listed property but different situation to jc195's

I also have a listed property that I’m interested in that I found on the newspaper. The newspaper states that the seller is motivated and will entertain all offers. Can i call up the realtor/listor and tell him I would like to do a sub2 deal with his client? Am I allowed to do that, doing sub2 technique this way?

Please help

From what I understand a Realtor can’t have anything to do with a Sub2, its against their code of ethics. Herbster

First, frankly, your taking the wrong approach. My RE agent, the one I use to sell my retail houses, says in all listings and ads, ‘motivated seller, bring all offers’.
It’s a sales technique that makes the phone ring, and allows us to have a larger buyer pool to pull from.

When buying investment real estate, especially when using creative methods to purchase, you are better off marketing to have sellers call you.
It is possible to do creative transactions with agents and brokers involved, more so today than before, however, it is MUCH less likely than a conventional sale with an agent or broker involved.

Keep in mind, most agents and brokers are trained in just a few weeks time, to sell properties, using conventional buyers with loans, or cash.
Anything outside the norm, they shun…and for good reason some times.
They will also need to know how they get paid?

Rather than call a listing agent and ask right off the bat if the sellers will sell subject to? (this would only confuse most, and get a no),
…go see the house, schedule a showing. If you like what you see, set up a meeting with the sellers and the agent/broker and ask them if they’d sell for what they owe, plus commission.
Chances are low that this will happen, but is a better approach than the one you describe.

After this, get the message out that you buy houses, and an easy way to get ahold of you. (Ruukie Buys Houses, 555-555-5555)
Marketing is the number one thing you do in this business.
Rather than look for houses, look for sellers who need to sell, attract them to you.

So, to answer your question, are you ALLOWED to do this? Sure, but, its not the most productive use of your time.

I’ve had RE agents and brokers tell me they cannot have anything to do with subject to, its unethical, etc.
Most times, this is ignorance on their part, or that of their broker whereby office policy prohibits such things.
It is certainly not illegal, immoral or unethical.
The agent I use to sell my properties now has a nice rental portfolio built up, many purchased subject to…and, he brings me deals as well.
Don’t always believe what an agent or broker tells you, verify.

My two cents, keep the change,
Jim FL


As a REALTOR(r) (not just a RE agent), the code of ethics would prevent an agent from using a sub2 method either for themselves or a client because using it, you do not inform the lender of the transaction. A REALTOR(r) could do a Sub2, but would have to inform the lender of the deal and get their permission thus not making it a true Sub2.

Again, this is only if they are going by the “letter of the law” concerning the REALTOR Code of Ethics.

My Opinion


Well, ‘the letter of the law’ for the REALTOR code of ethics, or any law for that matter, is open to interpretation.
Meaning, if you really want to find a reason why something cannot be done, a reason is always easy to find.

On the other hand, I personally know a few REALTORS (yes, Agents and brokers who hold that designation), and all buy houses subject to, have acted as the agent or broker on behalf of sellers in subject to transaction etc.

In fact, a VERY large national chain, Keller Williams is known for doing some rather creative things…they were the first in our area to have a specific team set up to handle short sales as the market became a buyers market.
They also deal with subject to deals, and as I understand it, its discussed in some of their training materials.

Further, on the website, Matt Chan sells a course/book, specific to REALTORS, teaching them how to work subject to transactions, both when acting in agency and as investors/buyers.
Matt’s book/course is even endorsed by the REALTORS over at NAR.
Here’s a link:

So, don’t assume its against the code of ethics, just because someone says so, subject to is practiced by many who adhere to, follow, subscribe and pay dues to the NAR.

Take care,
Jim FL

If you personally feel anything is unethical and wouldn’t feel comfortable doing, it, then don’t. I also feel that it wouldn’t be a good idea to do a deal with someone who has an ounce of doubt about it either. That’s just me. In my limited experience with realtors and subject to, the lady told me that she’d only recommend that the seller accept my offer of sub2 if I gave him a month’s payment as deposit to cover him if I didn’t perform. In other words, she just didn’t care and wants the property sold. I’m keeping her!


I’d assume then, since all laws are open to interpretation that speeding is perfectly legal since most of us do it. For that matter, murdering someone would be a grey area as well, since obviously the person doing the killing interpreted the law to not include themselves.

Yes, big differences, but if laws are meant to be interpreted rather than followed, it fits.

Also, were not really talking about laws (though it is in some states), but rather a code of ethics adopted by an organization. Not even close to the same thing.

As that, again, if a Realtor performs a Sub2 deal as usually laid out, then they are in violation of that code because they are encouraging a seller to actively go against the terms of an existing contract between the seller and the lender, which is a clear violation of the code of ethics. The only way that a Realtor could possibly avoid this situation, in my opinion, is to inform the lender of the transaction. That alone changes the deal into something different than a true Sub2, again, in my opinion.

Add to that, if you, as a Realtor, are encouraging the seller to setup land trusts and/or some other means to try to “hide” the transaction from the lender, that is, or very well could be, deemed mortgage fraud if it ever came out. Whether or not it was ever in court, if the RE Commission and/or the Realtor Board found out about it, it still could cost one their license (again, depending on state laws for such).

And yes, you can always find Realtor/agents that have done, can do, or are doing something. Just because they ARE doing it doesn’t make it any more or less a violation than the fact that others aren’t. Personally, I still err on the side of caution, since, however remote a chance it might be, I’m not ready to bet my license nor my reputation on it.

Handling short sales would hardly be considered “creative” in the current market, if realty companies expect to survive. As to KW teaching sub2 deals in their training materials, I’ll simply reserve the right to review them. For all we know, their inclusion in training is simply “don’t do them.”

Yes, realtor.ORG does have that book listed on their sale page. And that proves that they too intend on making a profit by selling a book. The book in no way is specific to Realtors, at least not in notes. Have you read it? Just because it’s listed on doesn’t make it automatically approved by NAR, trust me. They have books listed there that specifically mention to “get the agent out of the way” before doing a deal.

Please bear in mind, Jim, that I was an investor long before I slipped to the “dark side” and became a Realtor. I AM fully aware of how to do a Sub2 transaction and have more than one under my belt (before agent). I would love to learn how to perform one that wouldn’t put my license on the line. If you’ve got a method, I’m all ears.


I thank you all for ur great feedbacks. Jim FL and Rojer J, you both answered in depth detail to my silly question, and I’m sure everyone reading this thread have learned and benefited in one way or another to ur great insights on this controversial topic. I would not even have thought about how great this would have lead me into. You have shortened the learning curve, and so my hat off for you. :biggrin