The joys of the 50/50 deal re- NFA's

[mstrmstr]

I have notice that some dealers are  doing 50/50 deals where they pay 50% up front for a purchase and the balance on completion of delivery.

I found the snafu in that scenario. The dealer pays YOU 50% and waits for form clearance while in the meantime he offers that same gun on a 50/50 incoming deal to a customer.  Knowing months will pass that gives ample time to find a customer.  Notice that the dealer is using customer down payment money to cover his first 50 and has NO CASH involved. It is also called ponzi or OPM .  May be an upfront deal but the dealer does not have money involved since he is using the customers down to pay YOU.  At the end of the deal he still uses the customers money to pay your balance due to the wait times of the NFA. The originating dealer takes his cut with no real investment. SLICK... FYI  A short term up front but full profit on the backside. 

My opinion since I have seen this play out several times for others. 

Edited March 9, 2022 by mstrmstr

[Bd_p98]

I'm not a dealer and while I have purchased on a 50/50 deal I have never sold to a dealer in that way. IMO, the dealer is offering a service much like a broker. If a customer is OK with the 50/50 deal I see no harm done. Dealers seem to have better sources for that item someone "must have" vs an individual with fewer connections.  I was going to end this with "my two cents" but due to inflation I'll go with "my three cents".

[taylorwso]

15 hours ago, mstrmstr said:

I have notice that some dealers are  doing 50/50 deals where they pay 50% up front for a purchase and the balance on completion of delivery.

which dealers? Ive only seen 50/50 deal on personal guns. Most dealers just buy them.

Even if they did who cares as long as the transaction goes through. Seems to me about the same as a deposit on a high  value item.

Edited March 10, 2022 by taylorwso

[mstrmstr]

I would be a buyer with 50/50 as I would have no real money involved.. I am not a dealer.. It is a OTHER PEOPLES MONEY conversion.. Think about it.

I AM NOT SOMEONES BANKER.   No such thing as a deposit on NFA items- just try to buy from a known dealer and pull this stuff- YOU WILL BE SHUT DOWN. 

 

 I can name dealers but I am not that kind of guy. Deal with me- get a deal. NO BS product at price- like buying a car. 

Edited March 10, 2022 by mstrmstr

[b_san]

Dealers don't pay you 50% for your gun, at least I don't maybe Im doing it wrong... lol. After they've already paid the current owner in full and submitted the F4 to dealer transfer paperwork, they offer it to the next buyer for 50% down as an incentive to purchase before the first transfer is approved.  Nothing shady in that.

Edited March 10, 2022 by b_san

[taylorwso]

3 hours ago, mstrmstr said:

I would be a buyer with 50/50 as I would have no real money involved.. I am not a dealer.. It is a OTHER PEOPLES MONEY conversion.. Think about it.

 

I still don't know what you're on about. Just sound like a rant at this point.

 

 

 

 

[mstrmstr]

not a rant- just if I offer at a price- that is it..

Been around the block

[MontanaRenegade86]

8 hours ago, taylorwso said:

which dealers? Ive only seen 50/50 deal on personal guns. Most dealers just buy them.

Even if they did who cares as long as the transaction goes through. Seems to me about the same as a deposit on a high  value item.

I can name one, because I made that kind of a deal just a few short days ago with a very well known dealer.

He made an offer, and I agreed to take 50% of the offer now, and 50% when the Form 4 is approved. 

I had no objections to the 50/50. 

 

Edited March 10, 2022 by MontanaRenegade86

[MontanaRenegade86]

2 hours ago, mstrmstr said:

not a rant- just if I offer at a price- that is it..

Been around the block

I understand what you are saying, and I can see where a guy might not like it.

All things considered, it's actually a pretty sharp move if you think about it. 

Edited March 10, 2022 by MontanaRenegade86

[Ryo]

Took me a few times to read what your talking about. I read it like this:

So the buyer is a FFL dealer.. buys it from another person (dealer or non-dealer) who has a MG.
They give 50% down payment to that seller. But on the side while waiting for the Form 4 or Form 3 to clear, they sell it to a customer who they are given either 50% down or full payment.

Hence that dealer doesn't need to use his own money (or at least not too long) for that purchase. I have no issue with that as long as the sale goes through. It actually is a good strategy but the dealer should be up front with his customer about the status of the MG.

If it gets all messed up between dealer and the seller of the MG.. that's where it gets ugly for the dealer's customer and dealer relationship. It is a risk, but that dealer is willing to take the risk.

Edited March 10, 2022 by Ryo

[MontanaRenegade86]

Ryo, you got it, brother. 

 

[b_san]

34 minutes ago, MontanaRenegade86 said:

I can name one, because I made that kind of a deal just a few short days ago with a very well known dealer.

He made an offer, and I agreed to take 50% of the offer now, and 50% when the Form 4 is approved. 

I had no objections to the 50/50. 

 

In a market like this, why would you do that? There's no reason for a buyer to take less money now than the MG would be worth 6-12 months from now for the disincentive to accept 50% down.

[Ryo]

Deal is a deal, and if both party agree, then great.

Also there's no guarantee that the MG would be worth more a year from now. I would think it would go up, but there has been dips before.
There could be also for multiple reasons the seller is selling where 50/50 is acceptable to them.  ie fast money for emergency, estate sale, etc.

Personally I feel there is more risk to the buyer than the seller. I have heard of sellers backing out of a sale and gave the money back with some lame excuse. Other is risk of being scammed, money long gone before buyer knows.

 

[MontanaRenegade86]

49 minutes ago, b_san said:

In a market like this, why would you do that? There's no reason for a buyer to take less money now than the MG would be worth 6-12 months from now for the disincentive to accept 50% down.

Why not? He met my price and then some. 

I'm just hoping the the transfer clears quickly so I have room in my safe for something else. 

Edited March 11, 2022 by MontanaRenegade86

[mstrmstr]

There is no reason for a seller to make any other deal than money for product- just like any other item that is purchased.

Reputation for solid deals is everything. I even travel to see guns I am interested in. Airfare and a car rent is cheap insurance. If the seller is not willing to show the gun in person- just walk away. I always offer a viewing at my local C2/SOT or police dept. PLUS it builds a new friendship.

At these prices due diligence is needed.

 

[riflejunky]

3 hours ago, b_san said:

In a market like this, why would you do that? There's no reason for a buyer to take less money now than the MG would be worth 6-12 months from now for the disincentive to accept 50% down.

I just bought four guns on 50\50. Why does it matter so long as both parties are satisfied. If you are guessing as to what prices will be in a year then wait a year to sell.

[mattnh]

In general, deals of this nature accrue most of the benefits to the dealer and few to the seller/buyer.

Similar to a brokered sale with an advance to the seller.

 

However, deals like these potentially allow for a more efficient market allowing the dealer to potentially pay more to

the current MG owner and sell for less to the future new owner.

 

My issue would be with the dealer not revealing gun was not actually in their inventory.

As long as the dealer is upfront with the buyer about the risks of an item still being in transfer to them and wait times, I don't see an issue.