Posted by Houserookie on August 30, 2002 at 07:17:33:
There are other methods but the you just mentioned is the big mac of them all.
What I like best about this approach is that you can’t get in trouble for buying, selling, or dealing in real estate or options. It doesn’t matter what the laws say because you are getting paid to cancel the deal.
Austin
Chain of Title - Posted by Billie
Posted by Billie on August 29, 2002 at 18:14:41:
Dear Y’all,
I wonder if I could get some feedback from others who have experience.
I am in the process of buying a house in foreclosure. It’s worth about $55K fixed up, needs about $5k in work to make it pretty. I got the house under contract with the seller and have negotiated a short sale with the lender with them willing to take $19,500 for the $45,000 loan they have on the house. I have marketed the house and now have a whole slew of buyers willing to buy it for my asking price of $35,000. I have one buyer prequalified and under contract to buy and we are closing right now. But we have run into a problem. The lender sees my original seller on title and not me and wants to do a direct title transfer from my seller to my buyer to close the deal. That would cut me out of the deal. At least it would make it difficult for me to keep control of the deal.
Does anyone have any experience with how to deal with this? Ideally I would like to do a simultaneous close to keep control of the closing, but I’m open to whatever works. Any help would be much appreciated.
Billie
Re: Chain of Title - Posted by Bill - FL
Posted by Bill - FL on August 30, 2002 at 08:31:39:
Billie,
Congratulations on your deal. At this point I would go along the lines of Mike’s post. The problem is the orig. seller will know what you are making. If you have to pay them something additional, go ahead and get this one behind you. In the future try to work with lenders that don’t have this concern. Also pick the title atty. who understands simultaneous closings and can advise you on how to avoid this problem in the future. As said before, I always will have the property deeded into a trust keeping the name of the seller as part of the trust name. When a lender checks title they see the name of the seller, albeit in a trust. On my contract to sell to the new buyer, they see the orig. owners name in the name of the trust as seller. In your case, they saw your name and hence the red flag. These deals can and do get done everyday. Don’t listen to anyone who says you can’t do them.
Re: Chain of Title - Posted by Mike Daly (Atlanta)
Posted by Mike Daly (Atlanta) on August 30, 2002 at 06:50:54:
You can still get paid by taking your profit as a “contract release fee”. Write an addendum to your contract stating that you have agreed to release your contract in exchange for $XXX dolars. Send the contract to the closing attorney. You’ll get paid at closing the same way as any other lienholder.
To protect yourself, you can record an affidavit that states you have an agreement to buy the property. Make sure to have the clerk court cross-reference the warranty deed. This way if the seller & buyer conspire to cut you out of the deal, your affidavit should come up on a title search and stop the closing.
There are some other methods I’m not as familiar with – try searching the archives
Mike
Re: Chain of Title - Posted by Lezlie TN
Posted by Lezlie TN on August 29, 2002 at 20:59:25:
Sorry to tell you this, but it is almost impossible to flip these days if there is a loan involved unless you want to actually buy the property first as suggested. You could then have another problem with the seasoning issue and have to hold the property before your buyer can get the loan. I always find cash buyers for flips. You need to compile a list of investors in your area who have cash and call them first on these types of sales. It is so much easier with a cash buyer. I always put my corp. as the buyer and when the hud statement is done I do a simo close. It’s not a problem with cash. I guess this won’t help in this situation, but maybe it will help you next time.
Happy investing
Re: Chain of Title - Posted by Travis (Dallas)
Posted by Travis (Dallas) on August 29, 2002 at 19:59:02:
Can you get the seller to sign the Deed over to you?
Then you will be the owner & can deal directly with the bank.
If not, can you pay cash and close and then sell it?
Good luck,
Travis
Re: Chain of Title - Posted by kim
Posted by kim on August 29, 2002 at 18:50:11:
Have you actually closed & taken title on the property?
Most lenders selling a property that is a short sale or REO property will not agree to a contract “and or assigns”, you have to actually close with your own money and take title.
Once you have taken title then you can resell it and earn your money back. You can do this right after you close.
Re: Chain of Title - Posted by Billie
Posted by Billie on August 31, 2002 at 09:53:03:
Bill,
Thanks for the great advice. That makes perfect sense and I’ll be doing that on the next one. I might have to flip this one to an investor. Oh well, could be worse.
Billie
Re: Chain of Title - Posted by Billie
Posted by Billie on August 30, 2002 at 14:03:00:
Thank you for your response. That sounds like a good thing to do. The only negative I see with it is one of the conditions of the release of mortgage the lender has noted in the short pay letter is:
“In no event shall the Borrower (Seller) seceive any funds from the sale of the subject property. Any surplus funds at the time of closing, shall also be made payable to Lender. Remaing proceeds will be applied as a principal reduction to our borrower(s) loan. The Borrowers (Seller)rights to any escrowed funds or refunds from prepaid expenses are waived.”
The more I look at this the more I think I will just have to close first to get the lender and the short sale out of the picture, then resell to my new buyer.
Do you agree? How would the short saling Lender view the Contract Release Fee in light of the above.
Billie