This is the scenario. The seller and I agreed a purchase price of $440k. Property is in good shape and is valued at 500k. I am intending to do a double close as I have found a buyer who is willing to buy the property for $485k. 45k profit for me. The problem is my buyer is looking for conventional financing and all the mortgage brokers they have gone to cannot get them a mortgage because it is a flip transaction. How can I get paid for the profit I am looking to make? I really don’t want the buyer and the seller know that I am positioned to make a 45k profit. If it helps, I am located in New York City.
The person buying the home seems like a homeowner not an investor which is why they are looking for conventional financing.
To be honest I don’t see any investor taking this property because there is not much room the investor to profit.
Although the 45K would make once nice payday for you I jus’t can see this happening with what you have lined up right now.
if u have your financing lined up that means you are buying the house first for $440k, then you are the rightful owner for all of ten minutes, name on the deed and all that good stuf. then your sellers are in the next room to buy it from you at $485k. why would a broker care how the transaction is structured?
these double closes are done everyday, all over the US. you need to find a broker that can handle a double closing, as well as a title co. call the title co’s, ask questions and get referrals. you need an experienced escrow agent as well. don’t stop at a few answers.
I don’t have any financing lined up. I know about double closing and how it works. I want use the funds of my end buyer to complete the transaction. My end buyer is having a problem getting a mortgage because I am not on title prior to closing.
if u do not have financing or funds to purchase the house from your seller, how are you acquiring the property to do a double close?
Tony, if you don’t understand how a double close works, why are you responding? The whole point of the double close is so mesbahul doesn’t have to get financing.
I think Tony, gets it…when you do a double close, you often need to show proof of funds – you actually close on the property and take title (briefly)…otherwise, you’d need to do an assignment or a “simultaneous closing”…
Yes, Tony knows exactly what he is talking about, which is the real world of double closing and not a guru’s “sell to the buyer, buyer from the seller” crap. In the real world, that’s not legal. Sure, someone’s going to jump on here and yell, “but I did it!” Doesn’t make it legal and have yet to have one be able to detail exactly “how” they did it.
If you can’t fund it yourself and you don’t have another mortgage broker that can effectively handle a double closing (something that you should have lined up ahead of time), then the best way to handle this is either with an assignment of contract or a contract release agreement.
Why do you not want the end buyer and seller to know what you’re making on the deal? Did you not disclose to the seller that you were an investor and intend on making a profit? Did you not disclose to the end buyer that you were an investor and intend on making a profit?
This should have been handled as an option agreement where you would now exercise the option and assign it over to your end buyer. You can still do that via the assignment of contract. When you do an option deal part of your negotiating with the seller is to have this conversation with the seller “I will get you your $440,000 for this property but I will turn around and sell it for some profit …how does that sound?” If all he wanted was $440K why would he care what you are selling the option for? And why would the end buyer care what you bought the option for from the original seller?
I agree with the above, just do a lease option on the property for the 340k price, be sure to include the assignability part in your option. Then let your buyer buy the home from the seller for 385k, Check into local housing lien laws, you could put a lien against the property for the profit to be assured that you would get paid. The seller would have to know what you would be selling for in this instance but the buyer would not.
You do have a legitimate concern about the buyer knowing what you are buying it for, I know many idiot buyers that even if they are getting the deal of the century, would not by because I would be making money too. (go figure)