How to handle inspections in a Subject To deal

[Parker Robertson]

I was listening to Pace Morby on the recent BP podcast and he was outlining the advantages of Subject To deals. One of the advantages he mentioned was avoiding inspections, but that goes against what I've always heard: "Don't buy anything without an inspection"

I am wondering how that is considered an advantage or ways to get an inspection while using Suject To approach.

[Edward Adams]

It's true that in a Subject To deal, the investor is taking ownership of a property "subject to" the existing mortgage, without going through the traditional process of getting a new mortgage loan. This can be an advantage because it allows the investor to take over the property quickly and with less paperwork than a traditional mortgage. However, it's important to note that this approach does not necessarily mean that the investor should skip the inspection process.

In fact, it's generally recommended that investors conduct a thorough inspection of the property before taking ownership, even in a Subject To deal. This can help identify any potential issues or repairs that may need to be addressed, and can also give the investor a better understanding of the condition of the property and any necessary repairs or renovations.

One way to get an inspection while using a Subject To approach is to include an inspection contingency clause in the purchase agreement. This would allow the investor to back out of the deal if the inspection reveals any major issues with the property. Additionally, the investor can hire a professional home inspector to conduct the inspection and provide a detailed report on the condition of the property.

It's important to note that while an inspection can be an added expense, it can also save the investor money in the long run by identifying potential issues before they become major problems. Skipping the inspection process in a Subject To deal can be risky, and could lead to costly repairs or even legal issues down the line.

In summary, while Subject To deals can provide some advantages for investors, it's still important to conduct a thorough inspection of the property before taking ownership. By including an inspection contingency clause in the purchase agreement and hiring a professional home inspector, investors can ensure they have a clear understanding of the condition of the property and make informed decisions about their investment.