Posted by Kristine-CA on October 02, 2002 at 19:35:55:
Mike F: I’m not familar with Iowa, but I am wondering what you know about your buyer. For example, can they close in less than 30 days. If your buyer needs lender funds, they probably can’t, unless they are already pre-approved, etc. I would find out the cash and/or loan status of your buyer asap. Here in CA I would be considering a double close on this one. The realtor doesn’t have anything to do with the second escrow, the one between your buyer and you, so doesn’t need to be informed. However, if you need more time to close, the issue will come up and you will probably need your realtors help as it sounds like this property is an REO. Here in CA, the escrows would happen at the same time and escrow officers are familiar with using second escrow funds to close on the first–and it all happens in the same day.
Another option might be to offer a discount to your buyer and assign them your contract, getting cash at the time of the assignment, getting you out of the deal, and your buyer goes to close. This can be tricky. 30K is a big spread and some buyers will bulk at giving you, let’s say, 20K cash and going to close for the remaining 64K. With big such a big spread, you may have no choice but to buy and then re-sell. Only you can figure out your buyer and how they might feel about this.
And then there is the title seasoning issue. Chances are if your buyer needs lender funds, a double close may make title seasoning an issue. Since you won’t be owning the property for more than five minutues and there will be almost a 50% mark-up in the price from the last sale, most lenders will notice this. And not like it one bit.
Again, find out more about your buyer. Also, you may want to talk to attorneys or escrow officers where you are to make certain that they can do a double close without you bringing funds to the table.
I have a similar deal going and the above reflects some of the the, uh, challenges I have run itno when flipping. Others on this board can give much better and detailed advice about the steps required in your area. Congrats on finding a deal and a buyer.
P.S. Again, make sure you find out what is required in your area. I am not a lawyer and know nothing about contract law where you are. Assignments may have special requirements and possibly your purchase contract is not assignable.