back to back closing

General Real Estate Investing
1

I have an option contract with a seller. Buyer is looking for FHA financing on the house. Do I need to have actual purchase contract between seller and my self and from me to my buyer separately? I am working with the title company that offers back to back closing but does not give advise.
Please I need all the help I can get.
THanks

2

While I am still new I have contacted many title companies and mortgage lenders in my area with the same question. I have found you may be able to go one of two ways with this.

  1. You do need to have two separate contracts to buy from the seller and then sell to your buyer. With that you also need “wet funds” to do the transaction. Another words your buyers funds cannot be used to pay off your seller directly. You need to fund the deal first with either a mortgage or transactional funding and then do a back to back closing that same day with your buyer. FHA has lifted their restriction of 90 day seasoning to do this as well this year so you can close the same day. But you MUST check with the mortgage company your buyer will be using as they may have their own standards and restrictions.

  2. Another possibility is to just assign your contract you have with your seller over to your new buyer and step out of the way. I think a lot of sellers though would probably have some objections about leaving them with lease option buyer they never met, never screened and they have no training to be a landlord. I would think most sellers are letting you do this becasue they trust your expertise in the management of this.

Hope that helps a little.