Subject To Ques
When doing subj to Deals, I assume the biggest objections from a seller are :
1.What guarantee do I have that my mortgage will be paid ? And if the T/B
doesn't pay then what ? Do you, etc. ?
2. What about damage to the property ? Who pays ?
3. Maintenance: Landscaping, Snow, etc.
The most important are motivating the seller to take your offer subject to his financing vs just dropping his price for a quick sale (without the risk of subj to his credit)
It's the risk reward of waiting 2-3 yrs to get his $ with credit & damage risk vs just dropping price & walking.
How does the equation make sense ?
The only way it seems to work is if he didn't have enough equity in the property and couldn't drop price & circumstances didn't allow him the luxury of time to wait ?
Other scenarios ? Also how about the "security" of his credit ? Thanks
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Tom,
Sounds like you've been spending too much time in the Stock Market. Buy John Lockes manual...it's the best investment you can make for $150 bucks...cause....
you're making this waaaaay too difficult on yourself.
The security of his credit goes hand in hand with,
"1.What guarantee do I have that my mortgage will be paid ? And if the T/B
doesn't pay then what ? Do you, etc. ?
The answer is "You use a Loan Servicing Company to process the loan payments. From your buyers down payment, you put 2-3 months of mortgage pymts. in an escrow account of every house you purchase should the buyer default.
However, this has never been a problem as you are very selective in the houses and buyers that qualify for this type of program".
As far as motivating the seller, you don't!
The seller you approach should already be motivated (you'll be wasting alot of time flapping your gums if they're not).
Your buyer maintains the house because in essence, they're buying it! (Subject To the existing mortgage, you do absolutely nothing). A buyer that plops down a substantial amt. of $ is more likely to take care of their (investment).
Now for the equity, in most cases you'll want very little equity. The objective is to show negative equity.
Example:
House payoff is:
$100,000
They're asking:
$110,000
You show them the cost of Realtor commissions 6%,
Closing Costs 3%
as you can see you're already at:
$9900
Not to mention holding costs (=mortgage pymts.) while their potential buyer gets financing, then another 30-45 days till closing.
All while they're still maintaining the home or doing minor repairs.
And... what if the potential buyers financing falls through....they're back at square 1.
Now, with this scenario they'll be paying someone to sell there house instead of recieving cash....(for the sell of their equity)
Not a very sensible solution is it?
With your program, (Sub-To) they'll be getting cash!
Now, after what I've just told you, don't you agree?
Hope this helps
Clif [ Edited by pbodys on Date 06/15/2003 ]
I DO, I DO... Tnx Clif
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