Learn › Can this deal even happen?
Who can actually sell you their house on terms?
Equity is the precondition everything else depends on. Check it first and you'll rule out most leads before you waste anyone's time — yours or theirs.
A seller can only carry a note on the part of the house they actually own free and clear, plus whatever a lender is willing to leave sitting where it is. That sentence sounds obvious written down, and it's still the single most common reason a promising-looking lead turns out to be a dead end. Before you spend an evening building a beautiful offer, spend two minutes checking whether the math underneath it can physically work.
Start with the reference deal for this course: a seller owes $118,000 on a mortgage against a house worth roughly $315,000. That leaves about $197,000 of equity — plenty of room. If instead that same seller owed $290,000 on the same house, there'd be almost nothing left for the seller to carry, and any note you structured would have to either pay off most of that existing loan at closing or leave it in place, which is a completely different (and legally heavier) structure covered in Module 2.
The three questions that actually matter
- How much is still owed on the property, and to whom? A private lender is a very different conversation than a 30-year fixed with a big bank.
- Is the seller's motivation big enough to accept a note instead of a check? Someone who simply wants top dollar with no urgency rarely takes terms; someone facing a deadline, a distant relocation, or a property they can't easily sell for cash often will.
- Does the remaining equity, after whatever cash the seller needs at closing, leave enough room for a note that's worth structuring at all? A note for $8,000 isn't worth anyone's legal and closing costs.
None of this requires a formal appraisal to get a first read. A recent tax assessment, an online estimate, and a phone call about the loan balance will usually tell you within the first five minutes of a conversation whether a seller-carry structure is even on the table. If the numbers don't work, that's useful information — it tells you to pivot the conversation toward a straight cash offer, a wrap, or simply thanking the seller for their time.
Worth knowing — This filters out most leads, and that's the point
Most distressed leads you'll encounter don't have enough equity to support a clean seller-carry deal — that's often exactly why the owner is distressed in the first place. Checking equity first isn't pessimism, it's triage: it tells you in under a minute which of the tools in this course actually apply to the lead in front of you.
Once a lead clears this filter, the next question isn't 'what rate should I offer' — it's whether the deal is even legal to structure the way you're picturing it. That's the entire subject of the next lesson, and it comes before any negotiation, not after.