Let’s pretend you recently sold a property. Time has passed. You now look at what you did and begin to ask questions you should have asked yourself when you were negotiating. Here are the terms:
You sold the property for $100,000, with a $10,000 down payment, an interest rate of 4%, interest only payments of $300.00 due for 24 months. A balloon payment of $90,000 is due in month 24.
- Your buyer committed 10% – you committed 90%. Is this good or bad for you?
- The interest rate is lower than the prime mortgage lending rate, which your buyer did not qualify for. Is this good or bad for you?
- The monthly payment is small and does not reduce the principal. is this good or bad for you?
- You did not ask – or require – your buyer’s credit score/history. Is this good or bad for you?
- You are not sure if or how your buyer will be able to pay you $90,000 when it comes due? Is this good or bad for you?
Every year I speak with several note holders who have agreed to similar terms, then realize what they have done when they speak to someone like me. You must ask the question “Are these terms good for me”? If the answer is “NO”, keep negotiating or walk away.
