Posted by Paris on September 03, 2009 at 01:45:15:
Hi Mikeia,
I think you did receive sound advice about double closings these days. I just talked to my lawyer about this very issue, as well as to a good mortgage broker. It is true that FHA lenders absolutely require a 90 day seasoning period before a house can be resold. Thus a double closing cant be done when the end buyer is using an FHA loan. However, even in the case of convetional it is likely to be a problem. Some conventional lenders dont have an exact 90 day seasoning requirements. However, as it was told to me in the case of GMAC - if someone buys for $100,000 - puts in only paint and carpet and tries to sell to the end buyer for $150,000 - it’s probably not going to happen. The lender probably wont approve the loan for the end buyer.
I am not sure when these new rules came into play - because I think they are a bit new. I believe they are a result of this crazy market!
Follow UP I Need Smart Investor Help…FAST!! - Posted by mike iaa
Posted by mike iaa on September 02, 2009 at 22:06:30:
Ive done multiple deals before, but Im trying to do my first double close on
this property and the owner wanted his lawyer to get involved…
The Lawyer put it on a standard “Bar Association” contract, no big deal…
Everything seems pretty OK. If I assign do we make this subject to financing
or Cash…Im going to possibly try to finance the deal if I cant get it flipped
off, but then they might want a letter of credit…from the bank…which if I
cant get it financed then im screwed. My only loss is 100 earnest money and
I have 60 days to close…The owner is giving me the keys… tomorrow and
hes leaving town. But I need to get the deal signed by tommorrow before he
leaves… Are there any red flags or traps I could fall into if I dont close.
As far as the double close, when I get the abstact sent to my lawyer/title
company, and I have a buyer in Place…Does the new buyer use my title
company for the double close, or how does that specifically work…I research
RE everyday and I am stumbling through this type of strategy…I have the time
to try to get it flipped and hardly any cash at stake…I just dont want to get
sued for non performance under the contract, I know its unlikely but
…stranger things have happened. I really need the “PRO’s” help now, I need
to sign this contract tomorrow morning.
Re: Follow UP I Need Smart Investor Help…FAST!! - Posted by DJ-nyc
Posted by DJ-nyc on September 03, 2009 at 09:20:05:
Assign to Cash buyer and avoid the headache. Of course the price must be low enough and your profit included. Build your buyers list quick! Place some ads in pennysavers, craigslist.org, call the we buy houses signs. Find the “real” cash guys there are alot of phonies. Good luck.
DJ-nyc
Re: Follow UP I Need Smart Investor Help…FAST!! - Posted by IB (NJ)
Posted by IB (NJ) on September 02, 2009 at 22:44:35:
Well Mike. Since all the ‘PROS’ are asleep you’ll have to settle for me.
If you make the deal subject to financing (depending on the specific language used in the contract) you won’t necessarily be on the hook if you don’t close due to not being able to obtain financing. Why don’t you make the deal subject to you being able to assign it? The days of assigning and keeping the seller in the dark are over, imo. The market is too fragile for you to guarantee that you can assign this thing. I’m telling all of my sellers (on my wholesale deals as I still rehab) that I’m only doing this if I can assign it. But I’m also telling them that I have a couple of buyers who are interested in buying in the area (which is true) so I’m pretty sure I can get this done.
It’s best for your buyer to use your title co. It’s much smoother for your title co. to ensure that everything goes smoothly if they don’t have to communicate with anothe title co. on this.
But tell us how will your buyer finance the property. If it’s cash then you’re good. If it’s conventional financing you’re going to have a tough time getting your buyer’s conventional lender to finance the deal and you (as the brief owner of record/seller in a couble closing) haven’t seasoned the property.
Re: Follow UP I Need Smart Investor Help…FAST!! - Posted by mike iaa
Posted by mike iaa on September 02, 2009 at 22:56:00:
I cant double close this deal if its conventional???, Is that because I am
not the current owner of record…S%%t How will this deal get done.
How do most owners react to you when you tell them this??? I told him
I have investors that we work with that buy properties…Im guessing
he doesent care as long as he gets his money…This might be tougher
then I think…I really want to make this deal work and let this guy get
his cash…He is a good guy… Everyone wins on this deal…if I get it
closed out somehow…Didnt think about that…Hopefully I can find a
cash buyer…Any ideas? Realtors? Ad? I may finance it if I can make
it happen…Dont know…Kinda stressed about this, I buy properties for
rental, but never done an assignment or double close…I just want it to
work… Thanks for your input, any new responses are
welcome…mikeia
Re: Follow UP - Reverse Assignment? - Posted by IB (NJ)
Posted by IB (NJ) on September 03, 2009 at 10:38:34:
Mike:
As a business man you can’t get worked up over this stuff. Remain calm and confident and tell yourself that you WILL find a way to get this done.
Having said that, do a search in the archives for “reverse assignment” where attorney William Bronchick gives a basic rundown of the process. Basically it involves getting the seller to pay you for assigning the contract instead of the buyer.
Has anyone done one of these? I’m actually working on my first one now so if someone has done one of these successfully I’d like for them to chime in. The other wholesales I’m doing are typical contract assignments to cash buyers.