Creative Real Estate Transactions
Creative real estate transactions offer innovative ways to buy and sell property. This guide explores the concept, benefits, and key considerations for both buyers and sellers.
Table of contents
  • What is Creative Real Estate?
What is Creative Real Estate?
Creative real estate involves unconventional purchasing methods. Buyers acquire property title while Taking over the monthly payments on the seller's existing mortgage. Click here for video
Title Transfer
Buyer acquires the property title
Mortgage Assumption
Existing mortgage remains in seller's name
Payment Responsibility
Buyer makes mortgage payments through a service company
Benefits for Sellers
Sellers can benefit from creative transactions in several ways. ​​

1

Credit Improvement
On-time mortgage payments improve seller's credit

2

More Cash at Closing
Subject-To sales can result in higher cash payouts

3

Reduced Responsibility
No longer responsible for property expenses

4

Payment Security
Automatic payments made by service company
Seller Protection: Service Company
A third-party servicing company handles payments for owner financing and existing mortgages. Click Here for Video

1

Payment Handling
We provide easy management of mortgage and loan accounts through professional loan servicing companies. Our transaction coordinators set up a servicing company that creates a portal to handle all payments, including HOA fees, water bills, and electricity, ensuring timely and hassle-free management.

2

Monthly Notifications
Sellers receive email notifications for payments made

3

Transparency
Ensures timely payments according to agreed schedule

4

Proof of Payment
Provides documentation for buying another property in the future.
Seller Protection: Legal Documents
Several legal documents protect sellers in creative transactions.
Deed of Trust
Seller hold a deed of trust until the loan is paid off, with a notarized statement attached. In the event of non-performance, the seller regains the property within 45 days and keeps the given funds.
Insurance
Title and home insurance protection
Promissory Note
Seller holds as security
Deed in Lieu : DEED IN LIEU
With this, the house is effectively transferred back into the seller's name if the buyer defaults over 45 days.
Worst Case Scenario Protection
In case of buyer default, sellers have multiple layers of protection. Check out these documents to get more information about how this works: DEED IN LIEU
1
Default Occurs
Buyer misses payment for over 45 days
2
Deed in Lieu Activates
Property transfers back to seller
3
Credit Protection
Escrow company holds two payments upfront
4
Minimal to No Impact
Seller's credit remains unaffected
Important Topics of Discussion and Frequently Asked Questions
Legality of Creative Transactions
Creative real estate transactions are legal and recognized by federal regulations.
HUD-1 Form
Yes, this method is legal and recognized in the Code of Federal Regulations. Click here for HUD-1 instructions.
Line 203
Specifically mentions assuming or taking title subject to existing loans. This Code of Federal Regulation (CFR) document states on page 396, second paragraph: "Line 203 is used when the Borrower assumes or takes title subject to an existing loan or lien."
Government Recognition
Inclusion in federal regulations confirms legality
Impact on Debt-to-Income Ratio
Creative transactions can potentially improve a buyer's debt-to-income (DTI) ratio.
Our company will set up a servicing company where sellers receive monthly proof of payments made. We also create lease agreements for individuals looking to purchase a new home after selling their property to us. After six months, they will be able to purchase another property. Example : Click here
Property Damage Concerns
In case of property damage and buyer default, sellers have protection measures.

1

Insurance Coverage
Property insurance covers potential damage

2

Prevention Focus
Aim to maintain insurance and avoid default

3

Financial Implications
Default results in significant loss for buyer

4

Investment Protection
Seller's investment is safeguarded
Impact on Future Property Purchases
Creative transactions may affect future property purchases differently based on loan types.
Conventional and FHA Loans
Pre-paying lease agreement can remove 75-100% of seller's DTI. Refer to the DTI section for more info.
VA Loans
Purchase amount depends on remaining entitlement. Click here for video
Credit Impact
On-time payments positively affect seller's credit score
Mortgage Duration in Seller's Name
The duration of keeping the mortgage in the seller's name varies.

1

Agreement-Based
Duration depends on seller-buyer agreement

2

Average Holding Period
Typically around 7 years

3

Refinancing Option
May refinance when rates drop

4

Direct Communication
Handle lender and underwriter communication directly
Due-on-Sale Clause Considerations
The Due-on-Sale Clause is rarely invoked, but we have strategies to address it.
Low Risk
Only one instance in $500 million transactions
Bank Preference
Banks prefer receiving payments over foreclosure
Resolution Success
100% success rate in resolving with banks. If due on sale will happen our team uses power of attorney at we sign at closing and adding owner to our LLC or Land Trust as a secondary owner sending them our operating agreement and that proves them that seller is still the owner of the property even though LLC owns it.
Worst-Case Plan
Commitment to refinance or pay off the loan
Closing Process for Creative Real Estate Transactions
The closing process starts with an offer submission and agreement. A contract is signed electronically, and a third-party Title Company facilitates the closing. Our team will provide daily updates through our transaction coordinator, ensuring a smooth and transparent process. We will cover all closing costs, typically 1.5-2.5% of the sales price. We aim for a seamless experience up to and beyond the closing day.
1
Mutual Agreement
  • Review the contract thoroughly.
  • Consult with an Attorney for legal advice (if applicable).
  • Execute the contract once reviewed and approved.
2
Opening Escrow
  • Gather the following documents to initiate escrow:
  • Your valid ID.
  • Listing Agreement.
  • Seller Disclosure.
  • HOA documents (CC&Rs/By-Laws) if applicable.
  • Mortgage Statement.
  • UR Creative Solutions Onboarding Form.
3
During the Escrow Process:
  • Conduct a title search to ensure clear ownership.
  • Order a property tax certificate to obtain property tax information and identify any delinquencies.
  • Review the title commitment, tax certificate, and outstanding items needed to close.
  • Confirm seller finance details including amount, interest, term, and payment.
  • Review the Escrow Officer's closing statement (HUD).
  • Assist in completing HOA-related addendums including transfer fees and balances.
  • Prepare Buyers/Sellers’ Power Of Attorney if necessary.
  • Coordinate with home insurance requirements.
4
Closing Logistics:
  • Obtain approval of the closing statement (HUD).
  • Schedule a mobile notary for signing.
  • Have the Attorney prepare closing documents.
  • Return all signed documents to the title company for funding and recording.
  • Finalize the closing process.