On a subject 2 deal, how does an owner get money for handing over the deed to the buyer (you) if it is illegal for an owner to profit on an subject to deal? How does the owner get money for the equity on a subject 2 deal?
Second, how does an owner profit on a cash deal. With a check from a agreed upon price or at closing when you pay them more for what they originally bought the home for?
The last thing I want to know is it more profitable to do a subject 2 deal then a cash deal? I mean, instead of aggreeing to pay cash for the home it would be more attractive of a deal if you just took over the extisting loan and pay the owner for some of his equity?
On a subject 2 deal, how does an owner get money for handing over the deed to the buyer (you) if it is illegal for an owner to profit on an subject to deal? How does the owner get money for the equity on a subject 2 deal?
...
It is not "illegal" for anybody to profit on a "subject to" sale; the "subject to" sale does trigger "due on sale" clauses in the mortgage docs. You might be getting confused with a "short sale" where the bank holding the seller's loan does not want the seller to get any payment when the bank has to settle for less than what the seller owes on the loan.
Originally posted by Quincy Williams:
...
Second, how does an owner profit on a cash deal. With a check from a agreed upon price or at closing when you pay them more for what they originally bought the home for?
...
That's basically how anybody profits selling anything - sell for more than what one paid for it in the first place.
Originally posted by Quincy Williams:
...
The last thing I want to know is it more profitable to do a subject 2 deal then a cash deal? I mean, instead of aggreeing to pay cash for the home it would be more attractive of a deal if you just took over the extisting loan and pay the owner for some of his equity?
If you don't have cash, then you might be better off trying the "subject to" approach. Whether one approach is more or less profitable depends on so many other factors that there is no real answer to this particular question.
Yes you are right I was thinking about the short sale where it is illegal for the owner to profit fro the transaction.
I should have made my question more clear. Does the owner get a seperate check at closing on a cash deal or does the profits come at the closing table from the all cash transaction.
Like, do you pay the owner a seperate check? Or does the owner get the money after close on the agreed upon set price?
I try to have all payments made through escrow; that way, if the seller can't deliver clear title or backs out for whatever reason, the money never reached the seller. Once the seller can perform by closing with you (deliver the property to you with clear title), then escrow will pay them.