Possible Subject-To????

2 Replies

Hey BP Family,

So I went and looked at my first house today from a small Pre-Foreclosure mailing i did last month.  here is the low down

-- The house is 896 sq ft and their is a large, spacious unfinished basement, needs some work on the roof (possibly a new one), refinish hardwood floors, paint, and replace a few doors.  Outside needs a new deck and minor landscaping and there is a huge lot of land.

-- She still owes 70k and is asking for 110k, here is where it gets tricky.

-- I am very new so its hard to determine the ARV, but from looking at comps (from Zillow, which might be be up to date) I think it could go for 100-105k.

-- and here is the biggest kicker... she hasn't paid the mortgage in 2.5 years!!! and also hasn't paid any taxes.  

-- I knew going into this it would be a tough deal and honestly I just wanted to get familiar with talking to sellers so i went and saw the house.

-- Is there a possible subject-to deal here?  Not sure exactly what the terms would be, so I wanted to throw it out into the BP universe and see what options I may have.

-- Thanks

I would verify who has been paying the taxes. She may have not paid taxes but someone could have bought them at a tax auction. Which if someone has, they could be quietly waiting to foreclose once someone comes in and fix the property up.

@Shawn Connors

I'd be very careful on a few fronts. 

The first is that Zillow should never be used to determine value of a property that you are giving serious consideration to. Perform a proper CMA and get a firm number and estimated time to sell.

The Second issue is your idea to take this subject to the existing mortgage. I assume you know that this means you will inherit all the defects on the property:

  • All Mortgage Payments Owed
  • All Taxes Owed
  • All HOA Fees Owed
  • All Liens on the House
  • Legal Fees (Probably Near Foreclosure)
  • Etc

Given that she hasn't paid anything in 2.5 years, that could easily eat up all the equity you currently see in the deal. If you have that kind of money, you would most likely be better off purchasing the home outright and doing a short sale with the bank. 

-Christopher

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