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Sellers Options Part 6: Subject To – I’ll Take Over Your Payments
Joe: Hey, it’s Joe Crump doing seller options. Helping you understand all the options the seller has. This is an eight-part series, so try to listen to them all because they’ll help you understand every option that every seller has. There are no other options besides the ones that I’m going to show you in these eight different videos so make sure you listen to them all.
Joe: These last three that I’m doing, because I’m part six right now, these last three are options that you can give them if you think it makes sense to do that. Now, I’m not going to get into the actual structures and how these structures work, so I’m going to ask you to go look at some of my other videos that talk about the structures. But at least these explanations will give you a little bit of an idea of how they work and whether or not they might make sense for a seller.
Joe: So this first one is, they can sell their property subject to – if you want to buy that property as the investor from that particular seller. And, now, it probably doesn’t make sense for you to sell it subject to. You want to keep control of your properties and I’ll show you how to do that with these other structures. But, you can buy them subject to and that’s the best way to buy them because you’re going to get the deed and it’s going to give you more power. It’s going to give you more control in that particular deal.
Joe: Remember my philosophy. You’re the most ethical person in the room and you know that you’re going to do the right thing but the only way that you can do the right thing is if you have control of the situation. Having a property subject to gives you control of that situation.
Joe: Subject to. If the numbers make sense, we’ll take over the payment on your loan so you don’t ever have to think about it again. We typically find a tenant for the property and manage the property until the values go up enough so we can sell it and make a profit. If you do it this way, you don’t have to worry about it. We deal with everything. The pros. You can hand over your property and never think about it again. It happens within a day or two so you can move on quickly. It doesn’t cost you anything to sell. You don’t have to worry about maintenance and repairs, we deal with that. We’ll make your payments on your property on time and your credit will stay clean. And you’ll never have to think about it again.
Joe: The down side. Your name will continue to be on the mortgage, but you will not be making the payment. We will. The property has to be in pretty good condition for us to take it this way, and you can, if you’re an investors and you want to take properties in tough conditions, subject to, I’ve done that sometimes as well. That means I have to put cash into the property. We typically ask for one to four payments on the property after you move depending on the situation. The bank has the contractual right to foreclose if you sell the property this way. But in all the years that we’ve been buying houses this way we have never seen a foreclosure for this reason. There’s no reason for a bank to foreclose on a property that is making it’s payments on time. They have enough foreclosures on their plate to worry with properties that are in good standing.
Joe: Analysis. This is a great way to get rid of the property quickly and with very little headache. The paperwork can be done on the kitchen table. If you do it with us we’ll provide you all the information and the disclosures you need to make an informed decision. There’s some risks, but those risks are determined by who you sell it to. We make a promise to all our sellers to make all the payments on time and take care of the property. We’ll pay the loan off as soon as we can and still make a profit. If you sell this way you have to decide if you feel we are credible and will follow though the way we promise. If you’d like to discuss this in detail, we’re happy to do so.
Joe: The only reason you’d have to worry about this property after you sell it is if something happened to us. It’s possible that everything could fall apart, even death God forbid, but I would also say that it’s unlikely. In the event that that happens, the property goes to our state and our heirs and would probably want to keep it. If a major problem like this arises we give you back the property in reasonable condition and with a mortgage current. If we get into trouble, again this has never happened to me, we will not let payments go late with contacting you first. If that happens, you’d be no worse off than you are right now. And maybe a little better off since you will have bought some time and the potential for the market appreciation and the mortgage will have been paid down.
Joe: The other reason we might give it back is if it becomes unsustainable to us as an investment. Again, this is unlikely. There are only certain properties we are willing to do this with, so if this is of interest to you please let us know and we’ll seriously look at the numbers to see if we can make it work.
Joe: So, this is the kind of conversation we would have with somebody when we’re doing subject to. I want them to know what the pros are, the cons are, what could happen, what might happen, you know, the down side the positive side. Most people that sell to me subject to understand everything before they do that and they’re trusting me to follow through with it and I always follow through with what I promise I’m gong to do and you should, too. And if you can’t follow through, give them the property back before their next payment comes due so they don’t go late on their payments and it screws up their credit.
Joe: All right. That’s another option that the seller has that you can do if you decide to.