What Is a “Subject-to” Real Estate Contract?

A “subject to” real estate contract is an option that an investor might offer you when inquiring to buy your house. It means that they want to buy your house “subject-to” the existing financing remaining in place.

The investor wants to take over your current mortgage payments and any other liens that may encumber the house.

Investors who offer you this option will likely also cover all costs involved in the transaction, and sometimes buy houses to fix up and sell again.


 Subject-to Selling

The reason this strategy is a good option for both the buyer and the seller is because an investor has the resources to fix up properties and find buyers. But they can’t always get a conventional loan with a bank because of current guidelines. This means that having the loan stay in place is an essential part of the deal working for both parties.

“Subject-to” real estate contract transactions have an added benefit to the seller because they are relying on an investor to make the payments on the property instead of a typical buyer, which may give the seller a higher comfort level.

Some of the advantages of a subject to transaction are:

  • Little to no closing costs,
  • Almost always no realtor commissions,
  • Can improve the seller’s credit,
  • Faster house sale,
  • Higher comfort level.

The main disadvantage to a subject-to transaction is if the investor stops making payments, the seller will get the house back by either a foreclosure or a deed-in-lieu.

Markette Properties can buy your house using this method or assist you in the transaction with another investor.