Quick question about LLC’s and short sales- I read that a good way to get around doing a double close while completing a short sale is to put the home in an LLC and sell the LLC with the property attached to it as opposed closing twice but I am confused as to how I accomplish this. Do I have the current HO assign the title to me, then create the LLC and sell this to the new HO?? If anyone could help me I would be very grateful! Thanks in advance and hope everyone has a great weekend! :banghead2
You have an LLC.
HO sells the property to the LLC thru closing.
You, as owner of the LLC, then sell the entire LLC to whoever. No closing required because ownership of the property doesn’t change.
Of course, it can be problematic for the new owner to get the property back out of the LLC, so it’s best when you’re selling to an investor who will hold the property in the LLC.
Thank you for responding so quickly! This forum never lets me down…
Okay let me just clarify
- I create an LLC with the address of the prop.(ex. 1234 Money lane, LLC)
- Then purchase the prop from the current HO using the LLC and use title and escrow to close
- Then sell the LLC to purchaser w/out closing b/c im just selling the LLC.
My question is if i am doing a shortsale and using the new purchaser’s funds to supplement the sale how do I go about purchasing the home through the LLC? Would I first make a sales agreement with the new purchaser, including my assignment fee and the price of the payoff amount of the home, then collect the money and use that to then purchase the property from the current HO (using the created LLC) and pay the bank off then switch the LLC to the new HO’s name? Wont this create problems for the new HO if they are trying to qualify for a mortgage??? HELP!!
Also, what steps are necessary to get the property out of the LLC and why would that be necessary?
I hope my questions make sense b/c I am confusing myself!!! Thank you so much!!! :banghead
You may want to consider another option. The Short Sale Flip. Here is my suggestion:
The Seller transfers ownership to a simple trust’s third-party Trustee. This is like a lawyer’s escrow (no sale). Now, the second seller (the simple trust’s third-party Trustee who is directed by the beneficiaries) sells it to a buyer with a normal financed deal (90% loan, that’s non-owner, interest only, probably an 80/10 or 80/20 ARM loan.) Lenders do this all the time. There is only one seller (trust), one buyer (credit investor/partner), one sale, and one appraisal. There is no double contracting, no simultaneous closing, no assigning your contract, no acquiring or selling of an option, no private or hard money, no loan fraud (everything is fully disclosed because of our use of the trust), and your down payment and improvement costs, if any, comes back to you at closing! It’s safe, ethical and legal in all 50 States.
THANK U! :angel Ive been so nervous to pursue deals because I wasnt totally sure on the closing part but you explained it perfectly! Thanks again and good luck to you as well!
The problem with this method is most savvy or seasoned investors will not buy an llc because they don’t know if there are liens or creditors looking to place judgments.
you may be able to sell a position in the llc which is holding the contract. you will need a good attorney to proceed using this approach.
Some states impose transfer taxes when LLC interests change if the LLC owns real property.