Creative Hybrid Real Estate Deal: Income Dream or Nightmare Waiting to Happen?

When a real estate seller really must have their price, many times they are willing to leave their existing bank financing in place. In addition, they may agree to carry back a portion of their equity as a second position lien.

When I look at these 'hybrid' deal structures, I can't help but wonder if the seller understands the level of risk they're accepting. If the 1st bank loan gets called / accelerated, or if the buyer defaults, the phantom equity that they created by the deal structure could easily evaporate.

While I love seller financing and often use it as a powerful tool to make win-win transactions, many times, depending on the seller's overall financial situation, they would be much better off just dropping their price 5% - 10% and walking away with all cash.