Why is a subject to deal a viable option?
As I understand it a subject to is when you take the place of the original owner in a property. Money is made when you buy a house not when you sell it so how is this beneficial? Are you paying less for the equity they have in their house? Does this only work when the owner is threatened with foreclosure?
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Wayne Brooks
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Wayne Brooks#1 Foreclosures Contributor
#1 Foreclosures Contributor
- Real Estate Professional
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A sub2 makes sense if the mtg balance, plus any cash you need to give the seller, is below market value. The only real benefit to the buyer is if they couldn’t qualify for a straight up loan or this method would require less cash.
There are risks in a sub2 to both parties.....the due on sale clause being the biggest risk to the buyer, and the seller. The seller has the risk of the buyer not making the mtg payments and there is very little the seller can do about it.
Proper state required disclosures need to be executed by the seller, otherwise the buyer has some legal/criminal liabilities.
Once a sub2 is done, a short sale is no longer possible.