I have currently put my first wholesale deal under contract for 23k. I have an end buyer who is willing to purchase the property for 29k. From reading the posts I am confused about how to specifically proceed to the close. If my original contract (for 23k) is assignable, do I still need an “Assignment of Contract” between myself and the end buyer, or will another purchase agreement between myself and the end buyer (stating the purchase price of 29k) suffice/ (or do I need both)? Also, if I double close will the end buyer and the original seller know my assignment fee? How can I close so that neither party knows my assignment fee? In my original contract I agreed to pay closing costs which I intended to pass onto the end buyer. In a double close would the end buyer pay closing costs twice??? Any help would be greatly appreciated! :banghead :help
Congrats on your first deal!
If you do an assignment, they will see what you are making.
If you don’t want them to know, keep the transactions separate, and do a double close.
There will be 2 sets of closing costs, one for each transaction. If you sell it at a net price to you, you can avoid paying any closing costs on the 2nd transaction. That’s what I do.
The closing costs shouldn’t be too bad on an amount that small, though.
Steph :cool
Hi Steph,
Do you always do double closes on wholesale deals?
Dennis,
If it’s an REO, then, yes, I will do a simul. close, where I use my buyer’s funds to fund both transactions.
I’m only going after REOs, so I can’t just do regular assignments anymore…
Steph :cool
I see,
So do you only use MLS to find those REO’s? Or do you sitll use bandits and other forms of marketing.
Thanks,
Dennis
Dennis,
I just make offers on REOs. Don’t do any other type of marketing any more (not for sellers, anyway).
There are a ton of REOs on the market here, so I have plenty to keep me busy…
Steph :cool
Tampa Steph - Awesome blog!! So your not spending any money on advertising? Nice! I have some questions regarding REO’s. We have cash buyers ready to go but are not sure how to wholesale REO’s What is your process once you submit your offer? Is it a standard TREC 8 page contract for each offer? Doesn’t that get time consuming? I would like to send numerous offers but if we have to fill out 8 page contracts everytime that would definately limit the number of offers. Is there another way? For the embassals in the back of the class who still don’t understand, Can you walk us through the closing process again
? I’ve read articles about creating LLC’s for each property and then selling them to the buyer but seems a little cofusing… Thanks for all of your help!
I use the FL As-Is contract, which is 4 pages long. Only takes a few minutes to write up an offer (I have it in a pdf, where I can just fill in the necessary fields).
The last few I have closed, I did simultaneous closes. Not all title companies will do them, so you have to ask around. There are several that I know of in Tampa who do them, and they were referred to me by other wholesalers. All I really had to do was get the HUD and the title committment from the bank’s title company the day before closing, and send it to my title company for them to get everything ready for the closing between me and my end buyer. The funds from my end buyer are used to fund both transactions, and then I get what’s left over. It sounds complicated, but isn’t. Just find a good title company who is used to doing these types of transactions, and you will be fine.
Also wanted to add that I have my buyer pay all closing costs on the transaction between me and him, so I don’t get stuck paying 2 sets of closing costs.
Hope that helps,
Steph :cool
Good stuff! We do have those investor friendly title companies lined up already which should help. Due to a double closing, do you physically attend each closing or are the funds wired into your account? I like how you have the buyers paying all the closing costs. The cash buyers we have relationships with are pretty new. How should we approach them about paying both of the closing costs? I would assume they might bicker a little…
Also if the realtor for the REO needs proof of funds how are you handling that? :beer
Since the bank’s title company is usually in another city, I just have them send all the docs for the first transaction to my title company, and they handle getting everything signed and FedExed back to the bank’s title co and also wire the funds out. So, I show up to my title company, and sign everything for both transactions all in one shot.
I don’t ask my buyers to pay the closing costs, rather, I sell the deal at a net price to me, so they understand right away that I need to net, say, 65k, and they are responsible for any closing costs. It’s never been an issue.
If you don’t have proof of cash, then get a letter from an HML. You will need one or the other, and there is really no way around it. They want to know that you can close and aren’t just wasting everyone’s time.
Steph :cool
I locate REO by using the county recorders online service. I search under owner name and enter the name of the bank, it then gives me the trustee deeds and foreclosure records for the time frame i specify in the search for everything the bank currently has on hand.
Chris