A Stack Method deal I was working on just fell apart because of the appraisal.

It came back $90K below the purchase price. - OUCH!

Here’s why.👇

This deal in particular was a single family deal, but the same lesson applies to Multifamily deals too! (Hope this helps anyone NOT make the same mistake!)

The seller had added an extra bedroom and bathroom during renovations.

🚨 But none of the work was permitted. 🚨

So when the appraisal was done…

The appraiser couldn’t count the additional 1 bed / 1 bath.

Instantly the value dropped. 😩

And in Stack Method deals, that creates a big problem.

Because now the Transactional Funder may be asked to cover the gap between the appraisal value and the purchase price, on top of the down payment required by the primary lender.

That’s a tough situation when the numbers no longer support the structure of this awesome acquisition strategy!

Unfortunately this deal didn’t close.

💡But it taught me a simple lesson.

Before sending & signing a PSA, buyers should always ask the seller:

“Has any work been done on the asset — and was it permitted?”

⭐ Sometimes one small question can prevent a $90K problem.

👋 Anyone closing on Stack Method (Morby Method/ Seller Carry-back) deals? Let's Connect!

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