Approaching sellers with "subject to" financing?

Question

I have a seller who is willing to give up a property for what she owes on it and split the cost of the repairs (approx $10k for foundation, paint, and carpet). I want to approach her with the option of subject to financing.

What is the best way to bring this up? What objections should I be prepared to address?

Thanks in advance for your suggestions!

What is the best way to bring this up?  What objections should I be prepared to address?

Thanks in advance for your suggestions!

Monica Breckenridge · Answer

The most frequent questions are

how do I know you will make  the payment  on the loan?

How can I trust you?

when will you pay off my mortgage?

can I get another loan if my loan isn't paid off?

What happens if something happens to you and you can no longer pay the mortgage?

You will have to overcome all these questions.

William T. · Answer

@Dan Shoemaker What are you numbers for the deal?  How much equity is in the home?  How does the structure of the house look? the inside or the old.  If you proceed with subject to, are you going to have the house inspected?

William T. · Answer

@Brandon Krieg My local REIA is having a seminar on this tomorrow, I am going to copy your questions and take them with me.  I will follow up on this strategy when I complete the seminar, maybe we can make a document for the file place for suggestions.

@Monica Breckenridge Thank you for the additional questions...

Steve Babiak · Answer

And don't call it "subject to" when talking to them; say that you will "take over the payments on the loan".

Brandon Krieg · Answer

@Dan Shoemaker  - Overall, try to do as much homework as you can squeeze in on the process before you talk to her.  It's hard to address every question that can come up, but here are a few common ones:

-Does the title stay in my name?
	-Does the loan stay in my name?
	-What happens if/when they don't make a payment? (this one comes up 98% of the time)
	-So will I have this on my record for 20 more years?
	-How is this different than a short sale?
	-Do I have to find a buyer?
	-Who handles taxes/maintenance/upkeep?
	-What happens if they trash the place and leave?

There are more, but these are common ones that I've seen.  A few key things: 1. If you go through with this, meet up with a good attorney that knows what they're doing.  PM me if you need a reference.  
	2.  Make sure if you go through with this, you or your attorney deliver notification to the lender
	3.  Be very honest with the everyone about everything

In terms of approaching the seller initially, you probably have an idea already if they need cash RIGHT NOW or are just tired of the house.  If it's the latter, just ask if you can talk through some options with them, and then explain the process to them.  I don't think there's any magic phrasing.

Good luck!

William T. · Answer

Actually, if you perform a search in the forums... You will have almost all of your questions answered.

Approaching sellers with "subject to" financing?

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