Subject two vs Seller Finance

[Adam Hayashi]

Hello, 

I have came across what I deem an excellent opportunity but for me being a rookie, I can not grasp structuring a plan together. Currently, have a property that has been on the market for some time, spoke with the agent and the sellers are trying to move forth due to another property. Sellers still owe 71k  which I have the funds to pay off but the catch is, they obtained the property with seller's financing. The agent told me the owner is not trying to do a seller finance deal but I know that he wants 15 - 20k more than listed. The agent had a very hard time already getting him to come down but it could be possible I can use this to my advantage. Lending could be an option but with interest rates high 7, I am looking for other creative options. Any guidance in the right direction would be greatly appreciated. Thank you!

[Melanie P.]

I would ask him to review his documents from the seller finance to see if that financing is assumable. If it is follow the requirements in the documents. If it's not assumable per the documents ask him to reach out to the seller (now his lender) to see if they'd consider letting you assume the mortgage. You'd only need to bring the difference between the balance on his loan and what you agree to purchase the property for and your share of closing costs.

The term is "Subject to" which is short for Subject To Existing Liens, Deed of Trust, etc. These deals are risky and complicated. I don't recommend them starting out. This is a lender you can talk to, negotiate with and has gone through with financing the property once already. 

[Kristine Ann]

Instead of trying to structure a deal, spend more time and energy figuring out what's wrong with the property.  I am concerned in your excitement to start that you've overlooked a problem.  You really should be in a situation where you're negotiating and not overpaying.