There are several reasons why a seller might prefer these methods over a traditional sale:

1. Immediate Debt Relief: Sellers can quickly relieve themselves of mortgage obligations without waiting for a traditional sale to close.
2. Avoid Foreclosure: If the seller is facing foreclosure, these transactions can be a swift solution to avoid damaging their credit further.
3. Potential for Improved Credit: On-time payments by the buyer can positively impact the seller's credit score.
4. Maintenance and Repair Responsibility: The buyer assumes responsibility for the property's maintenance and repairs once the deed is transferred.
5. Flexible Terms: Sellers can negotiate terms that might be more favorable than what they could achieve in a traditional sale, especially in a slow market.
6. Higher Selling Price: Sellers might obtain a higher selling price by offering financing options.
7. Investment Income: Seller financing provides the seller with a stream of income from the interest paid by the buyer

Yes, "Subject-To" & “Seller Finance” transactions are legal. The HUD-1 Settlement Statement, a standard form used by title/escrow companies and attorneys, explicitly references "Subject-To" transactions. Line 203 of the HUD-1 form is used for cases where the borrower is taking title subject to an existing loan or lien on the property, as specified in the Code of Federal Regulations (CFR) document.

To ensure timely mortgage payments, a third-party servicing company is set up to handle payments. The servicer withdraws money from the buyer's account and makes direct payments to the mortgage as well as to the seller if any seller financing is applicable. This process also provides proof of payment, which can be beneficial when the seller applies for new loans and needs to demonstrate that the existing mortgage is being paid.

A Deed in Lieu, pre-signed and held by the servicing company, can be used if the buyer defaults for over 30 days. In this scenario, the house is transferred back to the seller. The seller benefits from any loan paydown, improvements made, and property appreciation. They can then decide to keep or sell the property.

For Conventional and FHA loans, one month of a lease agreement is pre-paid upfront. Our lender can typically remove 75% of the seller’s DTI immediately. After one year of on-time payments, 100% of the DTI is removed from the seller’s name. Sellers just need to show their lender the on-time payments made by the buyer over the past year.

For VA loans, the seller's purchasing power for their next home depends on their remaining entitlement. If additional entitlement is needed, proceeds from the "Subject-To" sale can be used for the down payment on the next property.

When on-time payments are made, the seller's credit score benefits as these payments are reported to credit bureaus. This can significantly help improve the seller’s credit score and reduce their future borrowing costs.

This rarely occurs, but if the bank calls the Due-On-Sale Clause, they might request the remaining loan balance be paid in one lump sum. This situation can be handled in several ways:

• Negotiating with the lender to rescind the request, as lenders often prefer their loans to remain performing.
• Deeding the property back to the seller and executing a land contract.
• As a last resort, refinancing or selling the property to pay off the mortgage balance.

We send a Letter of Intent (LOI) as a preliminary offer to facilitate the negotiation of terms. This approach allows for more flexibility and easier adjustments during the negotiation process. Once all terms are agreed upon, we provide a formal purchase agreement, which is then sent to escrow for the final transaction.

Higher Selling Price: Sellers often can ask for a higher selling price when offering seller financing because they are providing a valuable service by allowing the buyer to bypass traditional financing hurdles.

Steady Income Stream: Instead of receiving a lump sum payment from a traditional sale, the seller receives regular payments, which can provide a steady income stream. This can be particularly advantageous for sellers looking for consistent cash flow, similar to an investment income.

Attractive to Buyers: Seller financing can attract a larger pool of potential buyers, including those who may not qualify for traditional bank loans. This can lead to a quicker sale and reduce the time the property stays on the market.

Higher Interest Earnings: By acting as the lender, the seller earns interest on the loan, potentially resulting in a higher overall return than a traditional sale.

Tax Benefits: Seller financing can provide tax advantages by spreading out the capital gains tax liability over several years, rather than paying a large lump sum tax in the year of the sale.

Negotiation Flexibility: Sellers have more control over the terms of the sale, including the interest rate, repayment schedule, and down payment requirements. This flexibility allows the seller to tailor the agreement to meet their financial goals and risk tolerance.

Reduced Maintenance and Management: Once the property is sold, the buyer takes over all responsibilities for maintenance and management, reducing the seller's obligations and costs associated with property upkeep.

Potential for Property Repossession: If the buyer defaults, the seller retains the right to foreclose on the property and take it back. This can be advantageous if the property has appreciated in value or if the seller can resell the property under favorable conditions.

Simplified Sale Process: Seller financing can simplify the sale process by eliminating the need for bank approvals, appraisals, and other traditional financing contingencies. This can lead to a faster and smoother closing process.

Market Expansion: Offering seller financing can open up the market to international buyers or other non-traditional buyers who may face difficulties obtaining financing through conventional channels.

If the buyer sells the property, the existing mortgage will typically be paid off from the sale proceeds. The seller would then be fully released from their mortgage obligation. If Seller Financing is in place as well, the remaining balance would be paid in full.

We completely understand your desire to move on from this property without any ongoing obligations. While 'Subject-To' and seller financing involve some level of continued involvement, there are ways to minimize your responsibilities and ensure a smooth transition.

For 'Subject-To' transactions, we can set up a third-party servicing company to handle all mortgage payments. This means you won’t have to worry about collecting payments or managing the property. The buyer will be responsible for all maintenance and repairs once the deed is transferred, effectively freeing you from any further involvement.

In seller-financed transactions, the agreement can be structured to ensure that the buyer takes on full responsibility for the property from day one. If the buyer defaults, you have legal recourse to reclaim the property, but this is typically rare when proper vetting and agreements are in place.

If your goal is to have a clean break, we can also explore traditional sale options or look for cash buyers who can close quickly.

However, we highly encourage you to really think it through, as you may be leaving money on the table. Seller financing and 'Subject-To' transactions can often result in a higher selling price and provide ongoing income streams, which could be more beneficial in the long run.