"subject to" - Posted by pete

Posted by Phil (CO) on March 05, 2002 at 13:04:18:

I don’t know the answer to your specific question, but one thing that I have seen posted here is that several people who do “subject to” deals add a clause to the contract that stipulates that the seller has the right to buy back the property for $1 if the buyer defaults on the agreement. That gives the seller a straight-forward remedy in the event that the buyer is a deadbeat.

“subject to” - Posted by pete

Posted by pete on March 04, 2002 at 07:56:45:

I’ve taken time to read through archives regarding “subject to”. It appears to be a solid creative financing tool.

I do, however, have a concern from the seller’s standpoint. Please correct me if Im wrong. The deed would go to the buyer, the note would remain with the seller, and a Land Trust can also be factored into this equation. But from the sellers standpoint, isn’t this a bit risky. Other than a signed purchase offer, what recourse does the seller have if the buyer defaults on mortgage payments? Would the seller need to then get the lender involved? It seems these scenarios would not give the seller a lot of incentive to work with a “subject to.”

I’d really appreciate any feedback and thank you.


Re: “subject to” - Posted by GL(ON)

Posted by GL(ON) on March 04, 2002 at 15:58:17:

One of this site’s big experts, who says “subject to” deals are wonderful, has stated that while he would buy subject to, he would never ever sell property that way. LOL LOL LOL

Re: “subject to” - Posted by Mitchell

Posted by Mitchell on March 04, 2002 at 08:32:20:


You understand the process completely. Of course you should take into account the sellers attitude toward a potential negative situation. However your question is moot because the real issue has to do with the kind of seller that will enterain a Subject To transaction.

Why would any seller enter into this type of transaction unless they had no other choise? And, if they have no other choise except to sell in this manner, why should their questions or objections be taken seriously? Just say, “this is the way that I do real estate investing” and leave it at that. If you can convey that you are willing to walk away from the transaction, that is the most powerful position that you can be in. Remember, you are helping the seller out of a situation that he is in. You are taking on a situation that he could not resolve. The price is to do it on your terms, period. If the seller has a better deal, let him take it. All this can be conveyed nicely.


Re: “subject to” - Posted by pete

Posted by pete on March 04, 2002 at 18:03:43:

Thanks for the feedback guys. Have Trustees ever been utilized to hold the deed to help hedge the sellers risk. Just a thought. Don’t know if this can be made to happen or not.