year, no interest, with a balloon payment principal only in that one year. They agreed.

All was good until my heard money lender said they don't do seller financing. Period. 

I'm going to keep trying to get them down to 20 (the seller no knows how much the property needs in work, and that it's got foundation issues, so who's going to buy from them?), but does anyone have any suggestions for ways that I can save this deal and have it still make sense for me?

I've thought about recording the 2nd mortgage (seller finance) after the deal goes through, so the HML doesn't see it, but that definitely seems like a grey area of legality, and I'd like to use them again, so I don't really want to do it. The other thought is to have the seller hold a non-secured loan of 6k, which I think is ok with the HML, but I haven't asked yet. Do sellers ever do that? The only other option I can think of is to give them a lien on my CAR (which I own free and clear) but I'm not so sure that'll fly either...

Anyone have any other thoughts as for how to make this deal work out?

[Joel Owens]

The HML lender will likely have docs that you attest and sign under penalty of perjury that there are no undisclosed loans or side agreements when closing on the property.

You would be committing loan fraud in that case so it's not a grey area.

No legal advice given.