House appraised house Value: $200,000, Existing loan(s) payoff: $225,000, Sales price: $225,000. Here, the house is transferred to the buyer subject to the existing loan(s) that the new owner is then responsible for making the payments on the loan(s).

The sales price is the balance of the loan, which may even be a premium above the current appraised house value. Typically when a house is sold with financing, as in this example, it will sell faster and at a premium price, because the buyer is getting the financing. This is because loans are currently difficult to get, and because in general, buyers are buying based more on the terms of the loan (monthly payment and money needed at closing) than the price of the house.

Subject To Pros and Cons

The pros to selling a house subject-to is that it will typically sell much FASTER and even at a premium sales price because it comes with financing, even if the house is worth less than the total amount owed.

The con of selling a house subject-to is that the seller’s name remains on the loan. It is somewhat similar than having a seller co-sign for a loan on behalf of a buyer. Obviously this is not as desirable as a not having to remain on the loan, however, it is usually a better alternative to a short sale, traditional listing (where the seller will have to bring money to the closing), foreclosure, etc. For many sellers, living in areas where hundreds or thousands of houses are available on the market, the most valuable thing they have to offer the market place, is their loan itself, and the subject to strategy allows these sellers to sell.

For questions about Subject to go to Mortgage Payment Assignment