I’m putting a sub 2 deal under contract this weekend, but am not sure what to insert as the purchase price. The house is in pre-foreclosure & the seller just wants to walk away. Also, any thoughts on CYA additions to the contract?
Thanks!
I answered your pm.
What ‘contract’ are you using to close on a Sub2 deal?
As far as cya additions to the contract, you need the right to administrate the loan after closing. You need clarification on what happens with the insurance policy and the ongoing payments. Are you paying the seller directly? The bank directly? Or are you going to have the payments serviced by a third party? How are you going to allow the seller to track the payments without them having to call the bank, or worse, check their credit report…?
Where is the insurance company going to send bills? What about the taxes? What about a settlement statement that the sellers will need to ‘prove’ a sale occurred when they try to get another loan?
You want to know where is the bank going to send future statements and how you are going to keep from flagging the bank’s three-dollar an hour employees about your equitable transfer of interest.
Who will have power of attorney over the property and the loan in the future?
Good advice, ‘Javipa.’
Also, I’ve had great success using a trust as that is a standard financial planning tool for a property owner and does not creat ‘red flags’ with lenders. Then, buyer of ‘subject to’ deals can be trustee and manage the transaction on behalf of their trust.
Hope that helps.
Rob