You’re not the only agent getting a million calls about subject to.

The amount of investors currently using subject to to purchase real estate is simply a sign of the times. Between the current interest rate and high prices, understanding how to properly present a subject to offer to your seller can be the difference between a sale and an expired listing.

The basics: In real estate, Subject to is a way of purchasing properties in which the buyer receives title and deed to the property at close, while the original mortgage remains in the seller’s name. The buyer becomes responsible for all aspects of owning, managing and maintaining the property along with the responsibility to pay the mortgage every month along with all associated costs such as taxes and insurance.

What sellers are a fit?: This type of transaction is useful in situations where the seller has very little or no equity, needs to sell the home quickly, facing pre-foreclosure, needs more cash than what a traditional offer would bring.

Why would a seller consider this?: Simply put, subject to offers will usually match or provide more cash to the seller than a conventional offer. Many sellers are finding themselves in the precarious situation of having bought a home at a high price, with a great interest rate mortgage only to have to sell it a few years down the road due to life circumstances. If in that time their home has not appreciated in value, they may have so little equity that they may be forced to come out of pocket to sell their home.
Sellers who have missed mortgage payments or have arrears may see their credit score improve as a result of the buyer getting their payments up to date and making all future payments on time.