Instead of double-closing, why not just hand over an invoice to title company??

I’ve been buying rentals and flipping for a few years. I want to try my hand at wholesaling and am curious about a few things. Let’s assume the following, since this is what I plan to do:

1.Looking at REO properties
2.Cash investor(client)
3.Non-circumvent agreement AND clearly stated fee agreement

Why can I not just put the contract under the investors name instead of doing a double-closing or trying to assign it? On REOs, my understanding is that there are no assignments.

Why not just outline and agree to a fee with my buyer, then draw up an invoice or agreement to give to the title company. Then get paid at closing.

This is only for cash buyers. Any insight? The negatives I see is that the buyer could tell a friend about the deal that isn’t bound by the agreements. I don’t have a RE license, but work very closely with one since I’ve been doing it for a few years.

I’ve thought about doing this as well. Just don’t want to be doing anything illegal.

I’ve heard of using a promissory note and having the seller agree to pay you the difference after closing. Not sure exactly how to go about structuring this though.

In your opinion, what could be illegal about this? I’m in texas by the way, so laws can change from state to state.

Nothing in my eyes; that’s why I’m trying to figure out how to structure something exactly like this. The only thing I would say is make sure you put the house under an option before doing anything else…the option gives you an equitable interest in the property and allows you to legally market without acting as an agent. Let me know if you figure something out…I’d say talk to your attorney, I’m sure they can come up with something.

Here are 3 ways I’ve heard of in getting around the double closing situation:

  1. Get a bridge loan and buy the property yourself, the sell it again.
  2. Put an option on the property & record the option at the county recorder’s office.
  3. Put the property under contract in the name of a single member LLC. Then sell your interest in the LLC to the end buyer.

Of course, please be sure to contact your tax or legal professional for details or specific info.

The only one of these that will work for REO’s is #1 the rest only for direct to seller deals. I personally would never trust a cash buyer to pay me I make sure I close first then sell to the end buyer. Find a title co that will use buyer funds to close between you and bank. If not use a 1 day loan company.

Check out this video…

http://www.youtube.com/watch?v=_YrlNRZ7Vac

Go to about the 7 minute mark and it talks about a “reverse assignment”. I have a property I can get for 100k and have someone to buy for 110k. Create a 10k note secured by a second deed of trust on the property and get paid at closing by the title/escrow company. Hope this helps a little.