2nd position note help

[Paul Burbank]

Hi BP. I am currently working on negotiating an off market deal to sell my primary residence 3 unit property in Saratoga Springs, NY. The potential buyer wants to give me a good price for the property but would like me to hold a second position note. The issue of the note is what I could REALLY use some help with as I have ZERO experience in this area.

Here is where things currently stand:

His last offer to me was for $575,750 with a 2nd position note of $35k at 5.5%, 25 year term, 6 year balloon.

I have the following questions and would also appreciate any other input you all have to offer.

-What can I do to protect myself in the event that he defaults?(Aside from talk to my attorney. I of course will do this.)

-What terms should I be pushing for(rate, term, balloon, principal only or P&I payments and anything else I might be missing.

-In his own words the purpose of the note is "they bring less cash to closing and can offer higher prices". My previous offer was $590k and I think this is close to where we would be listing on the MLS. I feel $575 is fair but if I'm going to defer $35k for 6 years I feel like I really want to get something more then a few thousand in interest out of it...especially for the risk...any thoughts on this idea would be great!

I am also having some trouble determining the value of the property as local RE pros have given me HUGELY varying numbers and comps are basically non existent in the area(tons of similar properties but no one is selling) This is probably a topic for a different post but any input in this area is welcome also.

Thank you! I look forward to some conversation on the topic!