Is Subject To allowed with if listed with a realtor?

Question

I currently have been reaching out to expireds on my MLS. This one happened to be a duplex. Anyway I had talked to the realtor and she said that he may be interested in owner financing. Come to find out he still owed 135K on the property but was open to the idea. He bought it for 165K and has only owned it 3 years..that being said I offered to take of the payments subject to because I had told him if he did sell it and pay the realtor fees he would not really be walking away with much at all and he agreed.

This was not my original plan to do a subject to, I was originally trying to get properties through owner financing. That being said, can I still do this if a realtor is involved? My guess is no or it is extremely difficult to do since it is not a "traditional" real estate sale going through a brokerage.

I would really like some input on this if any of you have any idea. Thanks in advance.

Account Closed · Answer

You said:"I currently have been reaching out to expireds on my MLS."

Why then, is there an agent and any commission?

Wayne Brooks · Answer

A Realtor May “get in the way” as a sub2 sale is very risky and generally a horrible idea for a seller unless they are desperate and in trouble.

Account Closed · Answer

@Chris Lynch figure out if it cash flows. Put a contract together and close it if the #’s make sense.

Chris Lynch · Answer

I was reaching out to the agent. I know this is a bigger pain than sending mail but I have gotten great responses with people saying they would be open to owner financing. Only downside is the agent is involved now.

Lee Ripma · Answer

@John Farady brings up a good point. Is there a listing agreement? When you say you are reaching out to expired listings are you reaching out to the former agent or the owner?

Chris Lynch · Answer

@mitch messer thanks for replying, and so when you say for the realtor to not get in the way are you saying it's fine if it is still under contract with the Realtor? If so that's good then. But at the same time she is willing to hear me out. Same with the owner.

And as for the property he wants more than the 165k. He has it listed at 210k but I had a talk with him and that was his starting point. I know for a fact it is not going to sell for that price (I am a realtor as well and know the home values in my area) that being said having it only 3 years did not build any equity.

But at the same time it has a gross income of $2150/month.  That is where he got the value of the property from calculating the numbers. I think I could possibly get it for 180k-190k IF the numbers make sense.

His mortgage is $990 /month and I was thinking if I get it for 180k with 12k down he could finance the 33k for 8-10 years 0% interest rate and balloon payment at the end. Would that be an option?

Also the front unit rents for $1,450 and the back $700. Long term tenants are in place that love it. There is definitely room for an increase in rent as well. I am going to check out the property this week to see if it as good as it looks in photos.

Mitch Messer · Answer

Hi @Chris Lynch and welcome to BiggerPockets!

First, let's be precise: Buying subject-to is a form of owner financing. So, yes, you can still do this with a Realtor involved provided:

• The seller's agent will still get their full commission.
• The seller's agent understands subject-to or at least agrees not to get in the way of the sale.

If, say, your purchase price were $165K, that might break down to taking over the $135K mortgage plus paying the agent commission (call it $4,950 at 3%), and finally paying the seller the difference, or $25,050. (Of course, there's no rule that says you have to pay the full $25K to the seller at closing...)

Is Subject To allowed with if listed with a realtor?

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