Buying Real Estate Using "Subject To" Strategies

Buying “Subject To” Properties

“Subject to” is short for “subject to existing financing.” A “subject to” property can be purchased as long as both parties agree that the existing mortgage will stay in place.

Purchasing a “subject to” property means you will have to finish paying off the previous owner’s mortgage besides making a small down payment in most cases. The main advantage is that sellers offering a “subject to” property are usually trying to get rid of it quickly. This could provide you with the opportunity to negotiate a low down payment or even to buy a home with no money down if the remaining balance on the mortgage is important.

Look for pre-foreclosure properties, since sellers usually want to get rid of these properties as quickly as possible and will probably take the first reasonable offer you make.

Before purchasing a “subject to” property, go over the loan terms carefully. The loan terms should not include a due on sale clause, since this type of clause requires the remaining balance of the loan to be paid when the owner changes.

Buy your first home at the best possible price for your local market.