$4.2 million. Full asking. 47 days. On a listing three cash buyers had bid $3.2 million.

442-444 East 48th Street, Chicago. A nine-unit multifamily, closed May 2026.

By the time 48th Street reached us it had been on market more than six months and had turned away three buyers. The strongest offer was $3.2 million, all cash. She turned all three down.

Usually a listing like that is overpriced. This one wasn’t, and the reason is the whole story.

The seller was a physician. She had owned the building as an investment rather than as a job, and she wasn’t looking to get out of real estate. She was looking to get out of this kind of real estate. The plan was a 1031 exchange into a net-leased medical office building in the north suburbs, where she’d have a tenant on a long lease and nothing to manage.

Her exchange had a target on the other end of it. The question wasn’t whether $3.2 million was a lot of money. It was whether it covered what she was buying next.

It didn’t.

And on an exchange sale, a discount doesn’t cost you once. Whatever comes off the price at closing never makes it into the replacement property, never gets levered there, and never shows up in the portfolio she was building. A million dollars off the price of 48th Street was a million dollars missing from everything that came after it, permanently.

Three buyers spent six months telling her how fast they could close. None of them asked what she was closing toward.

We got her on the phone and asked what she intended to do with the proceeds, rather than what she wanted for the building.

That changed the shape of the problem. She had a specific replacement property in view and a specific amount she needed in hand to acquire it, and the amount was well short of the full sale price. What she wouldn’t accept was a million-dollar cut in total consideration to get her hands on it.

So the real question wasn’t cash or terms. It was whether she could take enough cash at closing to fund the exchange and still be paid full value for the building she was selling. She could, as long as the cash was sized to her plan instead of to a buyer’s convenience.

The structure had two parts.

A new first-position loan, underwritten to the building’s rent roll, wired to title. It funded $1,890,000 at closing, 45% of the purchase price. Her existing $200,000 mortgage came out of that and the balance went to her. Because the loan qualified on the property’s income rather than on a borrower’s tax returns, it wasn’t capped by the debt-to-income limits that would have held back a conventional buyer on an asset this size.

She carried the remaining $2,310,000. We formed a single-purpose LLC to take title and added her as a member, with the carried balance and her protections written into the operating agreement rather than recorded as a second lien behind the new first. The note runs five years at 4.5%, interest accruing to the balloon, with $6,000 a month in principal-only payments in the meantime.

The down payment is worth a note of its own. At 45% it sits above the 35 to 40% these transactions usually run, and she didn’t negotiate it out of us. We sized it that way on purpose, because her exchange needed a specific amount of deployable cash on closing day. Every dollar above that number was worth more to her carried at full value than discounted into a wire.

Her existing mortgage was paid off and closed out the day we closed. She walked away from the debt completely, and her credit was never attached to the building again.

This is the part that could have cost her badly, and it’s the part most buyers offering a carry have never thought through.

A carried note is not automatically exchange-eligible. Cash proceeds directed to a qualified intermediary can be reinvested into replacement property. A note receivable generally cannot. Without deliberate structuring the carried portion is boot, and a seller who signs a carry without knowing that finds out at the point when the exchange can no longer be unwound.

With $2.31 million carried, this was the central technical question in the file.

Her CPA made the decision, as she should have. The cash moved through the qualified intermediary and into the replacement building. The note was taken outside the exchange and reported under installment sale rules, so tax on the carried portion follows the payments as she receives them instead of landing in a single year. She took deferral on part of the transaction rather than all of it, and got a million dollars of additional price and a secured position on a building she knows better than anyone in exchange.

Sequence mattered as much as substance. The intermediary was engaged before closing rather than after, and the documents were drafted so she never took constructive receipt of exchange funds. Neither of those can be repaired afterward.

She closed on the medical office building inside her 180 days. That was what she said she wanted on the first call, and it’s the outcome we’d point to before any of the numbers.

Four rounds of LOIs over five weeks.

We opened at 35% down. She came back asking for 60% and a three-year balloon, which was her attorney’s number more than hers, and it would have broken the deal from both ends: too much cash out for the loan to carry, too short a runway for the building to season. We traded up on the down payment to protect the term and landed at 45% and five years. Most of that negotiation happened on terms the cash offers had never touched.

Then the first lender declined. Three weeks in, their credit desk read the jointly held ownership entity and stopped, because the program prohibited it outright. That cost nine days. We moved to a lender whose program allowed the structure and put the full arrangement in writing before the application went in. On an ordinary transaction, catching that late costs you weeks. On a 1031 it can cost the exchange.

Her attorney spent two calls on why the carry wasn’t recorded as a second lien. It was a fair question and he asked it hard. We rewrote two clauses in the operating agreement to tighten her reversion rights and he signed off. We’d rather deal with an attorney who tests the documents, because that’s what makes the structure hold up if something ever does go wrong.

In week six a fourth buyer surfaced at $3.45 million, all cash, and she called to ask why she shouldn’t take it. We didn’t argue with her. We sent the side-by-side to her CPA and let the two of them work through it. She stayed. A seller who reasons her own way into a structure tends to.

We asked for an eleven-day extension near the end and she gave it without much discussion, which by that point in the file told us where we stood.

The mechanics are worth spelling out, because this is where deals like this usually come apart.

The new first-position loan wired to title, paying off the $200,000 mortgage and funding her cash at closing. We sent the seller-finance portion to title separately, so the settlement statement balanced at the full $4.2 million purchase price, funded out of our own capital and a transactional lender.

At disbursement her payoff cleared, her cash went out to the qualified intermediary, the listing commission was paid, and the seller-finance portion came back to us and the transactional lender the same day.

The title company had never closed one structured this way, and the escrow officer said so plainly, which we appreciated. We walked her through the funds flow in writing two days ahead, line by line, so nothing on that statement caught anyone off guard.

47 days from contract.

The seller sold at her full $4.2 million asking price, a million above the best alternative on her desk. Her mortgage was cleared, roughly $1.48 million went to her intermediary after commission and funded the replacement purchase, and she carried $2.31 million secured, with membership in the ownership entity, a performance deed-back provision, and a personal guarantee standing behind it. She completed her 1031 and closed on the medical office building.

The listing agent was paid $273,000 at closing out of wired funds: his full 5% commission on a $4.2 million contract, plus 1.5% from our side for the coordination the structure took. On the best cash offer he’d managed to bring her, the same file pays him $160,000. Six months of work closed at his client’s number and at his own.

He has brought us every deal he’s had since, which matters to us more than the fee did.

The buyer acquired a nine-unit asset with real capital at risk from day one and working capital going into the property.

Somebody asked the seller what she was actually trying to accomplish, and then sized the deal to her answer instead of to a template.

She never needed $4.2 million in cash. She needed a specific number at closing to buy a specific building, and full value for the one she was selling. Three cash buyers spent six months competing on the one variable that mattered least to her. The offer that won wasn’t more generous than theirs. It was more accurate.

The rest of it was ordinary business done in an ordinary way. The terms in the LOI were the terms at the table. The lender knew what it was funding before it funded. The escrow officer saw every wire two days before any of them moved. And when a higher cash offer landed in week six, we sent the seller a comparison instead of a sales pitch, because it was her decision to make and she was entitled to make it with real information in front of her.

None of that is complicated. It’s relationships, straight communication, and doing what you said you’d do on the days it costs you something. The structure is just how the deal got built. The rest is why the phone rings again.