What Is the Morby Method?

As commonly taught, the structure has three layers. A lender provides a first loan covering most of the price. A private money lender fronts the down payment at closing. After closing, that money goes back to the private lender and the seller carries the same amount as a seller-financed note, which leaves the buyer with little or none of their own cash in the deal. Variations swap subject-to in for the first loan or change who holds which piece. There is no single official definition, since the name comes from a teacher’s brand and no statute or industry body defines it.

A wholesaling team usually meets this method from the buyer side: creative-finance buyers want properties where the seller will carry paper, and disposition markets to them. Callers do not structure anything, but they learn what makes such a deal possible: the seller’s equity, loan balance and rate, openness to monthly payments over a lump sum, and timeline. Wholesalers use those facts to flag deals for partners who work this way. Because the structure needs several parties lined up, it fits best on properties with real seller equity and a seller who values terms over a quick lump sum.

Treat the no-money-down pitch carefully. Someone still pays: the private lender is paid fees, the seller carries the risk of a junior note, and the first lender’s rules may limit or forbid a seller-carried second behind its loan. Lenders generally expect seller financing to be disclosed, and misrepresenting a transaction to a lender is a serious problem. Whether any taught version fits a given deal depends on state law, the loan terms, and the lender, so have an attorney look at the specifics. A glossary entry cannot confirm that a structure is legal for your deal.