Picture this deal.
Agent comes to me — let’s call her Keisha. She’s licensed two years, doing fine on traditional transactions, but she keeps bumping into the same situation: sellers who are 60–90 days behind on payments, underwater on equity, and two weeks from foreclosure. She knows how to help them. She’s been studying subject-to acquisitions on her own time. But every time she brings one of these deals to her previous broker, she gets the same answer.
“We don’t do that here. Just list it.”
So she joins us. And three weeks later, she’s sitting across from a seller who owes $178,000 on a house worth maybe $215,000 in good condition — except it’s not in good condition. Carpet that smells like a decade of poor decisions. A HVAC unit that died sometime during the Obama administration. Two back payments missed, with a third coming due in eleven days.
A traditional agent would have talked that seller into a listing at $189,000 hoping to squeeze a 3% commission — $5,670 — before the foreclosure clock ran out. If the deal even closed.
Keisha saw something different.
The Setup
The seller’s existing loan was a 30-year fixed at 4.1%. In this market, that note is an asset all by itself.
Keisha proposed taking the property subject-to the existing mortgage. The seller deeds the property to Keisha’s entity. Keisha takes over the payments — not formally (the bank doesn’t know and wasn’t invited to this conversation) — and the seller walks away from the foreclosure threat, clears their name off the debt-to-income ratio, and gets a cash-at-close payment of $3,500 for their equity and their cooperation.
Nobody’s listing anything. There’s no MLS, no showings, no open house weekend.
Here’s where people always ask me: But Keisha’s licensed. Can she do this?
Yes. A licensed agent can be a principal buyer. They can acquire property. What they cannot do is skip the disclosures or pretend they don’t have knowledge the seller lacks. Keisha disclosed her license in writing, disclosed that she intended to profit from the transaction, and made sure the seller signed acknowledgment they’d had the opportunity to seek independent counsel. That’s the work. That’s the protection — for both of them.
And per my two-item rule: I want the paperwork, and I want my broker fee. That’s it. Keisha paid the brokerage fee on the transaction. I got my signed forms. We were done in twenty minutes.
What Went Sideways
The first title company Keisha called ran this through their standard intake and it came back flagged — their underwriting team saw “subject to existing mortgage” and essentially stopped reading. Declined to insure.
This is the moment where agents who don’t have support quit and list the property instead. They take the $5,000 commission and leave $35,000 on the table.
Keisha called me. I gave her the name of an investor-friendly title company we work with regularly in the DFW area. They’ve seen subject-to transactions before. They understand the mechanics, they know how to insure the transaction correctly, and they didn’t blink.
Closing happened in nine days.
The Numbers
Keisha’s entity took title subject-to the $178,000 existing note at 4.1%.
She spent $11,400 on repairs — HVAC, flooring, paint, a few cosmetic fixes. Her crew did it in 22 days.
She sold the property on a standard retail listing for $233,000.
Rough math at close: $233,000 sale price, minus $178,000 payoff on the existing note, minus $11,400 in rehab, minus approximately $8,200 in carrying costs, commissions on the retail sale, and miscellaneous closing costs.
Net to Keisha’s entity: approximately $35,400.
She also earned a referral commission from the retail sale because she co-listed it through our brokerage. That added another $6,900.
Total: just over $42,000 on a deal that her previous broker would have killed.
For context: if she’d listed it at market in distressed condition and earned 3% on a $215,000 sale, she clears $6,450 — before splits.
What You Actually Steal From This
One. The investor-friendly title company list is not optional equipment. You need to know who in your market insures creative transactions before you’re nine days from a foreclosure date trying to figure it out under pressure. Build that list now.
Two. Disclosure is your protection, not the obstacle. Agents who are also buyers sometimes act like disclosing their license is going to kill the deal. It won’t. A seller who walks because you told them you’re a licensed agent who intends to profit was never going to close anyway. Get it in writing, every time.
Three. The seller in this deal didn’t get the most money. They got what they needed — relief from foreclosure, a clean exit, and $3,500 cash. That’s not predatory. That’s solving the actual problem the seller has, which is different from the problem a listing solves. Know the difference.
Four. If your broker’s first instinct on a deal like this is to tell you it can’t be done — ask yourself who that broker is actually protecting. It’s not you. And it’s usually not the seller either.
That’s the StepStone Realty difference. Not just that we allow these deals. It’s that we’ve already built the infrastructure — the disclosures, the title company contacts, the broker support structure, the in-house training on how to actually run a flip project — so that when you bring me a deal like this, the answer isn’t no.
The answer is: let’s look at the paperwork.
StepStone Realty: sponsorship at a brokerage that has closed these deals.
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