Sub 2, Short Sale, and Arrears

[Michael Acuna]

Hi Community,

I had a question about a property that is a short sale but is in arrears. I'm interested in pitching a sub 2 to the seller and have been hearing that I wouldnt need to pay off the arrears if I was going to sub 2 this deal. How does that work? cause I thought when a property is in arrears, they need to be caught up before making any kind of deal.

[Blake Dailey]

It depends on the situation. Short sales usually have to be approved by the bank. The best way to execute a subject-to deal is also by notifying the bank. If you can negotiate that with the seller and then sit down with them and call the bank, and then the bank okay's it you should be good to go. I've went this route and it involved sitting down with the seller and calling the bank together. Usually the bank will accept what is owed to them and allow you to take payments if you fill out their loan assumption application and are approved. This may involve you paying the balance, or just reinstating payments in your name - that's why I say it depends.