Posted by JohnBoy on July 20, 2001 at 16:00:39:
No. You are just assigning your contract over to your buyer. If you were required to pay any closing costs as per your contract agreement, those costs pass to your buyer. He’s buying your contract from you and he then gets all the rights to the contract according to the terms and conditions written in the agreement.
Need answer from experienced Flippers - Posted by Lehman
Posted by Lehman on July 20, 2001 at 10:01:30:
I am new to Flipping and have been studying and studying. I have started doing my homework on contacting investors to flip these contracts to as well as attorneys and title companies. I have contacted a large title company (Nations Title) and spoke with a lady I have been doing business with a long time. She has told me that they are not allowed buy the company to do flips. She said that the underwriter said the money in the first purchase contract can not be coming from the second purchase. (basically told me it was not legal) I told her maybe her company could not do them but I think she is wrong as far as the legality issue. She also went on the say that alot of the mortgage companies want the 12 month chain of title. Could someone that is experienced in this area please explain their views on this. I really appreciate the help and love this site.
Re: Need answer from experienced Flippers - Posted by Dr. Ralph Werner
Posted by Dr. Ralph Werner on July 20, 2001 at 12:23:39:
Here is where I took a different approach to flipping that might help you! What I did was find a source of investors made up of Doctors and Lawyers here in Michigan who purchase mortgage notes at closing and threfore provide the funds needed to close with the seller and cash them out! What you do is tie up your property with an intent to purchase contract with your seller and explain to the seller that this contract does not obligate either you or them until a formal purchase contract is drawn up. However you now gain equitable title to the property and can show the home to your buyers. (We always fully disclose all parts of the deal witht he seller and have them sign a disclosure form to protect ourselves. Also we assume a somewhat motivated seller here also) This also allows you to advertise the home with “seller will finance terms” which should flood you with calls. After you show several buyers the home, the interested ones will fill out a 1003 loan application, give you money to pull a credit report, and fill out a purchase contract with an earnest money check not to be cashed until they decide and you decide that they are a good match to buy the home. My investors then are sent the 1003 and credit report and they make a decision if the buyers are qualified at least to their relaxed standards! If they are, the deal can close in as little as 14 days!
Remember this is a system that is reversed from buying the home first and then wondering what to do with it! Here we get the buyers first then flip to them after they are qualified. Yes its a lot of work but the profits of $5K to 20K per deal make it worth it.
God Bless
Dr. Werner
Re: Need answer from experienced Flippers - Posted by Jason
Posted by Jason on July 20, 2001 at 11:11:47:
You may want to read this How-To…
also do a search for seasoning in this and the financing posts. There is a lot of discussion on this issue on this site…
Happy flippin’
Jason
Re: Need answer from experienced Flippers - Posted by Tanya
Posted by Tanya on July 20, 2001 at 10:44:22:
This is what I do for a living I am a flipper and I have never had any problems. I know that the law is trying to get involved and that is where the seasoning problem comes in. But, that has not happened yet. So I just keep flipping. It might also have something to do with where you live. If I was you I would call around to some other title companies and investors. One place you could get help in this area is join a REIA (real estate investors assc) that is where I got most of my help when I first started. Also a double closing is not the way to go when flipping because you just got your profit eaten by closing cost. I think you need to study more and make some more calls. By the way I have been flipping for ayear and I know this part of the business very well and I make alot of money doing this. Be carefull whose advise you take!!!
Re: Need answer from experienced Flippers - Posted by WaynePa
Posted by WaynePa on July 20, 2001 at 10:21:38:
I could be wrong so if I am please ignore and forgive me. However this is my take on the situation:
Re: Need answer from experienced Flippers - Posted by Jose O. (FL)
Posted by Jose O. (FL) on July 20, 2001 at 12:40:26:
Tania: I have a questions for you. If you do not do a double closing, What do you do?
