Considering selling my home Subject to and have questions

I had never even heard of this concept until a few weeks ago. We have found a house we want to buy but already own a house and don’t want to mess with a realtor, double payments, etc. We have never paid a late payment and have perfect credit.

An investor has offered to purchase our home subject to. We are leary, as is our attorney. But, it is very tempting, so we are trying to find out everything we can before making a decision.

First, the investor is not located in the city where I live. Is there any place I can check up on him? The references he provided were really good, but I doubt he would have provided any bad ones for me to call.

Second, he always puts the property in a trust and keeps my insurance until he finds a buyer. Are these the best protections?

Third, can we put it in the contract that we get the house back if he fails to make a payment or something like that? And, can we limit the time that his buyers would have to get their own financing, say 12 months or so?

I have the actual contract from him, and of course, all of the risk is ours. I know most of you here are investors, but I hope someone here can help me feel more comfortable as the seller.


Sell it to him on a wrap around not sub2, it offers you some protection. Ask him for proof of funds to make the mortgage payments, and maybe prepay some payments in advance.

Do you mind telling me how a wrap differs from a subject to? I have never heard of it.

I wondered about asking him about his funds but haven’t, yet.

I don’t do subject to investing, I do lease/options which is a different animal legally, but the objective is basically the same (to take over your existing mortgage without going through the bank).

I wouldn’t agree to a 12 month term myself because there’s just no way to guarantee that my buyer will be able to close then, I might need to extend or even put someone new in the home for another 12 months. I guess the real question is: Do you want to get the house back, or do you want the investor to keep on making those payments for you until it does sell?

As for the contract if the investor has been around the block a few times they’ll have an ironclad contract that pretty much makes you sign your first born over to them for collateral. It’s exactly the same as going into contract with any other professional in the real estate business, be it a realtor, a lender, an insurance company etc. All of those contracts are completely one-sided.

If I was going to sign over the deed to my house without getting cashed out of my mortgage I would do some serious digging into the buyer. How many of these has he done? How many does he currently have on the go? Does he had cash reserves in case something goes wrong?

When I sell my houses I also do it by lease/option or contract for deed because then I still hold title so if something goes wrong I can easily and cheaply take the house back.

a wrap around or All Inclusive Deed of Trust (AIDT) is basically an owner financing with you as a lien holder. If he does not make the payment, then you have the right to foreclose on him and get your house back. Your attorney should be able to provide you with such paperwork. Also check your state laws.

Daug brings up another option. Lease option it to him. You are in control and if he does not make payments, then you “evict” him. Don’t do lease option in Texas though.

Thanks to both of you. I am in Texas.

Will an experienced investor consider a wrap? The person we are talking to has a large portfolio of subject to transactions.

Maybe, maybe not. Its between you and him to iron out. If you feel comfortable with him, then do the deal. If not, then demand guarantee and be willing to walk away and finding another buyer. Where in Texas are you?

Sell him the house, it doesn’t really make a difference really. Because the guy is a real estate investor and if he has a quite a few of these in his portfolio, believe me he will make the payments. If he does not he will then lose his investment ( money towards you, back up payments, rehab possibly). He’s not going to fail to make those payments, he would lose and i think that he is probably a smart guy and knows what he is doing.

realn2, I’ve got to say that that is probably some of the dumbest damn advice that I have ever seen on this site. You’re personally vouching for someone that you don’t have a clue about and then going further and telling Dee72 to make a high risk investment because the investor is “probably a smart guy.” Geeesh! :rolleyes

Dee, if you want to consider this, then tread carefully. This investor may indeed be an honest, upright individual. Even so, honest people have problems, too. In a Sub2 transaction, the seller ultimately bears the weight of the risk. If the investor stops making payments for whatever reason, it’s YOUR credit that takes the hit, not his.

And forget about negotiating. Investors aren’t really into the whole negotiating thing. If it’s a deal (ie, the investor can make money with it), then they’ll take it. If it’s not, then they’ll walk.

Am curious as to why you say that you don’t want to mess with a realtor, but you’re willing to consider dealing with an out of town investor. From the sound of it, that doesn’t make much sense.


Subject 2 is a great tool for investors AND homeowners under the right circumstances. You simply needing debt relief AND the fact that you have a high credit score are not the right circumstances. YOU, the seller are the one taking all the risk with your credit. I wouldn’t put my credit in someone elses hands, even those I trust dearly. They probably aren’t trying to swindle you but there are better options for you than sub 2 (because of your good credit)

A few others have mentioned Lease Options. I would suggest you go this route instead. You can get someone else making your mortgage payments AND keep more in your pocket when your house does sell by doing it this way. But, 12 months is too tight a time frame. You should allow at least 18 mos, and better yet, 2-3 years for this to play out.

I’m in Texas, so Lease/Option is not an option.

