Avoiding foreclosure is a pressing concern in today’s real estate market. Yet, many homeowners are unaware of the options available to them. One lesser known but potentially effective strategy is selling your home “subject to,” which might be one of your best options.
If foreclosure looms over you, there’s a creative approach that could help salvage your credit and any equity in your home, allowing you to move forward with greater financial stability. Selling your home “subject to” is not as common as a traditional real estate sale, but when done correctly, it can attract unique buyers and yield competitive results.
The Problem:
When financial hardship leaves you unable to make your mortgage payments, continuing to live in your home may no longer be feasible. Traditional solutions like short sales, forbearances, or loan modifications often come with challenges, such as lack of cooperation from your lender or strict eligibility requirements. However, even if the foreclosure process has already started, there’s still hope.
The Solution:
A “subject to” sale simply means you sell your property, and the buyer takes over your existing mortgage payments without paying off the loan (subject to the existing loan, not being paid off at closing). This option can be particularly helpful in challenging situations, but certain factors must be addressed, such as how to handle any equity, if any, in the property. If there’s no equity: The buyer could simply take over the payments after closing. If there is equity: The buyer could provide you with an agreed upon cash amount at closing. This arrangement depends on multiple factors, including the loan terms, amount of default, if any, and the property’s condition.
A “subject to” sale isn’t for everyone, but it can be an effective way to possibly avoid foreclosure, protect your credit, and potentially recover some of your investment. With the right buyer and terms, this strategy offers a way out of financial hardship and a fresh start.
When facing foreclosure, it’s crucial to explore all your options. A “subject to” sale could provide the solution you need to regain control and move forward.
About the author: Mike Nelsen has been a real estate investor in Arizona for over 25 years, specializing in Creative Real Estate Financing to help buyers and sellers alike. Residing in Prescott, Arizona, he runs the local Prescott Real Estate Investor Group, where he helps fellow real estate investors grow their businesses through the power of networking. Interested in selling a home? Visit: www.NWAZhomes.com. For details on investor group visit: www.MikeNelsenAZ.com