Re: Need answer from experienced Flippers - Posted by ReggieSC
Posted by ReggieSC on July 20, 2001 at 11:45:45:
Tanya, you said a double/simultaneous closing wasn’t the way to go. But couldn’t you just pass most of the closing cost on to the buyer that you flip to. Also how do you flip most of your deals? Do you just assign your contract? I’m a newbie trying to get started by flipping and I have come across the seasoning issue also. Any help you can give is greatly appreciated.
DUUHHHH!!! - Posted by WaynePa
Posted by WaynePa on July 20, 2001 at 11:20:00:
Tanya,
Thanks for the info. I didn’t even think about the cost of the closing! I would love to talk with you some more if I could because I plan to do some flipping myself and your knowledge would be well appreciated.
Wayne
Tanya, do you find most of your - Posted by walter_IL
Posted by walter_IL on July 20, 2001 at 10:49:03:
deals throught the MLS or otherwise?
Re: Need answer from experienced Flippers - Posted by Tanya
Posted by Tanya on July 21, 2001 at 11:19:01:
I assign my contract. That way I pay no closing cost.
Re: Need answer from experienced Flippers - Posted by Tanya
Posted by Tanya on July 20, 2001 at 11:50:59:
I only do assignments that way I do not have any closing cost. Cause I am not giving up my money.
Re: Tanya, do you find most of your - Posted by Tanya
Posted by Tanya on July 20, 2001 at 11:47:56:
I run an ad in the local paper 365 days a year. I also drive around an look.
Re: Need answer from experienced Flippers - Posted by ReggieSC
Posted by ReggieSC on July 20, 2001 at 12:02:23:
Tanya thanks for your quick response. One last question, so seasoning would not be an issue for the buyer whom you assign your contract to? If so, why?
Re: Need answer from experienced Flippers - Posted by JohnBoy
Posted by JohnBoy on July 20, 2001 at 11:57:43:
This is also why you haven’t had any seasoning problems to deal with. Assigning a contract has nothing to do with seasoning, since the investor you’re assigning to is the one that will be buying directly from the seller.
Re: Need answer from experienced Flippers - Posted by Tanya
Posted by Tanya on July 21, 2001 at 11:21:53:
I have never had that problem. Now it might be a problem depending on what state you are in. So I would tell you to do some research before you assign a contract or even get a property under contract.
Re: Need answer from experienced Flippers - Posted by Tanya
Posted by Tanya on July 21, 2001 at 11:22:36:
right!
Re: Need answer from experienced Flippers - Posted by ReggieSC
Posted by ReggieSC on July 20, 2001 at 12:06:37:
JohnBoy, Just a thought, but would it be a good idea to prequalify the person you are assigning the contract to, so that you can be assured that they do have the funds to close and are creditworthy?
Re: Need answer from experienced Flippers - Posted by JohnBoy
Posted by JohnBoy on July 20, 2001 at 12:25:00:
When you assign the contract to your buyer, you get the amount of your assignment fee up front. If your buyer has a problem with that, then have the amount of your assignment fee put up to be held in escrow with the title company as NON-Refundable earnest deposit, subject only to your buyer being able to get clear title to the property at closing.
This way if your buyer tries to back out for ANY reason (other than being able to deliver clear title to the property), you still get paid your assignment fee! This eliminates having some investor trying to just tie up the property from you while they either try to flip it to someone else or trying to wait out your contract with the seller to expire so then can back door you and deal with the seller directly, avoiding having to pay you the assignment fee.
Once you get your buyer lined up to assign your contract to, then get the seller to sign a release of liability to you since you have someone else that is assuming your contract and will be the one actually buying the property. You only need this if your buyer is paying you the assignment fee up front where you can just walk away with your money and be done with the deal! If you will be escrowing the assignment fee then you don’t need a release from the seller since you will be remaining in the deal until closing in order to get your money.
Since your buyer will be putting up the full amount of your profit as NON-Refundable, then it’s unlikely they wouldn’t show up to close unless they like losing their money!
Re: Need answer from experienced Flippers - Posted by ReggieSC
Posted by ReggieSC on July 20, 2001 at 15:35:49:
JohnBoy,
Thanks for the info. One last question. Would I have to pay any closing cost, using the method you just described?