"Subject To" Real Estate Agreements Continued...

Joe starts to worry a bit, because he needs to get to his new job out of State within fourteen days, and Joe and Debbie would like to spend a few days off together before Joe starts going to his new job.

Joe starts to think and remembers a "We Buy Houses" sign down the street from their home and runs down and calls the number on his cell phone. After talking with the investor, Joe finds out that the investor isn't willing to pay more than $120,000 for the house. Hearing that, Joe is mad and upset that such a person can come in with such a low and insulting offer. Besides, Joe couldn't do that deal anyway because the second mortgage the Blume's took out last year makes their debt just about equal to what the house is actually worth.
Getting worried and running out of time, Joe places an ad in the local newspaper advertising the house as a "For Sale by Owner" (fsbo).

People do call about the real estate, and some do come and view it. Mostly, however, prospective buyers try to 'low ball' Joe – offering him much less than the house is actually appraised at. This is, except for one guy who said "I will offer the asking price, so long as he can see the place first." Feeling excited and curious at the same time, Joe invites the man over.

A couple of hours later, Brad, the caller, comes over and introduces himself to Joe as the one who called about the house. Brad asks Joe to explain to him a little about the house, and also his real estate, financial, and life situations.

Joe opens up and thoroughly describes his dilemma to Brad. After Joe finishes his story, Brad tells Joe that he thinks he can still offer the asking price, and then asks if Joe was still interested in selling?

But before they start agreeing any further, Brad says, that as an investor, that his primary motivation to make a profit on the house. Joe and Debbie understand that, so long as their asking price is met and the house is sold quickly.

Brad continues and tells both Joe and Debbie that because of his need to make a profit, he needs to offer an agreement which will satisfy both their needs. Brad continues and says that his coming offer is what's called a "Subject To" offer. Of course bewildered and confused, Debbie and Joe ask what kind of real estate purchasing program that is. Brad simply states that it's a program that suspends both their money for the house, and his profit on the house, for a period of two years – during which time Brad takes over the payments. Brad continues with what the agreement entails:

• Keep the current mortgage in place for two years, at which time the house will be sold, and Joe's original asking price will be met, plus 5% of whatever profit is made by Brad.

• An escrow account is setup and paid by Brad to ensure full integrity of his contractual agreement with Joe and Debbie.

• The real estate is claimed over to Brad, which obligates Brad to continue making the existing payments to the escrow account. The deed will stay in the attorney's presence until the deal is fully executed by Brad in two years.

• Relieves Joe and Debbie of the monthly debt for the mortgage payment – so they can move on with their life.

• Brad offers to pay the closing costs and two months of mortgage payments to the escrow account to solidify his offer, and demonstrate clearly his intentions to make good on the contract.

After discussing the deal with each other and realizing that their options and time are running low, both Joe and Debbie agree with Brad over the details and sign over the deed to Brad via the attorney.

Brad then quickly rents out the house to cover the mortgage payments and manages the house as a rental.

Two years later, Brad sells the house for $210,000 and pays $160,000 dollars to the Blume's mortgage company, plus sends Joe and Debbie a check for %5 of the $50,000 profits, which is $2,500. Everybody wins!

<< Previous Page :: ::