Why assume a lien or loan?

Question

Hey everyone.  I'm continuing with my real estate education, and I have a basic question someone could probably answer.

Sometimes when buying a property, there's an encumbrance on it, a lien.  Why would anyone want to assume a loan that someone else took out against that property?  Could the buyer negotiate a lower price for the property because of that encumberance?

Adam Bartomeo · Answer

Assumable Loans - There are few reasons that you would want to assume a loan. 1. You can't get a loan some you assume someone else's. 2. The interest rate and/or terms are better then what you can get. 3. The loan doesn't show up on your credit report and allows you to qualify for another property.

Liens - When you purchase a property with fines, liens, or the like, you can often get the property for much less. You can also often negotiate these expenses down to a fraction of the price by explaining that you are the new owner.

Chris Martin · Answer

Possibly. My company bought a property where we 'assumed' a lien and negotiated a payoff based on <30 cash payment at discount... all done via closing attorney prior to closing, with good (no exceptions) title policy underwritten by reputable company .This was in 2006... we still own the place. Technically we didn't 'assume' the lien, we just handled it because we preferred to negotiate a lower payoff.