The Second of Five little Known Proven Ways How to Buy a Home For Less.

The Second of Five Little Known Proven Ways

How To

Buy a Home for less.

"Subject To" real estate financing is not new to in real estate but can be a smart way to get into a home for less if one wants to get into a home now with little or no money down.

"Subject To" deals can actually be a win-win situation for both the seller and the buyer/investor.  The seller usually receives his/her property price needs and they no longer pay their mortgage directly.  The buyer or investor usually gets the property with very little money down, and does not have to wait for bank financing which may take a month if the buyer can qualify in today's tight mortgage market.  There is nothing wrong with this type of transaction. I have used it on several occasions myself.

This is a little know way to buy a home.  No one else is going to explain it to you because if you use this method you can save thousands and you can purchase a house in Georgia without a lot of extra expense.  There's absolutely nothing wrong with this method. While doing it this way one would still incur the paperwork but, many of the costs that go along with buying a home like the transaction fees that are involved (real estate commissions) are never paid by you or the seller.  Other Costs (closing costs, recording fees) are charged to the buyer right away or in some cases never.  All transactions are completed in an Attorney's office and are legal.

The time needed to do a "subject to" deal is also reduced quite often. On an average, the whole process usually takes up to a month if the house is priced fairly depending on the situation.  The time a buyer spends can be just a few hours.

Conventional real estate involves working out an agreement that is fair both the seller and the buyer, by using banks and or mortgage companies. By using this type of financing, the seller may sell their property for the price near what they ask (normally in our area 93 to 96% of asking price), but often not in a timely fashion.  The seller normally must pay a real estate commission (6 or 7%), and either the buyer or seller gets stuck with the closing costs (typically 3%). Other costs (routinely 3% i.e.-home warranty, termite letter, etc) and any fix up cost (like painting and carpet replacement) plus up to six months of carrying cost while the house is on the market (mortgage, elec, water, gas, yard service, assoc fees, trash pickup, insurance, etc.) usually add up to several thousand dollars that the seller usually gets saddled with in a traditional sale. 

By leaving out the usual suspects like title companies, real estate agents and loan officers, both parties stand to make the transaction more profitable.

Let's go over a sample situation which would create an ideal environment for a "Subject To" agreement.

Our Clients, Terry and Tim bought their house two years ago for a $100,000 dollars. After 2 years, they now owe about $99,000 dollars, while their house is appraised for $109,000 dollars.  

Shortly after this, Tim receives an offer within his company for a higher paying position, but in a different area. Terry and Tim decide to take the job offer and move out of the area. Now they have a problem because they must sell their home quickly.

Like so many of us, when we look to sell our house, we think about what we know, logically and talk to a real estate agent.  The real estate agent tells them with a net sheet that once the commission is paid and the fees and the time to sell the home is figured in there will be no equity and or profit left in the house.  The agent also tells the homeowners that they will have to pay part of the agent's commissions out of pocket. Of course, Tim and Terry can't do that, because they are out of money and are basically living paycheck to paycheck until the new job starts.

Tim starts to worry and stress a bit, because he needs to get to his new job out of town, within 30 days, and Terry and Tim would like to spend a few days off together before going to his new job.

Tim starts to think and remembers a "We Buy Houses" sign down the street from their home and runs down and calls the number on his cell phone. After talking with the investor, Tim finds out that the investor isn't willing to pay more than $100,000 for the house. Hearing that, Tim is hurt, and confused that such a person can come in with such an offer. Besides Tim believes he couldn't do that deal anyway because it places their debt just about what the house is worth.

Getting really worried and running out of time, Tim places an ad in the local newspaper advertising the house as a "For Sale by Owner".

Mostly everyone is trying to low ball him except for You the new buyer who says we will offer what you need, so long as we can come over see the home and discuss the options today or tomorrow.  Feeling curious, Tim invites us over.

Thirty minutes later, we come over.  Tim tells the new buyer a little about the house and his situation.

Tim thoroughly discusses and describes his dilemma the buyer. After Tim finishes his story about his situation, the buyer tells Tim that we can still offer him and Terry a deal that will net them about the same as if they sold it the traditional way.

But before the buyer starts agreeing any further, he or she explain, that our primary purpose is to buy the house. Tracy and Tim understand that, so long as their needs are met and the house is sold quickly.

The buyer continues and tells both Tim and Terry that because of the buyers desire the offer is an agreement which will satisfy both the seller and the buyer's needs. The buyer continues and says, "the offer is what is called a Subject to offer".  Of course bewildered and confused, Terry and Tim ask what kind of program is that. The buyer simply states, that it's a program that the buyer will move in and take over the payments and later refinance the mortgage.  The only issue is the bank could call the mortgage due but probably wont as long as the new buyer pays on time each month which the new buyer is committed to do. Not fully understanding, Tim continues to listen to our offer.

Here's what it entails:

1. We keep the current mortgage in place for approximately 2 years, at which time the house will be refinanced buy the us (new buyer), and Tim's agreed to price of what he needs is 100,000 will be met by the new buyer. In the meantime the current mortgage will be paid by the new buyer every month on time and the new buyer will move into their new home immediately.

2. The difference in the asking price and the selling price is $1000.00 The new buyer gives the $1000.00 to Tim and gets a receipt and an agreement is signed.

3. The property is deeded over to the new buyer which by contract ( ATTY Contact) is signed saying the new buyer will pay the current monthly mortgage note starting now on time every month until the current mortgage is paid off.  The contract obligates the buyer to continue making the existing payments or the house deed returns to Tim and Terry.  The deed will stay in the attorney's office until the deal is fully contractually completed by the new buyer in approximately 2 years.

4. This relieves Terry and Tim of the monthly debt for the mortgage payment so they can move on with their life and new job.

5. The new buyer offers to pay closing costs (saving Tim and Tracy this expense)

6. After discussing the deal with each other and realizing that their options and time are running low, both Tim and Terry agree with the new buyer and sign over the deed to the new buyer in a document called a land Trust.

7. Now Tim and Terry can move on with their live and have no worries about their old house.

8. The new buyer moves in and pays the mortgage each month on the new house.

9. Two years later or sooner, the buyer refinances the home at a great rate and the original mortgage is paid off (freeing Tim and Terry from any further obligations while having a perfect mortgage credit history for the time the buyer moved in and paid the monthly mortgage payment). The new buyer now fully owns and has all tax advantages available for home ownership in our great USA. Everybody wins! 

  Hope this helps,
Mark

We have good houses in Georgia right now that you move into for only $5000 and up option money and you can own them shortly.  View some of our listing at www.goodhouses.org for the details and pictures. When you sign up, you do not have to buy anything or talk to anyone if you do not want to.  Just sign up for free to be put on the Georgia homebuyers VIP list. 

We have and are daily receiving leads to homes in all price ranges and areas of Georgia. Want to live in a specific subdivision or school district?  We have it or we can get it. Sign up now for free stuff and more articles at www.aohomesolutions.com .

The third of our first Five Street Proven techniques will follow shortly.

A O Home Solutions LLC

PS: This is a Brief description of how it works. We are not supplying legal advice or any recommendations. For legal advice consult an Attorney. For more information go to www.askmarkfirst.com and post your questions