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  • Jackie,

    I was reading Jack Miller’s “Intro to Real Estate Options” book and in it he provides the language for an Option Agreement that can be used to avoid triggering a Due On Sale Clause when buying properties “Subject To”.

    I really like the language in this contract and the way it is structured. I was wondering if you have ever used this agreement, and could you discuss the up and downsides of the way it is structured in the book.

    The agreement can be found on page 58 of the “Intro to Real Estate Options” book. Thanks in Advance!!!

    Garrett Humphrey

    HI Garrett

    I have used that language many times when buying subject to. But, prefer to buy subject-to that WRAPS the underlying loan. Look in the Special Report section for a report that has all the details.

    A WRAP is better because it gives the sellers confidence that they are still have some control of the property. They can foreclose on you if you don’t make the payments. Just like a mortgage company, they have a note and a Deed of Trust (or mortgage). The Deed of Trust is recorded. But title that shows up in the Deed of Trust is always taken in the name of a Trust that has their last name in in some place so it does not draw a red flag to the underlying lender.

    check out the special report.


    Thanks for always responding so quickly. I have one more question.

    Wouldn’t the “Due on Sale Option Agreement” also give the seller confidence because if I fail to make the payment, the Option may be cancelled by the Optionor/Owner without having to go through a messy Foreclosure?

    Also, the mortgage and deed would stay in the owners name until I decide to excercise (Control without Ownership), although I would have possession of the property.

    I’m just looking at multiple ways to structure these types of deals in the event that an owner is uncomfortable with one scenario. Please advise at your earliest convenience. Thanks.

    it is good to have multiple ways to make the seller feel comfortable.

    Some will be ok with just an option – but I can tell you that some title companies overlook an Option so you need to make sure the option is secured with a deed of trust too. (heck, I even had a title company overlook a recorded Deed of Trust one time)

    Some sellers will feel more comfortable if they don’t “own” the house anymore, even if it is purchased subject to a mortgage that they are still legally liable for

    Some sellers will feel more comfortable with a master lease scenario.

    You never know which was will make the seller more comfortable until you talk to them to determine what their motivations are.

    Until a seller feels comfortable, they will not say YES to your offer. That’s why you need to have multiple ways to solve real estate problems.

    That all makes perfect sense, plus it is nice to offer multiple structures. Thanks!!!

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