Subject To Existing Loan - What to ask the seller?

Question

I am learning how to get property by using subject to existing loan.  I know how it works. However, I didnt know what to ask the seller in order to qualify the correct motivated seller that willing to do this method with zero down. What questions I should ask so Im not wasting time on sellers that are not willing to sell house with this method. Please advise! I have a goal to hit : 1 subject to property each month.

Kerry Baird · Answer

I just hand wrote a letter to a pre-foreclosure owner, who lives out of state.  The court hearing is in June.  So she is coming up on the date quick  I told her that I can buy quickly, all cash and take her problem house.  I must factor in repairs, since the house is vacant, and I use this to bring down the expectations of a high price.  She hasn't been in the house, according to the neighbors, so there may be repairs that she is not even aware of.  Anyway, I proposed that I buy the house quickly, and that we can have a local title agent or lawyer draft up the terms, and do the closing in a "proper" fashion, which tells the owner that I am doing this in a legal venue and with appropriate players.

I've also done sub2 deals with a traveling notary, at the kitchen table, and in hindsight I do not think this type of closing has the feeling of a "real deal" to the owner.  I want them to be comfortable with the sales side, as they were with their buying process. Basically, in a case where there is strong motivation (illness, divorce, probate, job move, jailed spouse, etc.) the owner feels the need to move quickly.  It takes TIME to get a conventional mortgage and that is often the reason why they will sell to you.  I had an owner, recently divorced, who begged me to take the house, and only wanted $10.  Really.  There was one strip of tile missing from the floor where they'd taken out a pony wall.  I paid her more than that, as she needed to have money to get established in a new place.  But, when a motivated someone has three choices (higher price for a conventional purchase, medium price for a lease option, or low price and speedy sub2) they will often go with a lower price and speed.

Just chat with them and see what your seller needs.  And figure out a way to solve their problem.  If you think of this, you will do right by them, and earn your profit, too.

Corrinne Yap · Answer

@Kerry Baird Thank you! Haha, that is a good exercise for your kids to practice handwriting! Nice. Do you mind sharing what you have on your script? I afraid that I ask the wrong questions and couldn't get what I really want to convey. I read and heard that never ask the seller "if you would do subject to existing loan on this deal", instead ask them " if we can take over his/her payments". How do you ask?

@Rick H. Thanks for your information too! Will do. I will make sure I have those form/doc. I need to get my feet wet!! Thanks!

Rick H. · Answer

@Corrinne Yap I suggest that you only think you know how sub-2 works, due to the question(s) that you are asking.

You'll want a copy of the original promissory note and Deed of Trust or Mortgage.

Also, copy if recent mortgage statement.

It's essential that you get an Authorization to Release Information form complete and signed by all persons on the mortgage, or their personal representative if a probate estate.

Kerry Baird · Answer

I've done a bit of everything.  Have a website with (improving) SEO, have done bandit signs (but don't now), have done a variety of mailings.  I like direct mail.  We are women on this post, thus far.  I can write or stuff envelopes while kids sleep, not that mine are little now.  But, they were little when my bigger campaigns were going.  Now, I want them to write the letters for handwriting practice.  LOL!  Seriously, every bit of marketing you do works.  I use VistaPrint for my business cards and leave them around town, like at my kids' gymnastics, or random places where you see other business cards.  Letters pull better than postcards, but they take more time.  And I prepare a script to have with me when people call, so that we can screen each other.  They want to see how it works, or whether I pay top dollar.  I want to see if they are motivated.  Often, my deals have been women in divorce or with a partner who is ill, or similar situations.  They can't make it work on their own for whatever reason.  Yes, compassion goes a long way.  Empathy.  Go back and listen to the podcasts with Sharon Vornholdt...I've got episode 12 in my notes.

Corrinne Yap · Answer

Hi Kerry, thanks for sharing your knowledge and experience. Do you do lots of marketing in order to know these sellers? What kind of marketing is the best? How can I get to these people so I can help them and they help me...Im thinking of Bandit sign and Craigslist. What's your best marketing tool? I know with subject to we can save lots of people from going into financial difficulties, especially foreclosure and save their credit history too. I know the feeling of being bad credit score where no banker or credit card company wants you. So, I really hope that I can help these people and at the same time make money. Thank you.