The last time the U.S. ran stagflation this persistently, mortgage rates hit 18%. People still bought and sold houses. They stopped using conventional financing and started structuring deals on terms.
We’re not at 18%. But we’re not at 3% either, and we’ve been “six months from a rate cut” for about two years running. Motivated sellers are sitting on properties they would move if someone structured the deal right. The agents and investors who know how to do that are working a different market than everyone else.
Most Texas agents have never walked a seller through owner financing. Sellers often would consider it. The agent was simply never trained on how to present it, and most brokerages quietly discourage anything that doesn’t route through a conventional lender. Their agents wouldn’t know what to say.
At StepStone, we train our agents on the full toolkit: owner financing, wraps, subject-to. In a market where deals stall at the financing stage, knowing how to ask “what if you carried the note?” is the difference between a transaction and a dead listing. That gap in training is a real competitive edge, and right now it’s as wide as it’s been in decades.
What Subject-To Actually Gets You
Subject-to gets mocked by people who’ve never done one and oversold by people who’ve done two. The mechanics are simple: you take title to the property, the seller’s existing mortgage stays in place, and you make the payments going forward.
Yes, mortgages have due-on-sale clauses. There’s no due-on-sale police and no due-on-sale jail. The clause gives the lender the right to accelerate the note; it doesn’t obligate them. Lenders accelerate when you stop paying, not when a title transfer gets recorded. The risk is real and worth managing correctly. It’s not a reason to avoid the structure.
Pick up a 2020 or 2021 note at 3.25% on a property requiring 7.5% conventional financing today, and that spread is built into your acquisition cost. That gap is where the actual margin lives right now, while everyone else is sitting out.
Wraps: Where People Get Hurt
Wrap mortgages have mechanics that can damage sellers badly when structured wrong, and this is the part most of the online-education crowd skips entirely. They sell the upside and wave at the downside.
One of our students brought a Zilker lot deal to class. The buyer proposed structuring his own company as the first lienholder, with the seller carrying a second for most of her equity. It looked like a creative solution. It was a trap. If the buyer’s company defaults, the seller’s second lien gets wiped in foreclosure. She loses her equity and has no recourse.
Requiring a legitimate third-party lender in first position solves it, once you know to ask.
Before any creative deal closes, answer this question: if the buyer stops paying and the whole thing unravels, where does the seller land? If the answer is “they lose their equity,” the structure doesn’t work. Lien position is everything in these deals. Get it wrong and you’re not doing creative financing, you’re doing creative harm.
Who’s Actually Winning Right Now
Two groups are making real money in Texas real estate at the moment.
Investors who bought before 2022, have equity, and can move deliberately. And agents and investors who learned to structure deals on terms instead of waiting for rate conditions to improve.
The group that’s struggling learned real estate between 2010 and 2022, when cheap money made deal structure mostly optional. Borrowed heavily, rode appreciation, exited conventional. That formula worked for a decade. In a sticky-rate, sticky-inflation environment, it’s not a business plan.
The listing agent who can present an owner financing option to a seller who’s stuck is working deals the competing agent literally cannot see. At 7.5% conventional, the buyer pool contracts sharply. At 5% seller carry with 20% down, a different universe of buyers can qualify on that same property, at the same price, for the same seller. Same listing, bigger market, because the agent knew one thing the other agent didn’t.
The Move While Everyone Else Waits
Pick one structure: owner financing, wrap, or subject-to. Learn it well enough to explain the downside mechanics to a seller before you pitch the upside. Bring it to the next transaction where conventional financing is the sticking point.
The late 1970s ran this same script. The investors who learned the tools came out with positions that compounded through the 1980s. The ones who waited for rates to rescue them mostly sat out. That cycle is running again right now, and most of the market hasn’t noticed yet.
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