A lot of people ask me questions about how to properly close a subject-to deal. A subject-to deal is closed just like a traditional closing where you go to a closing attorney or settlement company. I would never advise closing a subject-to at the kitchen table. There are just too many things that can go wrong. Plus, if you ever have a problem and end up in court, you want to be able to show a judge that you went to a closing attorney and had a neutral third party take care of everything.
So here is how it breaks down: You will sign all of the paperwork with the homeowner at their house (this includes the contract and any addendums that donâ€™t need to be notarized. Anything needing to be notarized will be taken care of at closing). Once you have all of the paperwork signed, you will fax it to your closing attorney, just like you do with every other closing. Your attorney will do a title search and prepare everything for closing. On closing day, you will meet the sellerâ€™s at the closing office, sign all of the paperwork and you will then own the house. Itâ€™s that easy and simple.
By the way, on a $250,000 house, closing costs should run about $3,000 (this is for the state of Virginia, every state is different). And, here is the â€œtacticâ€ I use to get sellers to cover all of the closing costs so that I can literally buy a house for nothing down and sometimes get a few dollars back at closing. I tell sellers that weâ€™re not Realtors and do not charge any commissions to sell their house. And that they are only responsible for the first $3,000 in closing costs. If closing costs are any more than that, our company will cover the rest. Now, if you get a seller who really has no money, or they refuse to pay any closing costs at all, then I would certainly not lose a deal over $3,000. However, if you donâ€™t ask for the $3,000 up front then you will never get it and it never hurts to ask.
So, when you are negotiating any deal at all, remember to ask for as much as you can, because all a seller can do is say â€œnoâ€.
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