Buying Houses “Subject To” the Existing Mortgage Part 2

Today I have the second part of this 2 part article on buying houses subject to the existing mortgage by Michael Quarles from Buy Sell Fix Flip.  In part 2 of this post on the creative financing technique “Subject To”, Michael lays out the rest of his buying strategy. He dives deep into how solving their existing problems will get you a great deal in the process.

Here is a link to yesterdays post Part 1.  Just click Here….


Finding Solutions

REI Statement: “If I could come up with a solution that will get you out of the burden of the house without coming up with all of this money, not saying I can, but if I could would that be okay?”

With this statement they have just let out a sigh of relief.

Seller: “That would be wonderful.”


Reinforcing Your “Expert Status”

REI Statement: “That would be wonderful, outstanding.”

REI Statement: “Let me tell you a little about what I do. I buy houses like yours all the time.”

Note: I assure them right from the beginning that I do this all of the time. I always make sure that they can only conclude that I am a complete and total professional, and so should you.


REI Statement: “I pay all the costs – including the real estate commission, the title insurance, escrow fees, transfer tax, Natural Hazard Disclosure, etc.”

REI statement: “Does that sound like something that works for you so far?”

I want them to start saying yes before I get to the important “Yes” questions.

Seller: “Yes that is wonderful.”


REI Statement: “That is wonderful; terrific.”

REI Statement: “Before I arrived today to buy your house I interviewed some of the neighbors and researched some of the house values in the area.  I have come to the conclusion that your house is worth about $178,000 if you use a Realtor and pay the normal cost.  So the Realtor wasn’t off too much.”

I am doing three things in this statement.  One, I am again telling the seller that I am buying their house today.  Two, I am letting them know the price was in reason.  And three, that the price is based on hiring an agent to sell the house and having those costs built into the cost.

You must understand, appraised value always assumes normal seller selling costs and you need to be able to communicate that fact to the seller.  Also, wait for the seller to acknowledge before saying anything else.


You Can’t Afford a Realtor?Buying Houses “Subject To” the Existing Mortgage Part 2

Seller: “We can’t afford a Realtor and those costs.”

REI Statement: “You can’t afford a Realtor and those costs. Hmm.”

REI Statement: “Do you have your next house picked out, or do you know where you will be moving?

I am creating urgency again.

Seller: “Yes we have a house picked out already.”


REI Statement: “You have a house picked out, that’s great.”

REI Statement: “This is a tough question, what is going to happen if you can’t sell this house?”

Seller: “We don’t even want to think about that, we need to sell.”


REI Statement: “You need to sell, really.”

REI Statement:” Let me explain to you how we can create a win-win situation for both of us.  You can move and sell this house without any cost to you, would that be okay with you?”

Seller: “That would be great.”


Selling the Seller on why this is a “Win-Win”

REI Statement: “That would be great, outstanding!”

REI Question: “I buy houses and I can buy your house today Subject To the existing liens on the house.”

Again I am letting them know that I can buy their house.


REI Question: “Do you understand what I mean when I use the term “Subject To” the mortgage balance?”

Seller Answer: No or Yes

Whatever answer they give me, I still explain what “Subject To” is.  I do not want them to think it is a formal assumption and mess the deal up later.


REI Statement: “That means that the existing loan will stay on the house. I will begin paying the monthly payment and making up any back payments and pay you your equity. It is not a formal assumption.  It’s the fastest and most economical way to get your house sold.”

REI Statement: “Earlier we spoke about how the cost of a Realtor and closing costs are and we figured into the normal price people pay and earlier we wrote down that the costs could be 18,000.00 dollars right”?

Seller: “Yes.”


REI Statement: “Yes, outstanding!”

I am collecting my Yeses and when I say $18,000 dollars I am stretching the word and saying it like oh my goodness that’s a lot of money.


REI Statement: “Here is what I am willing to do.  I will buy your house today for the amount that you owe the bank. That way you don’t have to come up with money to sell and more importantly you won’t have to wait for a qualified buyer to make you an offer. I can only do this by buying the house Subject To; that is what you want isn’t it?”

Wait for their answer.  Remember, you’re doing them a huge favor by buying their, over encumbered, house.  Just wait for the YES… It will come.

Seller: “That’s fine.”


We’ve got a Deal

Buying Houses “Subject To” the Existing Mortgage Part 2REI Statement: “That’s fine you’ve got a deal.”

REI Statement: “When do you plan on being out of the house?  I can close as soon as I get a payoff from the lender and you’re out.  That could take just a few days, or sometimes three weeks. It all depends on the lender you chose originally.”

I never let them stay in the house. Never!

Seller: “Three weeks will be fine.”


REI Statement: “Three weeks is okay, terrific.”

REI Statement: “We will put 30 days on the agreement just in case.  But if we need to close sooner that will be fine.”

You want as long of an escrow period as possible to locate you a buyer.


REI Statement: “Between now and the close of escrow, make sure to continue making the monthly payments and keep the house in good shape, okay?”

I will bring this up after they have agreed to sell me the house not before.

There are 17 objection handlers a Subject To seller could present and it is important that you are aware of them and can handle them appropriately.


Contact Michael


If you would like to reach out to Michael Quarles you can find him at Buy Sell Fix Flip. Michael is also the owner of



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