In today’s evolving real estate market, sellers may find themselves approached by investors offering creative purchase strategies. These offers are often positioned as fast, flexible, and financially appealing. But as a Realtor, I’ve seen firsthand how these proposals—while sometimes well-intentioned—can expose sellers to significant risk, particularly when it comes to their existing mortgage.
Let me walk you through a real conversation that highlights exactly why it’s important to stay vigilant.
The Offer: Sounds Clever, But Read the Fine Print
An investor reached out regarding one of my listings, proposing what’s commonly known as a “subject-to” deal. Here’s what they said:
“Would your seller be open to something creative where we pay their equity at closing, and we take over the responsibility of their mortgage payment while the mortgage stays in their name? We’ll also pay your 3% commission and closing costs.”
At first glance, this might sound generous: the seller gets some cash, avoids the hassle of a traditional sale, and the Realtor still gets paid.
But here’s the problem: the mortgage remains in the seller’s name, meaning the seller is still legally responsible for the loan—no matter what the investor promises.
The Questions That Matter
I asked some direct questions:
- Legally, who would be liable for the mortgage?
- If a payment is missed, whose credit is impacted?
- In the event of foreclosure, who gets foreclosed on?
Their answer was wrapped in legal jargon and comfort phrases like:
“The title company will draft a promissory note making us liable. If we miss two payments, the seller gets the deed back without foreclosure. “
Sounds reassuring, right?
But here’s the truth: none of those documents change the fact that the seller’s name is still on the mortgage. If the investor misses a payment, the seller’s credit takes the hit. If foreclosure proceedings begin, it’s the seller who gets foreclosed on, not the investor.
The Bottom Line: You’re Still on the Hook
This type of offer puts all the legal risk on the you, the seller, while giving the investor full control of the property. Regardless of what internal agreements or promissory notes are drafted, the lender still sees only one responsible party: YOU.
If the investor walks away or defaults, you could face:
- Damaged credit
- Foreclosure proceedings
- Legal complications with the mortgage company
- A significant financial and emotional burden
My Advice: Protect Yourself with the Right Representation
As your Realtor, it’s my duty to protect your interests, not just get the deal done. Creative offers can work in rare circumstances—but only with strong legal safeguards, a proven investor track record, and full transparency.
If you’re approached with a proposal that sounds too flexible or generous, pause and ask:
- Who really holds the risk?
- What legal protections are in place?
- Are there better, safer alternatives?
Final Thought
Real estate investors often rely on speed, simplicity, and emotion to get deals done—but that doesn’t mean their deal is the best one for you. Make sure you’re represented by someone who asks the tough questions, understands the legal implications, and keeps your future in mind.
If you’re considering selling and receive an offer that sounds “creative,” let’s review it together. It’s your home, your credit, and your financial future—let’s make sure it’s protected.