what is subject to?
In real estate a ‘subject to‘ transaction refers to a scenario where a property is sold with the understanding that the buyer will assume responsibility for the existing mortgage or financing terms without formally assuming the loan. In essence, the buyer agrees to take ownership of the property ‘subject to‘ the existing mortgage, while the seller’s name remains on the loan. This arrangement allows the buyer to acquire the property without securing new financing and can be appealing for sellers facing financial difficulties or seeking a quick sale.
why would i sell my house subject to?
Selling a house ‘subject to‘ the existing financing staying in place can be an attractive option for homeowners who are facing financial challenges, life challenges, or seeking a quick sale without the traditional complexities of mortgage approval processes. Here are some of the ways in how homeowners can benifit from a ‘subject to’ transacttion.
- Quick Sale: Selling “subject to” can expedite the selling process, allowing homeowners to sell their property faster than traditional methods.
- Avoiding Foreclosure: For homeowners facing financial difficulties or foreclosure, selling “subject to” can be a way to prevent foreclosure and protect their credit.
- No Need for Repairs: Sellers can offload the property without having to make costly repairs or renovations, as the buyer assumes responsibility for the property in its current condition.
- Owe More Than What It’s Worth: Perhaps you purchased a property in a market when houses where selling at a higher price point, and now owe more than its worth.
- No Realtor Fees: By selling “subject to,” sellers may avoid paying realtor commissions and other traditional selling costs.
- No Closing Costs: Since it’s not a traditional sale, sellers may avoid some of the typical closing costs associated with selling a home.
- Maintaining Credit Rating: By transferring the mortgage to a buyer who continues to make timely payments, the seller can potentially protect their credit score from the negative impact of a foreclosure or short sale.
- Failed Listing: Selling subject to could help you offload a property you have been trying to sell on your local market with no luck.
In today’s market, the average cost to sell a house utilizing traditional methods range from 10% to 12%. That means if you have a house selling at $300K, you’ll have to pay anywhere from $30k to $36k just to sell your home. Additionally, if you have a mortgage on the property, you’ll incur monthly holding costs until it’s sold. You can avoid all these fees selling your house subject-to.
- We Buy As-Is: When you sell to us, you dont have to worry about the deal falling through because any repairs. that may be needed.
- No Need to stage: Staging cost money and takes time, just to impress traditional home buyers who probably are not going to buy your house at asking price anyway.
- No Need To Clean: When You sell to us, you dont have to waste your days cleaning before showings, or when you move out
- We Can Close Fast: In most situations, we can close as fast as 7 days or date of your choice.
- We Pay All Closing Cost and Fees: Selling the traditional route in todays market will have you paying anywhere from 2%-6% in closing cost and fees.
- No Realtor Commision: When you sell to us, you avoid paying 6% commission to a realtor.
NOTE: Selling your house subject-to can help you avoid having to pay thousands of dollors just to sell you house!
selling my house subject to
Although selling your house utilizing the “subject to” method has its benefits, there are some key factors to take into consideration.
THE DUE ON SALE CLAUSE
Also known as an “acceleration clause,”gives the lender the right to demand immediate and full repayment of the loan if the property securing the mortgage is sold or transferred to another party. Essentially, when a property is sold, or the deed has been transferred, the lender can require the new property owner to pay off the existing mortgage in full.
However, in practice, lenders may not always enforce the clause, particularly if the mortgage payments continue to be made on time.
what if they call the loan due?
We believe when selling your house subject to, it is important that you work with buyers who are familiar with the structure and the process of these transactions. At Flippin’ Keys, we have extensive experience in facilitating ‘subject to’ transactions, having successfully completed numerous deals across . Our in-depth knowledge and hands-on approach have allowed us to build strong relationships with leading real estate attorneys who specialize in ‘subject to’ transactions.
These partnerships enable us to provide our clients with valuable guidance, expert legal advice, and personalized solutions tailored to their unique needs and circumstances. We are committed to ensuring a smooth and seamless transaction process, mitigating risks, and protecting the interests of all parties involved.
THE LOAN STAYS IN THE SELLERS NAME
When selling your house Subject to, you are simply transfering ownership of the property to the new owner, while the original financing stays in place. Yes, there are risks invovled, including the risk of the buyer not making the payments on time or even making the payments at all.
Thats why we emphasize on how important it is that sellers work with buyers who are experienced, and understand the ins and outs, of these type of transactions. At Flippin’ Keys, we specialize in subject to transactions, we have multiple stratigies in place for every property we purchase to insure that we are protecting the interest of all parties involved in our transactions!
NOTE: When selling your house subject to, be sure to work with a buyer who is experienced in knowing how to stucture the transaction!
should i sell my house subject to?
Whether or not selling your house ‘subject to’ is the right choice largely depends on your individual circumstances and your familiarity with the concept.
Consider the following questions to help determine if this approach aligns with your needs and situation. It’s essential to take some time to reflect on these questions and answer them truthfully to make an informed and logical decision.
- ARE YOU CURRANTLY FALLING BEHIND ON THE MORTGAGE?
- ARE YOU IN THE PROCESS OF A FORECLOSURE?
- DO YOU OWE MORE ON YOUR HOUSE THAN WHAT IT’S CURRENTLY WORTH?
- DO YOU NEED TO RELOCATE FOR WORK, MILITARY, ECT.?
- ARE YOU CURRENTLY GOING THROUGH OR HAVE GONE THROUGH A DIVORCE?
- DID YOU RECENTLY LOSE A JOB?
- HAS YOUR HOUSE BEEN SITTING ON THE MARKET LONGER THAN EXPECTED?
- WHAT WOULD HAPPEN IF YOU WERE NOT ABLE TO SELL YOUR HOUSE?
- IS THIS HOUSE OR PROPERTY A FINANCIAL BURDEN TO YOU AND YOUR FAMILY?
- DO YOU HAVE LOW EQUITY, ZERO EQUITY, OR NEGITIVE EQUITY?
If you find yourself relating to one or more of these questions, selling your house ‘subject to’ might be a favorable option for achieving a quick sale.
NOTE: Did you know the avarage cost for selling a house at $450k with zero equity is about $45-$50k in todays market. Selling your house subject-to can save you from having to pay someone to sell, and buy your house!
Can i sell my house subject to?
Yes, you can sell your house ‘subject to’ the existing mortgage. However, it’s essential to consider that not all properties may be suitable for a “subject to” transaction.
Houses with significant underlying issues, such as extensive needed repairs, high mortgage balances relative to the property’s value, or potential legal or title issues, may not be as attractive to buyers in a ‘subject to’ arrangement.
Additionally, if the existing mortgage has unfavorable terms or a high-interest rate, buyers may be hesitant to take on the loan without the ability to refinance or modify the loan terms. Therefore, it’s crucial to assess the condition and financial aspects of your property carefully.