My realtor recently showed me a home which is priced below market value. Per the seller’s realtor, the home was short sale and was purchased by some investor ( it could be the realtor seller realtor himself but he did not mention the name of the investor). The home was never put on the MRIS listing and even now realtor put it on thier website only.
I was told that I can do inspection etc and put it as contingency in the contract. However there will be two closings , one would be the bank and investor then second the investor and me. I was also told that I wont see the investor , there will be signed paperwork from investor. I am kinda confused as I have not heard deals like that. Can someone please let me know , is it safe to move on with this deal?Will appreciate your inputs
It sounds like it’s an A-B …B-C closing. The investor bought the property from the bank and will be selling it to you at the same time. This happens all the time with short sales. Are you looking to rehab and flip or just buy the home for your primary residence. The equity spread will determine which option might be best.
Thanks! I am buying this property for my primary residence and am first time home buyer. Can you please let me know the pros and cons of buying this property? In case I go for this property what I need to know before I write the contract…In addition, can I find out how much they (Investor)are paying for this property? Will appreciate it
As a first time home buyer, I am guessing that you will be using FHA 97% financing. If so, then you need to be aware that FHA won’t give you the loan if the owner has been on title less than 90 days.
Even if you decide to go forward with this deal, your lender may kill it for you.
As for not seeing the investor, don’t worry about it. Chances are the investor is not even located in the same state as you are and his settlement will be done by mail. I have only participated in one settlement since 1985 where the buyer and seller were present at the settlement table at the same time.
The investor is doing a double closing. They are buying it from the true seller and then immediately selling it to you. You will need to make sure of a couple of things.
Make sure that the investor has gotten an approval for the short sale. All mortgage companies will send a letter to the title company stating their short sale approval along with their conditions for closing. The investor may be in the process of getting this and if they haven’t received it yet I would wait to do any inspections or anything else that would cost you money until you see a copy of the approval. A lot of short sales don’t get approved.
You will want to make sure that the investor has the money to close. The investor will need cash to buy the home from the original seller, if he doesn’t, he can’t sell the home to you. The main reason a lot of title companies don’t do double closings any more is because if the first closing doesn’t occur then the second closing can’t occur and there may be liabilty on the part of the title company.
Hope that helps you. Good luck on your first home.