Why Would Buyer Agree To Sub To Deal?
A buyer bought a house 5 years ago for $120,000 and is now selling for $200,000. Now it is not possible or smart for the seller to sign a subject 2 deal in this case is it beacsue he would want his $80,000 in equity. Am I right here? Are subject 2 deals only for distrssed/in a hurry sellers? I guess I am confused about how the seller gets his/her money? Any clarifiction would be great!
~Chantelle
What if that seller just lost his job, and wants to protect his 750 beacon score? It is not up to you to guess why the seller will do it, it is up to you to be first in line at the dinner table.
Good Luck,
Shawn(OH)
I have now done two subject to deals. Both have been properties that were being foreclosed on. I would think that playing off of the mortivation factor is a big reason why people agree to them...
"mortivation"
As in mortivated?
I think you may have just coined a useful term, albeit by typo...kind of half-way between motivated and mortified...which is, I'm sure, just how the poor seller feels!!
Some people that I know who buy regularly "sub. to" would assume the mortgage, and then pay them the rest of their equity within 3 years or so. After 3 years they'll have sold the house, and can cash out the original seller. They could also refi the house themselves, because it now has 3 years of seasoning.
Quote:
On 2003-11-01 22:09, JohnMerchant wrote:
"mortivation"
As in mortivated?
I think you may have just coined a useful term, albeit by typo...kind of half-way between motivated and mortified...which is, I'm sure, just how the poor seller feels!!
Yes, sorry for the typo. Actually, the 2 deals that I have done, the sellers have been quite happy with the outcome. I leased the properties back to the original owners who did not have enough money to reinstate the loans. After the year lease, they will be able to buy the property back from me. It is called a win/win solution. They keep their house, and I make a little money too!
So in other words, the seller was not mortified. They were elated that they were able to keep their home.
i thought buying a house and selling it back to the same seller was a big NO-NO!!! even to lease it back to the original owner is a big NO NO. i've heard that they might be able to take legal action for you doing this.
i'm not saying, but i'm inquiring, isn't that a big NO NO?
[addsig]
ahabion,
The majority of investors would probably not sell to the original owners because of several reasons. The main reason, however, would be that the situation presents a very BIG possible legal problem where the investor could lose his money, the property and possibly face criminal prosecution.
Of course, a lot of that depends on how the deal is setup and what steps are followed to get to the deal. But REI is like any investment, the potential rewards must outweigh the potential loses. In the owner sellback, I think that the majority of investors don't feel that the risk/reward is worth it.
Roger