Sub2 And P&S - Fundamental Question

Hello folks,

Thinking about sub2 deals, it occurs to me that I'm not sure what number goes in a Purchase and Sale as the consideration amount in a Sub2 transaction.

Consider this example scenario:

Home FMV or ARV = $200K
Loans and arrears = $150K
Equity = $50K

Owner sells me home subject to existing financing plus half his equity ($25K) to be paid at closing.

So what is the purchase price on the P&S? Is it $175K or $25K?

And what's the best way to specify the sub2 condition of the sale within the P&S so it's clear how much cash is changing hands at closing?

Thanks and happy investing!

-presley

Comments(2)

  • dbshoupe26th February, 2004

    Its $175K with $150K subject to the existing financing.

  • InActive_Account27th February, 2004

    Sales price : $175,,000
    Subject 2 encumbrance and arrearages of approximately $150,000. The exact amount to be deterrmined at the close of escow.(there could be some surprises waiting for you). The balance in cash at closing to the seller..

    This is just a lukewarm deal . Is it an investment or do you intend to occupy as your primary residnece.? Who pays closing costs. FMV doesn't equal ARV, are there repairs to be done. ON who's nickle?

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