I am new to the investor side of the business. How does the title company allow this? I get deals all the time that I can control the contract but I don’t know how to orchestrate this transaction. Example, I found a property for 100k, someone wants to purchase the property from me for 120k because it’s worth 140k. How can I make this happen? How can you set you up a double closing?
Hi Matheno,
How do you want to handle this you could “assign” it to the person who wants to buy it. They pay you a fee for assigning the property over to them this way your buyer would deal with the owner. You would be out since you will have been paid your fee. I am new to this as well this is one way of doing it.
I’m sure more experienced investors will be along soon as well. good luck
Michelle
matheno,
I am fuzzy about the double closing mechanics of it, but I know it does depend on the title company as some do not do double closings. Not sure why, but…
I sure would hate to pay a 20k assignment fee to buy a property with 20k equity once I got it. I sure hope your buyer is going to be the new owner-occupant and the house doesn’t need any repairs.
That’s not an actually deal, I just needed the mech. of making a Double closing work.
You just need to call around to several title companies and ask if they will do a double closing. Some will some wont that simple. They will handle the rest. Your buyer needs to make sure that his lender will lend money for this double close. Sometimes this can get sticky because the lender is asking why should i lend this much money when its just been bought for less. Most of them are understanding as long as the appraisal supports the amount they are lending. You bring your funds to closing and they bring theirs and you walk away witht the difference.
Ok here it is…there has been alot of cracking down lately on title companies. they are getting more and more sceptical of- recording a mortgage for the second (your buyer) after they have passed title to you (w/o you having your own financing in place). the reson why is this: if your buyer is using conventional financing the lender will require title insurance in order to release the funds to the closing agent(start of the paper trail). Technically the title company represents your seller not you or your buyer until after you hold title. So if the title company doesn’t relase the title insurance, your buyer’s funds won’t be released. This could make for a very sticky situation and give your buyer the opportunity to go direct to your seller. Also if you are trying to get conventional financing to do the deal, you are going to piss off the bank because no one wants to do a loan (except for hard money) that’s going to be paid off in less than 120 day’s usually. Also you can’t get a pay off same day from a bank either. if you find a title company that is willing to play ball make sure that they have no problem with providing your buyer with coverage showing the chain of title with you as the seller because when your buyers bank looks this over they are going to compare it to your sales contract, if it shows your seller to your buyer without you in the middle of the chain the lender will not give your buyer the money. Another option would be for you to take ownership with as little out of pocket as possible and then set up a lease option which would expire in the 180 days and your buyer can buy it from you then (at today’s contracted price so they are protected). You can make it attractive for them and a tax benefit to you(possibly) buy helping them with the down payment assistance if needed. Other option- you could use hard money but expect to pay around 8 to 10 points on the deal, there goes your profit when you add closing costs.
I always say the best way is the legit way. Also remember anyone doing something out of the norm is going to want to get paid and ultimately effect your profit.
I recently did a deal for my client and it went like this -he was purchasing a condo from A foriegn investor who bought pre construction 300K and had 60k with the builder as a down payment. He was selling it to my client at 375k and its already being listed for 450k. The foriegn investor didn’t realize that he need his own funds. He almost lost his 60k and my client almost didn’t get the deal all because of the above mentioned items. I ended up negotiating hard money for the foriegn investor he sold to my client and everthing worked out. And everyone made money!!!
Mortgages, So if the title company is putting the sellers name on title and the bank really ownes the property how do you get around that. I know of some guys getting very rich off doing this. Will I be able to purchase the property from the bank “cash” and then sell to invsetor for a higher amount without seasoning.
if you are funding the first close of the double close especially with cash you should have no problem. It gets more difficult for those who dont bring funding and rely on the second buyers funds to close bothe deals of the double close. If you bring funds for the first close you shoul dbe fine.
it depends on how your investor is paying. If he’s pay cash as well then you are good to go. If your buyer is using conventional funds, you could run into some issues i am going to do some extensive research tomorrow for you some banks may let you use and assignable contract for a higher price. I just recently made a lateral change in the industry and I have’nt had this situation arise yet. Get back to you again tomorrow
Sorry that tomorrow ended up being thursday! But as long as your appraiser notes that the first purchase was in distress or an estate sale…etc some rehab would help some lenders will look at this situation case by case! Also If you have no control over your buyer’s financing which you won’t(you can require a buyer to be pre-qualified by a lender but you can’t force a particular lenders financing) your chances of sucess are limited BUT NOT IMPOSSIBLE (I am a firm believer in “anything is possible”, and i hate when i find neg words in my posts)
Generally flipping and conventional funding don’t mix well at all!
Different banks have different policies regarding double closes. Ditto for title insurance agencies. Do your homework and find the right law firm or closing agent to handle your business.
Are you saying that if I have a house under contract and want to “assign it” to my buyer (without actually having the funds to purchase the house myself) that this is NOT legit?? Is this illegal?
I thought this was the whole idea behind “flipping” properties?
New, learning, sometimes confused!
MRI:
The best way to accomplish this is to open escrow as an “Assignment”. Then go out and find your ‘wholesale buyer’. You simply have your wholesale buyer pay your your fee and then contact
the escrow company and tell them you are going to be assigned to the person you wholesaled the property to. They will draw up an amendment that you and the seller signs. Now, the next step is very critical. You contact the seller and tell them that you are going to be closing in your partners name for tax reasons. They won’t care as they want to sell the property. There will be times when you will be faced with a seller that demands that you close in your name such as when dealing with banks. That is simple to get around also, just close in your Land Trust. I always put in my contracts, “vesting to be determined at closing”.
In terms of getting your fee. When you go to wholesale the property, do not disclose what you paid for the property until you have a deal. it is not their business! It does not matter if you paid one dollar for the property as long as their is room in the deal for them. You can figure this out by running the numbers based on:
-Purchase Price
-Acquisition Cost
-Rehab Cost
-Carrying Cost
-Sales Cost
Always, collect at least half of your fee upfront. Once you have a relationship established with your wholesale buyers, there should not be a problem getting paid all upfront!
Best Regards,
Jeff Adam
MRI-
I feel special, someone quoted me.
I get confused myself sometimes, but the message that i was conveying had nothing to do with assigning of a contract. What i have dealt with lately, is people trying to buy and sell using there buyers funds and not realizing that it aint gonna fly without the closing agent title company and bank allowing for it.
Example: property value $150k , you PURCHASE(not assign) at 100k and sell to your buyer at 130k besides seasoning issue, going to closing and using your buyers funds to close your end of things is getting to be more challenging. And my point was mainly to say"DO YOUR HOMEWORK, AND KNOW THE PLAYERS"
Assignment is a great concept and listen to Jeff Adam he has some great points when it comes to assignment.
Right now our economy is saturated with opportunities to purchase real estate at fire sale rates from banks, auctions, or short sales. Often the strategy is sell property quickly to a rehabber or an end user with the main objective being to make a quick profit and move on to the next opportunity. Great idea!!
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