Anyone done a "Morby Method" deal? Zero down creative strategy

[Sean Bramble]

Heard about this on Pace Morby's Youtube channel - it's a zero down creative strategy that works when 1) the seller is open to seller finance, but 2) needs a sizeable DP for various reasons (i.e., pay off their existing loan, closing costs, and/ or put some cash in their pocket, etc)

There are 2 "legs" of the transaction. My understanding is it works like this:

Example: purchase price = $1M, seller still owes $200K, seller also needs addl $150K cash at close for whatever reason. But the buyer wants the property at zero down.

First leg:

-- Buyer secures a loan (1st position) for $350K and sends to title company (this is the amount needed to pay off sellers loan + their required cash at close)

-- Buyer also sends $650K cash to the title company (can put in your own cash, or do a temp loan from a transactional lender)

-- First leg of txn is now complete, and the $1M stays at the title company (this is bc you customized escrow instructions upfront to instruct them how to disperse money before escrow began)

Second leg:

-- Buyer and Seller enter into an agreement through an LLC which allows them both to be on title, and seller agrees to seller finance the buyer $650K of the purchase price (on whatever terms they agreed on). Being on title protects the seller from the buyer defaulting - it seems this is an alternative to "officially" putting them in a 2nd position)

-- Title company sends seller the $350K they require

-- Title company sends buyer back $650K (which they can use to pay off their transactional lender if they used one)

So now the seller is happy bc they got the $350K they needed, the buyer is happy bc they acquired a property for zero dollars out-of-pocket, and from what I understand the 1st position lender is happy bc due the LLC arrangement the seller finance component is not technically considered a second lien on the property. Plus all parties were protected throughout the entire transaction through the title company.

Have any of you completed a deal w/ this method? Am I understanding this right? I would love to hear your thoughts on the pros/ cons/ risks involved