Hi, I was wondering if anyone knows if the lenders will allow you to assign the contract of an approved short sale over to another buyer before the closing for more than you originally got it under contract for. Basically I would be buying any given short sale as an investment property to immediately resell, however, if i can find a buyer before the closing and just assign the contract over to them for a small profit that would be nice too, i am just not sure if how to structure it, if it would be permitted, etc… any input on this matter would be greatly appreciated.
no you can not assign a short sale. The bank would never approve a contract with the words assign after your name which is what is required for a S/S. You will need to do a double close.
is there anyway that you could suggest structuring the deal so that if i find the buyer and negotiate the short sale that i can collect some sort of fee for my time and effort… basically i am trying to find a way to collect the difference between what amount the bank will accept and how much i can get the new buyer to agree to pay. (i.e. if i get the bank to accept a 200k short sale and get a buyer agreeing to pay 205k for the property and i collect the 5k difference). Since you said i couldnt assign the contract maybe if i put the new buyer on the agreement initially and then i get paid some sort of brokering fee on the hud-1? Any more thoughts or suggestions would be helpful!
No to my knowledge. Only way you can assign the contract is if your doing a preforclosure and only dealing with the owner, not the bank. when doing a S/S you will be dealing directly with the bank. You are showing them that this property is only worth X amount of dollars and then you go and in the middle find someone to pay more than that. Don’t you think the bank would get pissed since they are taking a loss already and now they see you making a profit before the deal is done.
Most banks have a clause written in the original mortgage documents that their loans are not assignable. This insures the lender will collect the interest rewards for lending the money to the buyer on a long-term basis.
You could run into some nasty litigation issues should you jump the cart before the horse when dealing with banks and their collateral.