Very basic question on buying/selling a property within a week

I have a friend investor buying a short-sale property from the bank all-cash, and then reselling it to me within a few days at the same price.

So he’s closing on the 23rd and I’m closing on the 25th via mortgage and I plan to have a title company handle the closing, no attorneys involved b/c all legal aspects have been taken care of.

  1. What’s the easiest way to get this done, am I correct in having a title company handle it all?

  2. Are there tax implications to this that I should be aware of?

  3. Will it raise any red flags that this property is being bought and sold at the same price within a week’s time?

  4. Any thing I should be aware of???


Title Co seems to be your best and easiest bet for getting this done in NJ. I’ll assume your mortgage co requires title insurance and even if not, its a good idea. Title Co will do just about all the paperwork. Your friend might want to save himself the $300 or so fee to draw up a deed by drawing it up himself (perfectly legal…I simply copy the deed I received and change the names to protect the innocent).

No tax consequences I’m aware of. He has no capitol gains and you’re simply buying a property…not a taxable event that I’m aware of.

Only red flags might be with “title seasoning” requirements of your mortgage company. However, since it’s at the same price, it probably won’t be an issue

Best of luck.


DITTO on what JMD_forest said. I was a little confused in your post about who’s providing the mortgage. Is your friend owner financing it for you or are you getting a bank loan? If the answer is a bank loan, that may be a problem due to the seasoning and also because the bank will realize that your friend doesn’t even own the property yet. That could easily make a bank nervous.


Thanks guys.

Mike, I’ll get a bank loan and my friend will own the property before selling it to me so title seasoning shouldn’t be an issue given that he’s reselling for the same price. Also because the down payment will be substantial. The bank needs borrowers like me!

I know what jmd-forest meant, but let’s clarify for the casual reader. Buying a property is not a taxable event.

Selling a property is a taxable event. Whether there are tax consequences depends upon the amount of profit the seller makes. No profit, no tax consequence; but; the seller still reports the property sale to the IRS because a taxable event has occcurred.

Thanks for clarifying Dave. When I read it the first time I didn’t think I needed clarification, but after reading your post…turns out I did :biggrin

In all seriousness, Thanks!

Can you be my Layman’s Translator?

I overlooked this the first time, but how does a property like this get insured during the period between the first and 2nd closing?

Am I correct in saying that the investor, who’s buying it all cash, has to put home insurance on the house and then cancel the policy when he resells it within a few days? The insurance in that case would be prorated and he would receive a refund, correct?

The investor who buys all cash may chose to not insure during the 1 week period he is holding the property, depends on the investors risk tolerance. I’ve done it for several months at a time during rehabs because I simply refuse to pay the exorbitant rates insurors demand for an unoccupied property…it was over 400% more than a regular tenant policy and believe it when I tell you I shopped around. Alternately, he may very well handle it exactly as you stated.


Jersey has transfer tax right??? if so then the transaction is a “taxable” event. you are basically doing a double close. No problem with “title seasoning” whatever that is… I have sold properties that I had under contract, closed, and resold that same day. transfer tax must be paid. in PA it is 1% for both parties. keep that in mind with the contract between you and your friend. title companies are ok, but I have had better luck with attorneys.

hope this helps

fdshomes is right. I forgot about the NJ transfer tax… another gift from our illustrious legislators of NJ. Next week I understand they will be passing a new tax on fresh air and sunshine.

There are ways to get around it buy titling the property in an LLC and selling the LLC or in a trust and changing the beneficiary but that may throw a wrench into the bank financing for the second buyer.


Thanks for the reminder, almost forget about the transfer tax. It’s about .5% of the sale price in NJ.

jmd_forest, you bring up a good point. I want to put the house in an LLC during the second and final transaction rather than in my own name. I spoke with the rep at the title company about this, but he hasn’t gotten back to me yet. Do you know how it’s done?

Tax authorities are already wise to this trick. The transfer tax is due when the LLC is sold or the ownership interest changes.

These responses are over whelming. I mean, I am new in this forum and in this industry. I haven’t had the guts to close too much deals. This forum is helping me alot. Thanks so much.