Understanding “Subject To” Offers: What Every Agent Needs to Know

Hey everyone! I’m Bren Brewer—your favorite tech trainer and real estate broker—and today we’re diving into a hot topic that every real estate agent should be familiar with: offers that come in "subject to" the existing mortgage.

You might be wondering—what does that even mean? And more importantly, how do we guide our clients through these types of offers responsibly? Let’s break it down.

🚨 What is a “Subject To” Offer?

Picture this: You’re representing a seller and an offer lands in your inbox. The buyer wants to purchase the home subject to the existing mortgage. On the surface, it sounds pretty simple—the buyer takes over the payments, the seller walks away, and everybody’s happy.

But hold on… not so fast.

The reality? The mortgage stays in the seller’s name. The buyer doesn’t assume the loan—they just agree to make the payments. This setup can be very risky for your seller.

✅ Potential Advantages

Subject to offers can offer some benefits, particularly in niche situations:

• Faster closings: No waiting around for traditional financing.

• No need to pay off the mortgage: The seller doesn’t pay off their loan at closing.

• A lifeline for distressed sellers: If your client is facing foreclosure or severe financial hardship, this could be a potential alternative to losing the home entirely.

⚠️ Serious Risks to Consider

Now let’s talk about the downsides—and they’re big ones:

• Credit risk: If the buyer misses even one payment, the seller’s credit takes the hit.

• Due-on-sale clause: Most mortgages include this clause. If the lender finds out about the sale, they can demand full repayment immediately.

• Legal trouble: If the buyer defaults, the seller might have to go through an expensive legal process to regain control of the property.

• Limited recourse: In many cases, the seller has little protection if things go wrong.

🧠 When Does a Subject To Offer Make Sense?

These offers should only be considered in very specific situations:

• The seller is facing foreclosure and has exhausted all other options.

• The seller fully understands and accepts the risks.

• The buyer has a solid track record or the agreement is carefully structured and reviewed by a real estate attorney.

👩‍💼 Your Role as the Agent

As a trusted advisor, your job is to protect your client's best interests. Here's how you can handle a subject to offer responsibly:

1. Explain the risks clearly – Don’t sugarcoat it. Make sure your seller knows exactly what they’re getting into.

2. Involve an attorney – Always recommend that your client consult with a real estate attorney to review the agreement.

3. Vet the buyer – Does the buyer have a history of following through on subject to deals?

4. Explore alternatives – Look at other solutions like short sales or refinancing before recommending a subject to option.

5. Document everything – If your seller decides to proceed, make sure the agreement is in writing with crystal-clear terms about responsibilities.

💬 What Do You Think?

Have you encountered a subject to offer in your real estate journey? I’d love to hear your thoughts, experiences, and any questions you might have—drop a comment below!

Thanks for reading, and remember: I’m here to help you navigate the complexities of real estate with confidence.