Picture this deal. A seller calls in March. She bought in 2021 at the peak, paid $305,000, put 3% down. She’s got a 3.25% note from when rates were still embarrassingly low. Balance left: $295,000. She needs out. Job relocation. Forty-five days, hard deadline.<\/p>\n
You pull comps. The house is worth $310,000 on a cooperative day. Maybe $315,000 if you price it tight and get a clean offer fast.<\/p>\n
Run the traditional listing math:<\/p>\n
She owes $295,000.<\/p>\n
She’d have to bring $2,900 to the closing table to give her house away.<\/p>\n
The standard-issue agent answer is “let’s wait for values to recover” or a referral to a short sale specialist. Both are dead ends for a seller who has to move in 45 days. Both are dead ends for you.<\/p>\n
Before you walk, check two things: the interest rate on the existing note and the loan balance against what a retail buyer would actually pay. A 3.25% note in a 7% rate environment is a financial asset. Somebody values that note more than they value shopping for a new one.<\/p>\n
The play here was a subject-to acquisition.<\/p>\n
A buyer \u2014 in this case, an investor \u2014 takes title to the property while the seller’s existing mortgage stays in place. The deed transfers. The investor takes over payments. The lender is never formally notified of the ownership change, which is legal in Texas but carries real risk through the due-on-sale clause. The seller walks without owing anything at the table.<\/p>\n
We structured it like this:<\/p>\n
With the note in hand, the investor wrapped the property to a retail buyer. A wraparound works like this: the investor becomes the lender, carrying a new note at a higher rate, while continuing to make payments on the underlying note. The spread between what the retail buyer pays and what the investor owes is the monthly income.<\/p>\n
The retail buyer in this deal was self-employed for three years, had solid income on bank statements, and 10% ready to go. Couldn’t touch a conventional loan because his write-offs put his qualifying income too low on paper. He’d been renting while waiting to qualify. He wanted the house. The numbers worked.<\/p>\n
Wrap terms:<\/p>\n
That’s $8,052 a year on a deal that, run as a traditional listing, would have cost the seller $2,900 to close and paid you nothing.<\/p>\n
Two things.<\/p>\n
First: title insurance. A standard owner’s title policy won’t cover a wraparound if the due-on-sale clause fires. We had to find a title company in Texas that understands these structures and will still issue. Most won’t. The short list of ones that will is worth keeping.<\/p>\n
Second: the seller panicked ten days before close. A friend told her the bank could call the note the moment the deed transferred. That’s technically true. It almost never happens on a performing note \u2014 a lender would rather collect payments than foreclose on a house it then has to sell \u2014 but “almost never” is not “never,” and the seller had every right to know the difference. We laid it out plainly, in writing, and let her make the call. She closed.<\/p>\n
That disclosure conversation matters. As a licensed Texas agent, your obligations under TREC don’t disappear because the deal structure is creative. If anything, they get more specific. You document everything. You disclose the risk. You proceed only when the client understands what she’s signing.<\/p>\n
When equity is thin or negative, ask about the rate before you ask about the comps. A sub-4% note is worth something in this market. An investor will pay for it. Your job is to know how.<\/p>\n
As a licensed Texas agent, you can work subject-to deals. You need to understand the mechanics, know which title companies handle them, know how to document the structure properly, and know exactly what TREC requires you to disclose. None of that is a weekend seminar topic. It’s about two hours of focused instruction from someone who has actually closed these deals in Texas.<\/p>\n
The gap between agents who know this and agents who don’t is not ambition or work ethic. It’s CE hours spent on material that teaches real transaction structures instead of reviewing what an earnest money deposit is for the fourth time this renewal cycle.<\/p>\n
The listing you’re about to pass on might already be a subject-to deal. You need the hours either way. The question is whether they teach you anything worth knowing.<\/p>\n
We cover subject-to, wraparound mortgages, and the full creative financing toolkit in live CE classes at StepStone University \u2014 TREC-approved, actual credit hours, built around deals that have closed in this state.<\/p>\n
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