WHOLESALE NEWBIE BLUES - HELP!! - Posted by Jerry-IL

Posted by Tyrone on March 29, 2003 at 11:48:59:

How does the Lending Co. view this when it comes to a loan?

WHOLESALE NEWBIE BLUES - HELP!! - Posted by Jerry-IL

Posted by Jerry-IL on March 28, 2003 at 21:15:47:

Got a short sale and everything is going Okay. I have until May to close. The property needs lots of work. Had rehabbers look at the property and took the highest offer, which gives us a nice profit. The buyer showed proof of funds and when we spoke with his mortgage broker, they confirmed that he’s solid. He’s a businessman in the community and we signed papers in his office. My big gripe is that although the purchase is “as-is”, the guy has a mortgage contingency. I told my partner I preferred to take another offer $1,500 lower with cash, but we’re past that. We’ll need a double close. No problem.

Now, the realtor with whom the property was listed (engaged by the lender for the sale to me, and from whom I am making the purchase), calls me to tell me that an appraiser called and wants him to fax her the contract (gasp). This would be the contract for less money than the price for which we’re reselling to the rehabber. He didn’t fax it, but called me. I told him I would fax her the contract I have with the rehabber (he knows what’s going on). We set up a date for the appraisal and then she says she has to know the chain of ownership for the last three years. I said I’d have to get back to her on that. She says that the assessor’s office lists (my seller) as the owner. She wants to know what the deal is - do I own it with (my seller)? I repeat that I’ll have to get back to her on this.

What I’m picturing is that my buyer’s lender probably doesn’t know what is going on and when they figure it out, my deal is gone. I know a mortgage broker who could probably get it done, but I’m in totally uncharted territory (at least for me). Am I worried for nothing? Should I just have blabbed to the appraiser what’s going on and the whole double close thing? Should I try and get the buyer to kill the whole application with his lender and try to get him done with my guy? Helppppppppp.
Jerry

Re: WHOLESALE NEWBIE BLUES - HELP!! - Posted by Jerry-MI

Posted by Jerry-MI on March 29, 2003 at 06:45:32:

Jerry
Have the seller deed the property to a land trust. This is not a sale. You purchase the beneficial interest in the trust. When your buyer purchases the property he will by buying from the trust. The trustee will pay you your equity and the balance will go to your seller. You can show the apprasier the offer from your buyer. Seasoning problem and sale price problem solved.

Re: WHOLESALE NEWBIE BLUES - HELP!! - Posted by Jerry-Mi

Posted by Jerry-Mi on March 29, 2003 at 06:28:57:

Jerry
Have the seller deed the property to a land trust. You purchase the beneficial interest in the land trust. Only the deed transfer to the trust is recorded. The purchase of the beneficial interest is not. The land trust is sold to your buyer. When that happens you get paid as owner of the beneficial interest in the trust and the balance goes to your seller. The chain of ownership would then be your seller to the trust to your buyer. Deeding it to the trust does not show up as a sale. Seasoning problem and final sale price is solved.

Re: WHOLESALE NEWBIE BLUES - HELP!! - Posted by Kristine-CA

Posted by Kristine-CA on March 29, 2003 at 04:39:06:

Jerry: it’s called title seasoning and it can be an issue. It really depends on the lender. Sounds like your lender has specific info regarding title which they requested from the appraiser.

Your deal isn’t dead, but you need to find out if title seasoning is an issue for your buyers lender asap. You might want to search the archives and read about contract cancellations and assignments. Does your buyer have enough cash to take over your contract?

Flips involving lenders, and in this case one bank and one lender–can be tricky. There are investors here with more experience who can make better suggestions. But please keep us posted. I’m always curious to hear how people solve this. It’s not in any of the books that I’ve read and it keeps coming up for me.

Sincerely, Kristine

Re: WHOLESALE NEWBIE BLUES - HELP!! - Posted by Terry Y.

Posted by Terry Y. on March 29, 2003 at 16:14:18:

That is a very clever technique. Thank you for sharing your knowledge!