Subject to scenario and questions

3 Replies

My wife and I rent our home while she is completing residency.  Our landlords are experiencing a change in circumstances and need to sell the home.  We will not qualify for conventional financing with nearly $500k in student loan debt - Dr. Loans included.  We are considering offering to purchase the home subject to, and then refi out next summer.  The owner is looking to sell to an investor, or someone, who will take the home as-is with us living in it until the lease is up.  

The home has some problems.  Should we have the home inspected by a home inspector or a general contractor?

Once we know what we are up against, and the cost to cure, we are thinking of offering to purchase subject to.  We don't think they have any equity - and they have told us that our rent doesn't cover the mortgage, but how do we structure to buy them out if they do have equity? Do we give them a note for the difference?  

Is there a great thread on subject to that I'm missing? Is there another solution we should consider?  Thanks for your help.  We really want to buy this house, if at all possible.

Hi Mark,

Find out the existing loan amount on the internet or thru a title company. The Deed of trust or Mortgage is public record. You will also find out if there is a Notice of default or sale. Then determine the value. I will monitor the topic and let me know what you find out. This is way too much to go thru in one sitting.

Terry Lewis

This is a catch 22 if the property has no equity, will cost you more every mo. and has other problems as you stated! You may have to remove your heart out of this one in order not to get in a delicate situation!

IMO The best approach will be for you to go straight to the source get a authorization to release Info or POA from the Seller/Landlord to talk to his mortgage Co. and find out what's really going on there!


Terry Lewis brings up a good point, see how much the owner owes on the property. If he owns it free & clear, you can ask him to consider him carrying back a note for the balance after your down payment. If you go this route he must use a RMLO in your state to originate the note.

If the home has problems, then a full appraisal is in order to see what needs to be done and use that to lower his price. Whatever way you go, good luck and keep us posted of how it works out...

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