Help with writing a "subject to" offer

[Joey Morgan]

I'm a Realtor in Central Oregon and a client wants me to write a "Subject To" offer. I've never written one of these before so any info would be super helpful! Like specific clauses to include, contingencies, etc. 

[Ty Coutts]

Hey Joey, 

Here is my understanding of the subject:

Key Components of a "Subject To" Offer:
Clear Identification of Conditions: Clearly state the conditions ("subjects") that must be satisfied for the offer to be binding. These conditions typically protect the buyer and ensure certain requirements are met before finalizing the sale.

Contingencies to Consider:

- Financing Contingency: Specify that the purchase is subject to the buyer obtaining satisfactory financing. Include details such as the type of loan (conventional, FHA, VA) and the maximum interest rate acceptable to the buyer.

- Home Inspection Contingency: Include a clause allowing the buyer to conduct a professional home inspection within a specified timeframe. Outline that the sale is contingent upon the inspection report being satisfactory to the buyer.

- Appraisal Contingency: State that the purchase is contingent upon the property appraising for at least the purchase price. If the appraisal comes in lower, the buyer may have the option to renegotiate or withdraw from the offer.

- Title Contingency: Include a contingency that the buyer receives clear and marketable title to the property, free of any liens, encumbrances, or legal issues.

- Seller Disclosures: Specify that the buyer's acceptance is subject to reviewing and approving all seller disclosures and documents related to the property's condition and history.

Timeline and Deadlines: Clearly outline deadlines for completing inspections, securing financing, and satisfying other contingencies. This helps ensure the transaction progresses smoothly and in a timely manner.

Earnest Money Deposit: Specify the amount of earnest money the buyer will deposit with the offer. This demonstrates the buyer's seriousness and commitment to proceeding with the purchase.

Additional Clauses:

Subject to Sale of Buyer's Property: If the buyer needs to sell their current home to finance the new purchase, include a clause making the offer contingent upon the sale and closing of their property.

Specific Repairs or Improvements: If the buyer has identified specific repairs or improvements they want completed by the seller, include details about these requirements as conditions of the offer.

Review by Legal Counsel: Consider having the "Subject To" offer reviewed by a real estate attorney to ensure all contingencies are clearly defined and protect the buyer's interests.

Final Steps
Negotiation: Once the offer is submitted, be prepared for negotiation with the seller. They may counteroffer or request modifications to the conditions outlined.

Documentation: Ensure all parties sign and agree to the terms of the offer in writing. Keep copies of all documents related to the offer and any amendments made during negotiations.

Hope this helps! If you have any further questions or need any assistance please feel free to reach out to me directly!

[Lynn McGeein]

@Joey Morgan if your client wants you to write subject to the existing mortgage, likely best to contact listing agent first and ask if seller is even interested, can save a lot of time if not. As a listing agent, I let my seller know it can trigger the due on sale clause and they lose control of the home but still responsible for the mortgage if buyer doesn’t pay, so most aren’t interested unless it’s a special situation where they really need out and no real buyers out there.

[Ryan Cleary]

Hey Joey,

I would make sure you work with a title company that can handle sub-to deals, also if this offer gets accepted, I would contact a lawyer to assist in the transaction. Good luck!

Just did one, went smoothly!

[Jonathan Greene]

Always ask if the seller would be open to it, but you are basically getting taken for a ride. The sub to community trains their people to call properties on Zillow and get connected to agents and ask them to make a sub to offer. It's silly. Sub to is not for on-market properties, it's for direct-to-seller options where it will benefit the seller greatly. As mentioned above, as an agent you don't want to be helping sub to because of the due on sale possibility because you will be the one blamed later.

[Tom Gimer]

The buyer and seller sign disclosures at closing outlining all of the various risks of a subject-to transaction; they agree and understand that they are voluntarily proceeding, having had the opportunity to obtain the advice of independent counsel; and of course they release everybody involved (including any real estate agents) from liability.

Ours even spells out exactly what will happen if they try to blame us for their own stupidity including agreeing to indemnify us for any attorneys fees and expenses we incur in defending and/or dismissing the complaint.