Steps in a Subject To

[Mark J.]

I did a direct marketing campaign awhile back and one of the responses I received was from a seller wanting to get rid of the mortgage/debt.  She doesn't live in the property and it's been sitting vacant for the last year or so.  She tried to sell it but couldn't- think maybe due to a combination of bad agent and price/condition.

It probably needs about 10K to make it nice.  She owes 90K.  I'm thinking it could rent for $1100-$1200/month, which if I don't have to put the 20K down payment would make a lot of sense.

I'd like to approach the seller with a "subject to" offer, taking over the mortgage, fixing it up and renting it out.  Possibly selling it in a couple of years.

How would I go about it?  Do I need to get an agent to write an official offer and do the legal paperwork?  From what I've read I would/should get an inspection to make sure there aren't any major issues.

Would I hire a title agency firm to handle the transaction like a regular purchase (this is PA)?

Does this make sense as a financial deal or am I overlooking something(s)?

Thanks in advance for any input.

[Account Closed]

Originally posted by @Mark J.:

I did a direct marketing campaign awhile back and one of the responses I received was from a seller wanting to get rid of the mortgage/debt.  She doesn't live in the property and it's been sitting vacant for the last year or so.  She tried to sell it but couldn't- think maybe due to a combination of bad agent and price/condition.

It probably needs about 10K to make it nice.  She owes 90K.  I'm thinking it could rent for $1100-$1200/month, which if I don't have to put the 20K down payment would make a lot of sense.

I'd like to approach the seller with a "subject to" offer, taking over the mortgage, fixing it up and renting it out.  Possibly selling it in a couple of years.

How would I go about it?  Do I need to get an agent to write an official offer and do the legal paperwork?  From what I've read I would/should get an inspection to make sure there aren't any major issues.

Would I hire a title agency firm to handle the transaction like a regular purchase (this is PA)?

Does this make sense as a financial deal or am I overlooking something(s)?

Thanks in advance for any input.

Your offer: Tell her that you will take over the payments so she no longer has to make those payments, you tell her that the loan will remain in her name until you get the place fixed up and refinanced or sold. Tell her it will cost about $10,000 to do the fixing, which you will provide. You get ahold of a purchase and sale agreement, even one from Staples can work. You have a financing addendum stating that you are going to take over the loan for the amount owing on the date of possession. You call an escrow company (or attorney) depending on your state, have them open escrow and order a title report. You can have an inspection done but hey, you're getting a house for practically free, what're you complaining about? Then the escrow company or the attorney will draw up the paperwork and record the deed. Then you contact your favorite insurance company, and have both of your names put onto the insurance.