Chapter 11: Contract to Close
“The most difficult thing is the decision to act, the rest is merely tenacity.” — Amelia Earhart
Remember back in Chapter Two when I told you about my first subject-to deal—the one that slipped through my fingers before I could even get it under contract? That loss stung. I had the buyer lined up, the numbers worked, and the momentum was there. What I didn’t know were the mechanics of getting the deal closed.
I didn’t know which contract to use, which title company understood creative finance, or what the actual closing process was supposed to look like.
The deal didn’t fall apart because it was bad—it fell apart because I was unprepared. That moment became a line in the sand for me. I decided it would never happen again.
That’s exactly what this chapter is here to prevent.
We’re going to walk through the paperwork, the people, and the exact sequence that turns a verbal “yes” into a recorded, closed deal. Because when you don’t understand the path from contract to closing table, good deals die early—and unnecessarily.
Before we get into the roadmap, I want to share the most expensive mistake I’ve ever made in creative financing.
The $8,000 Lesson I’ll Never Forget
I was helping a seller market an underperforming short-term rental on stilts in Crystal Beach, Texas. At first glance, I knew it would be a challenge. The AirDNA comps were discouraging, the income didn’t inspire confidence, and the property wasn’t exactly a cash-flow machine.
But the sellers were experienced operators, and somehow they were making it work. More importantly, the property had one major redeeming quality: a mortgage in the mid-4s.
We structured the deal to make it as attractive as possible:
Initial Terms Offered:
Price: $425,000
Down Payment: $42,500
Loan Balance: $340,617
Interest Rate: 4.875 percent
PITI: $2,885.40/month
Balloon: None
Seller Financing (Equity):
$41,883
5 percent interest
No monthly payments
5-year balloon (equity only)
Seller pays commission. The buyer pays closing costs.
Not long after, we found a buyer who lived a couple of hours away. They planned to use the property as a second home and weren’t solely focused on the rental income—which worked in our favor.
They came in with an offer, but with a lower down payment than we’d hoped for:
Buyer’s Offer:
Price: $425,000
Down Payment: $35,000
Loan Balance: $341,558.90
Interest Rate: 4.875 percent (seller will let you keep loan for full term)
PITI: $2,885.40/mo
Seller Financing (Equity):
$40,911.10
5 percent interest
No payments
5-year balloon (equity only)
Seller pays commission. Buyer pays closing costs.
Here’s the problem—and this is where the lesson lives.
The buyer didn’t just change the down payment. They also changed the seller financing amount. I don’t think they fully understood how the terms work—because the numbers always have to add up. If you lower the seller financing (the equity), you’re effectively lowering the price. And if you lower the down payment, the equity needs to increase to compensate.
Where I Dropped the Ball
