@Pedro Oliva:  The majority of Fortune 500 companies have formal coaching/mentoring programs.  

Basically, if she had not chosen to take her cash out, we wouldn't be having to pay this.Anyone know how a more formal agreement would have been structured?

I don't have any formal design training but have been researching lots of design pics and I preview lots of property.

What it doesn't sound like they've told you is that the next step, which is a judicial quiet title action, is a much longer and costly process.  

Samuel,What you presented was an excellent description of how a formal valuation works.  

So you've done a formal contract for deed agreement?

You are NOT a private lender, they can form all the clubs, associations, or any lobby and marketing group they like, it doesn't matter what they want to be called, a duck is a duck in the eyes of the law.

Shoul D I purchase a formal course first?  

With that said, O.F. a property (and doing it properly) can increase the price you get for the property because it opens it up to a larger pool of buyers...buyers who can not get institutional financing and therefore will pay a higher interest rate with terms more favorable to the seller.Most investors balloon the payment in 5 to 7 years, but you could certainly do a straight 30 year amortization with no balloon.Some states are judicial foreclosure states and some are non-judicial foreclosure states (like Texas), so you would have to address that with a real estate attorney before you consider O.F. 

However if they are willing to play nice and there isn't any real issue, or there is an issue you can help them deal with you might shoot yourself in the foot.In hindsight you probably should have asked them to send formal notice after they texted or let them know you would send them formal notice based on what they told you.