Subject To Questions - Posted by Kimberly

Posted by wpage on February 13, 2002 at 17:36:20:

If you buy or l/0 the house now while it is listed the agent is entitled to collect his commission. How are the sellers going to pay a commission when they have no equity? You should make arrangements to wait the 45 days at least.Furthermore, doing a subject2 with you will relieve the seller of his payment but the debt is still in their name. So if they could refinance the house and lower the payment by $500. by month that would help you to make lower payments. The debt relief will be the same.

Subject To Questions - Posted by Kimberly

Posted by Kimberly on February 13, 2002 at 16:59:54:

I have an opportunity to take over a house subject to. I plan to lease option the house until I get a buyer to buy it from me.

They have the house listed with a realtor. How does this present a problem? If it is not possible to do this listed with a realtor, then the contract expires in 45 days and they are open to giving me the deed.

Their monthly piti is $2200 and they have no equity. The house is 3 years old, 4br, 2 1/2 ba, finished basement. They have lived in the house for one year.

They can get the house refinanced possibly to get their payment down to $1700 but they have to be relieved of the payment because of a job transfer situation.

Any insight and information would be greatly appreciated.

Re: Subject To Questions - Posted by TRandle (TX)

Posted by TRandle (TX) on February 13, 2002 at 19:22:23:

Based on the sketchy details posted, I’m going to say leave this one alone. In my experience folks that need debt relief are not real good candidates for a refi. And a refi would lower the payment $500 per month?

Based on the questions you’re asking, my ill-informed opinion is that you do NOT want to do this Sub2. No equity deals are not generally a good choice for ownership unless you have the capability of carrying the property for quite some time. Yes, the first go-round you could mitigate your risk of obtaining a TBer, but what about when they bail?

Even if you somehow got the payment down to $1,700, how many months could you carry it? Are you in a position to refi it if you had to? It obviously won’t sell at this retail price with a realtor so that route is out.

There are ways to make this work, but it would take forever to type. JohnBoy, you out there? Kimberly, you could do a search on JohnBoy and assignments - that would be one way to pull some cash out of this and remove your risk.

Just because you can get the deed, or do a nothing down deal, or help someone, or get a little upfront money DOES NOT mean you should do the deal. I do speak from experience on this one.

If you’d like some informed answers, you’ll have to post the following:

FMV and how you came up with it
loan balance - balloon, prepayment penalties
interest rate - fixed, adjustable
market rental rate
etc., etc.

There are numerous folks on CREO who are generous with helping someone out with a deal, but they want ALL the details.

Hope that helps some…

Re: Subject To Questions - Posted by Michael

Posted by Michael on February 13, 2002 at 19:14:40:


Are you sure you can get 2200 a month from your tenant/buyers on a lease option? Do a survey of the area to find out what you can expect to get per month from the home. Just because you can get the deed from the seller doesn’t mean it’s a good deal. Don’t count on your seller refinancing either, if so…GREAT, but base your evaluation on what they are currently paying a month.
I know this post sounds negative but, it’s better to find out the the deal won’t work BEFORE the deal is signed then waiting until the monthly payment is coming out of your pocket. PROTECT YOURSELF FIRST!

Hope it works out!

Michael, KY.