Selling the Seller on Subject-to Transactions

If you are familiar with subject-to transactions, then you know that the original owner of the property is taking a pretty big risk. After all, they are trusting you with their mortgage payments for a minimum of the next few years (and in my experience based on the current "credit crunch" you need the option of never refinancing at all if you do not wish to do so). If you fail to make those payments, their credit - not yours - will suffer. Additionally, the seller will not likely make as much money on the sale of the house as if they sold it at market or appraised value, so this can also make home owners skeptical when an investor suggests a subject-to transaction.
Fortunately, you have some information that can counter these concerns:
• If you do not make the payments, you suffer too. You are out a property into which you invested time, money and effort. A foreclosure renders all that useless.

• Market value is not so great these days. Even people who have lived in their homes for 20 years are finding that their homes may be upside down or that they do not have nearly the equity they once had. You may be able to offer the seller more than they would make on the open market, depending on the situation and both walk away feeling like you got a great deal.

• An appraisal can be a very persuasive thing. Many people have renovated their homes, put in additional amenities or simply watched the climb in value over the past few decades. This has made them assume that they will profit big when they sell. A new appraisal factoring in the recent sales (if any) in the area can help a home owner who stubbornly clings to an unreasonable appraised value put things in perspective.

• Time is on your side. Subject-to transactions happen with motivated sellers. So often, the idea of having the issue out of their hair is a big factor. Make sure the seller knows how quickly these deals can progress and how soon they could be walking away from a bad situation.
Not every home owner will be sold on the idea of a subject-to transaction. Over time, you will learn how to spot distressed properties that are prime and receptive for this type of real estate deal.
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com