Hi,
Can you get a property under contract (that you will eventually wholesale) from a seller without engaging in a “subject to” transaction if the seller still has a mortage on the house? Here I am assuming the seller has lots of equity and has a relatively small mortage. As a beginner I want to try and stay away from “subject to” transactions at least for the first few deals until I get comfortable.
Does the language in the purchase and sale agreement need to be different in case the seller has a mortgage? If so, what would be the needed language?
Thanks
Hi,
Wholesaling generally takes place during a time period of a few days to a couple of months, generally speaking a wholesale deal is achieved by a purchase contract (A-B) and either a double closing using transactional funding or the assignment of a contract (B-C).
A “Subject to” transaction requires an escrow to you (A-B) which cost’s money and generally “Subject to’s” are good for acquiring distressed property where the seller has a tax problem liquidating this year, or where the seller needs someone responsible to take over a distressed property where the seller can no longer afford to maintain or care for a property, or where the seller is living out of state and has been transfered or has inheirited the property!
The benifit to us as investors can be the ability to refinance into a “Subject to” and we can control the property without having a mortgage in our name on the property, this allows for renting / leasing to a tenant for some period before having to exercise a purchase by either a sale or refinancing the property.
The seller having a mortgage has no bearing provided the seller owes less than the agreed purchase price, if the seller owes more than the purchase price then a “Subject to” does not work and a short sale will be required for the seller to get out of the property.
No, the language is the same, but how a title or escrow company handles dispursements and settles the escrow is different.
GR
Get an option on the property, find your end buyer, sell your option and move to the next one.