Buyer Concerns in Subto Real Estate Deals
What should buyers be thinking through before closing on a subto deal?
Before you close, it’s critical to weigh the practical, legal, and ethical considerations that can make or break your deal. Let’s break down the key concerns every buyer should evaluate.
A Buyer's Objections and Concerns in a Subject-To (Subto) Deal
Financial Concerns
What if the lender finds out about the transfer and calls the due on sale clause?
What if there are liens, unpaid taxes, or other financial encumbrances I’m not aware of?
What if the escrow/impound account is short and I have to make a lump sum payment to cover shortages?
What do I do if there's an overage in the escrow/impounds account after closing?
How do I ensure I’ll get credit for the interest I pay on the loan for tax purposes (Form 1098)?
Am I overpaying for a property that has little or no equity?
Logistical and Procedural Concerns
What if the seller or lender doesn’t cooperate in providing information I need about the loan after closing?
What paperwork ensures the property and loan are legally and securely transferred to me?
Will I be able to insure the property without causing suspicion with the lender?
How will I know if the seller has disclosed all relevant details about the property or the loan?
Control and Risk Concerns
What happens if the seller refuses to cooperate after the sale?
Can the seller still access the account or interfere with the loan after the transfer?
What if the seller declares bankruptcy after the transaction?
How do I protect myself from a dispute with the seller about tax or insurance refunds in escrow accounts?
What if the seller decides to claim the property back using some legal loophole?
What if the lender refuses to discuss the account with me after the transfer?
Property Concerns
Are there hidden issues with the property that I’m not aware of?
What happens if the property needs major repairs that exceed my budget?
How do I confirm that all HOA dues, utility bills, and property taxes are current?
Exit Strategy Concerns
Can I refinance the loan in my name later if needed?
Will I face obstacles if I decide to sell or transfer the property in the future?
What happens if my buyer or tenant (if I sell on terms) doesn’t pay, and I still owe on the loan?
What if I’m unable to profit from the deal because of unforeseen complications?
Trust Concerns
How do I know the seller isn’t trying to scam me or hide important information?
What if the seller changes their mind or claims they didn’t understand the agreement?
What happens if I don’t trust the seller’s handling of financial or legal matters before the sale?
Market Concerns
What happens if the property value drops and I’m stuck with a bad investment?
Is this property really worth the risk of buying subject-to rather than through traditional financing?
Legal Concerns
Is this transaction even legal, and how do I protect myself from legal disputes?
Could I get into trouble with the lender or authorities for taking over the loan in this way?
How do I ensure compliance with local and federal laws regarding real estate and loans?
Management Concerns
What happens if I miss a payment or can’t manage the property?
Will I be able to deal with any issues related to tenants or future buyers in a wrap or rent-to-own scenario?
Still Have Questions? Connect with a DOS Guard certified partner
If these questions hit close to home and you've got concerns about your subject-to deal, you don’t have to face these challenges without support. DOS Guard certified partners understand these transactions from multiple angles and can help you do the best deal: Safer and smarter.
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