When I say I don’t want to mess with a realtor, I mean that we have little equity, other than real estate commission. The holidays are coming, and the average length of time a house is on the market is 90 days. That is at least 3 months of double payments. And, I haven’t had the best luck with realtors. During our last transaction, we had realtors literally walk into my home with no notice and no appointment, even though I had a confirmed listing. Plus, we have very young children.

And, I will not do the subject to without a written agreement that I get the house back with a missed payment. I will NOT allow my credit to be ruined. If he does not make the payment, I will. And, I guarantee that I will check it every month.

He has several properties and great references, but I am still leary which is why I came here. I know another family that used him, and they have raved about he experience. It is tempting, but I am not sold on it, yet.

You can’t simply just “get the house back” if he happens to miss a payment. With Sub2, the investor/buyer actually gets title to the property. It’s HIS property at that point. Yes, you still have a loan against it, but it’s in his name. In order for you to get the property back, you’d have to foreclose on him. Add to that the fact that you’d also have to deal with whomever he has put into the property IF you actually get the property back.

If this works for you, great. But, be very aware of the risks involved. You’re not going to make it risk-free by adding a few clauses in the contract, and truth be told, I doubt that he’ll negotiate much, if any on the contract.

Finding a good agent is just like any other profession. You have to get recommendations and you need to find one that works for you. Don’t toss the idea away on one bad experience (which btw, was because of your listing agents. NOT the other agents). Again, this may not be the route for you, but don’t close the door on it either.

And yes, it takes time to sell RE. Frankly, if you were looking for property, you should have figured this into your plans. You don’t have to have double payments IF you don’t buy the other property until yours sells (or at least goes under contract). Afraid that it won’t wait for you? Well, you’ve really got two options. One is make an offer contingent on your property selling (of course it has to actually be on the market). Two is to wait until yours does sell. Well, three options with the third being if you have to have it now, make the double payments and/or make the deal.


Raj, I don’t know how you can recommend she list with an agent in this market. That will only work for people who aren’t serious because they need 6 months to a year to sell through an agent. They can’t be in any rush because they’ll have to keep on making those payments while they wait.

I’ve never heard of an agent who will make your payments until your house sells. But that’s exactly what investors do.

Whether she lists with a ‘good’ agent or a ‘bad’ one won’t make the house sell any sooner, it’ll just make the wait a little more pleasant.

The market here is okay, but with the holidays looming, it is becoming much worse.

First, Doug, I did NOT recommend that she list with an agent. If you will kindly review, what I said was not to throw that idea out simply because she had a bad experience with ONE agent.

Second, while it may take 6 months to a year in your area for a property to sell, it may not in her market. Again, a brief review of the previous posts says that it’s about 90 days on the market. Hardly a long wait, IMO.

Third, I wouldn’t recommend simply going with an agent anymore than I would recommend selling the house to a Sub2 investor that we know nothing about, simply on a whim, or maybe it’s because that we are on an investing website that NOT recommending jumping on the deal is getting such a negative response.

Fourth, saying that investors make your house payments is like saying that agents sell your property. The real truth is that most do, although some don’t. Is it such a crime to inform her of the risks involved in a Sub2 transaction on while on this site?

And finally, fifth, as a responsible investor, one SHOULD say that Dee is NOT the best candidate for a Sub2 transaction. She is NOT behind on her payments. She is not in financial trouble (or soon to be so). She is NOT in a situation where she NEEDS to sell. In fact, all that is going on here is that the WANTS are getting in way of the NEEDS.

And while a good, professional investor may make this all work out well, what I see is huge potential for problems down the road for BOTH parties.


Raj, sorry but your post certainly seemed to be recommending listing and quite frankly I’m sick and tired of all the realtors who come on these investing sites and say that listing is the be all and end all solution to all things. That’s how your post came across to me.

For the record, I never suggested that Dee sell on a sub2 to this investor. I recommended a contract for deed or lease option to give Dee more protection.

I suppose I’m a bit biased in all of this because I buy houses from people exactly like Dee. I don’t buy from people who are behind on their payments, or in financial trouble, or who desperately need to sell. Those sellers are far too much trouble for my taste.


Since I am not doing creative investing in Texas I would appreciate it if you would answer a few questions for me.

If I was in you area investing I would not have to ask you, because I would know the answers in about 15 minutes after you gave me your address.

What is your mortgage balance?

How old is the property?

What do you think your property is worth?

What is your monthly payment?

What is your interest rate?

Are there any Home Association Fees?

What type of loan is it? (VA, FHA, etc.)

Who is your lender?

Whomever is on the deed to the property are they willing to sign off?

Do your know the yearly property appreciation rate in your area?

What I am trying to ascertain here is if the property has the possibilities of being a Subject To deal. Also what the risk factor is on your part and on the investors part.

Thank you,

John $Cash$ Locke

I pm’ed you the information. I really appreciate your help!


No problem, I will review what you sent, but will not divulge the overall specifics and give you my thoughts.

John $Cash$ Locke

Thanks, again. You have all been a tremendous help! I have enjoyed reading this forum.