Good to meet you.
I’ve compiled a list of the most common objections and questions that surface in a presentation. Familiarize yourself with these to the point of knowing them cold, so you can rattle them off without back-off, hesitation or insecurity.
Does the loan stay on my credit?
Yes, it does. And let me tell you how this will actually help you. You told me earlier that you were 2 payments late on your mortgage; being late on a mortgage payment, as you know, lowers your credit worthiness. By us making the payments on time, we will actually raise your credit rating by reestablishing an on-time payment history.
With the loan staying in my name, does it hurt my credit?
With us making the payments on time, it will actually increase your credit rating. Did you know that when you pay off debt it actually lowers your credit rating? You don’t want that to happen do you? There’s no better way to raise your credit score than to keep on-time, regular payments of your mortgage. The loan remaining in your name will do just that.
Can I buy a new house with this mortgage on my credit?
Yes, you can. There are many lenders that will look at this transaction no differently than as if you had a rental property. We will show the new house lender that we have been making the payments with copies of our payments; much like someone who bought a house with a former spouse.
How will I know that the payment is being made?
We pay all of our mortgage payments at the beginning of the month and you will receive a notice of payment made.
One of the steps we take to make sure the payments are always made is to have a reserve fund of 4 months’ worth of payments, and we set up these payments to automatically come out of that account.
It’s extremely important to us that we honor our commitments.
I don’t want to deal with it, I just want to sell normally.
I understand your concern. If we were to buy your house, by putting our own loan on your property, it would not allow us to pay you as much for your property.
I am offering you a solution to selling your home and you making the most amount of money without it costing you anything to sell your home.
I can just sell it normally?
Yes. You may be able to sell it without someone buying it subject to the existing loan.
However, my offer gives you many more advantages. It…
• pays you the most amount of money
• re-establishes a positive payment history or keeps your credit rating from dropping
• doesn’t require you to bring money in to close the transaction
With my offer, we don’t have to worry about whether the house will appraise for the sales price.
By buying “subject to”, there won’t be a lender involved telling us that certain repairs will have to be done before they will fund. This alone could save you thousands of dollars.
You get peace of mind knowing that the borrower doesn’t have to qualify for the loan. I have seen a number of deals that fall out of escrow because either the borrower didn’t qualify or the property didn’t qualify.
With my offer, we can close as fast as 2-3 days from now rather than waiting and having to make another house payment.
What if you don’t pay the mortgage?
It would be extremely foolish for us to not make the payment. We would lose everything we have put into the deal.
Our reputation is the only thing we have and I value it more than anything else.
You will get a notice from us every time we make a payment to the lender so you will know that they are being paid.
Is it legal to do this?
Yes, it is. The lender’s only recourse is to accelerate the Due-on-Sale clause. But it is my experience that they will not do this because of the reserve requirements that they are obligated to have for loans that they initiate foreclosure procedures on.
OR YOU COULD SAY THIS:
In fact, it could be argued that once they create a pattern of accepting my payments, they can’t even accelerate the Due-on-Sale clause.
OR YOU COULD SAY THIS:
Yes, it is. In fact, it is the number one method we investors use to help house sellers like yourself sell their houses.
Occasionally I have sellers who want to confirm that buying “subject to” is okay and that everything is on the up and up, which is why I use a title company to handle all of the paperwork.
That’s why I say, “Let’s go ahead and open up escrow, and they will take care of everything from there.”
Why don’t banks want you to buy “subject to”?
When banks loan money at 6% and five years later the interest is much higher, they are losing money. Banks want us to pay off those lower interest rate loans so they can make higher interest loans on the same property, and that just doesn’t make sense.
It isn’t something that lenders want the public to know a lot about. They want us to spend all that money it costs to get a new loan, points, appraisals, title insurance and escrow, just to loan the same money on the same piece of property.
What if the lender does accelerate the Due-on-Sale clause?
It is my experience that they will not accelerate the Due-on-Sale.
Most of the time when we buy “subject to”, we actually pay on the mortgage better than the original borrower, so lenders like us.
If they do accelerate the Due-on-Sale process, you are at the same place as you would have been if I didn’t step in and buy the house. Buying the house this way can only help your credit, not hurt it.
You said your interest rate was higher than today’s interest rates. Why would the lender want their higher interest loan paid off just to lend the same money at a lower rate? It doesn’t make sense, does it?
Lenders are not in the business of calling in loans, especially ones that are in a positive payment status for them; they are in the business of making loans.
When will the loan be paid off?
The loan will be paid off either when the property is refinanced or the last payment is made.
Will the loan be paid off when you sell the property?
Occasionally when we sell the property we will pay off the loan, but not all of the time. Sometimes we will manage the loan payments from the new buyer, making sure that the lender gets paid.
I want my attorney/real estate agent to look it over.
That’s a great idea! Let me have their name and I will have my attorney call your attorney. They probably know each other very well.
OR YOU COULD SAY THIS:
That’s a great idea! Please keep in mind, I am here to help you sell your house, I am not trying to trick you or take advantage of you. Do you think I would do that?
Does the insurance have to stay in my name?
Yes and no. Until I rehab the house and find a new buyer, I will ask that I be put on your insurance policy as an additional insured, I will be responsible for making the insurance payments. And once I find a buyer, they will be taking out their own insurance.
Actually, I will have my insurance agent contact your insurance company and work out their requirements. Therefore, I am not sure what they will want. Your policy staying in place is going to be fine.
Can I set a time limit as to when you will have my loan paid off and out of my name?
IF YOU WANT TO SAY “YES,” THEN SAY THIS:
Yes you can, but that may mean that I will not be able to pay as much for your house.
IF YOU WANT TO SAY “NO,” THEN SAY THIS:
No. I don’t buy houses that have loan payoff time limits on them because I just can’t predict the future. I know it sounds harsh, but I don’t want to commit to something that may be out of my control. I know that the terms I have laid out are terms I can honor.
What about the pre-payment penalty, do I have to pay that?
No. Actually, we will ask the lender for a payoff amount including all past late fees, payoff fees, and any pre-payment fees. We’ll assume all of those costs and pay you the difference between that amount and the purchase price.
OR YOU CAN SAY THIS:
No. That is what makes buying subject to the existing loan so advantageous for you. We are going to assume those costs as part of the sales price. But if you were to sell and pay off your loan, you would have to pay those costs.
What about my credit line? I still have some credit available.
We will call the lender and have them freeze the credit line and take the property subject to the existing amount. Just make sure you void any blank checks you have – just in case.