Posted by Bob The Builder on March 10, 2011 at 08:24:42:
Since the banks are unwilling to take much of risk, I have an idea how I can purchase a retail property, but am not sure if this is legal and/or ethical, here goes:
The seller wants $350k and will finance some of it. The property is not worth $350k so I would like to offer the seller $300k.
Have the seller sign a purchase & sale agreement for $200k which I will borrow from the bank. The property is assessed at $370k by the town and will appraise at $300k so I assume the bank will not have a problem with the loan.
Then I would have the seller take a promisary note for $100k payable at $50k on aniversary years five and ten(a balloon payment I supose).
Can anyone see any issues with this? Thanks.