Okay so this aspect of Wholesaling is new to me. I have done my best to read everything I could possibly find in this forum on the topic but I am still left a little confused and with a couple of questions.
I’ll give a scenario and whoever can help me understand, I appreciate it. So here is the scenario:
I have purchased a wholesale REO AS-IS from the bank using my pre-qual letter which makes my purchase a financed purchase, I am going to sell it to my buyer who does not have cash so he has to finance it on his end as well which makes his purchase a finance purchase as well.
:biggrin Q # 1.
How do I make profit from this deal if he is using financing? With a cash buyer, I just raise their purchase price and then the title company sends me the difference but how is this handled in a financed buyer situation?
:biggrin Q # 2.
What if my buyer cannot obtain financing and is unable to close? Then what? Can I escape? Even though I purchased AS-IS, can there be a contingency in my Purchase Contract that says something like “contingent upon satisfactory inspection of the neighborhood, demographics, school district, etc.” … is that a way for me to back out? And if it is, how do I get the bank to agree to put that into the contract?
:biggrin Q # 3.
When my purchase is financed and my buyers purchase is financed, how do I make it coordinate so that my buyers financing is in full effect on the same day mine closes so there is no lapse? And is this the kind of transaction to use a double closing with?
:biggrin Q # 4.
When using a financed purchase to obtain my property, I am noticing that they are requiring me to put at least 1,000 down as a deposit! Is there ANY way to get out of this? With the cash purchases I just put in the contract that I am not required to put up earnest. But in this situation the agent is telling me I HAVE to put the money up for EVERY financed purchase!! There has GOT to be a way around this??
I love you guys! Thanks for all your help in the past, all your help in the present, and all your help in the future!!
Capgiant - I am going out on a limbo here… I am assuming this is the same agent that told you that the bank will not accept any contingency clause… (from your other thread). Anyway - The agent is wrong. You don’t HAVE to do anything. You don’t HAVE to put earnest money if it is a financed purchase. You write your offer and state that you are not going to put any earnerst money…
Having said that - please note that this will weaken your offer. The bank may not accept to tie the property without some earnest money. However, in the other hand, they may accept it… You will never know until you try it…
Good luck…
PS: I didn’t feel qualified to answer your other questions… I am sure someone else will chime in… :O)
YOUR RIGHT!! Same lady!! How can I even get the offer to them though if everything has to go thru her?? That’s my problem, she’s in the way and she is the one saying “no, no, no”
Capgiant - put it in writing and send it to her… She has a duty to present the offer (unless the bank has specifically told her not to). If she tells you that she is not going to present, I would ask her very politely the reason why and if she understands her duty… Sometimes, real estate agents forget that they are agents (not principals). They can’t do what they want… They have to follow agency rules…
Good luck! Let us know what happens… I am curious.
Now, she has fully researched the loan officer who issued my pre-qual letter…what the hell is she doing? Should she be doing that? Why is she so involved and why is it her business to research him? Isn’t her job just to be the middle man who submits the offers back and forth between the bank and I?
I really need to just get that POF letter so I don’t have to deal with all of this drama. But trying to get a POF letter is next to impossible…It is like I am asking for their 1st born child or something…
A POF funds letter works well for the double when the title company and all other parties (such as-in REO) are comfortable that the end buyer’s funds will cover the entire transaction. For some investors, this is not possible and assigning may not work either.
For this I recommend using a “double close” loan. A private investor would give you the funds to purchase from the buyer with virtually no questions asked. Your end buyer must be lined up and the closing has to happen at the same title company. But they dont take an application, check credit, verify employment/income/assets, and no property evaluation. NOTHING. Your purchase funds are only at the title company for several hours; enough time that your buyers can close.
Capgiant,
Every offer must have some form of consideration to make it legal. There are 5 premises to a legally binding contract.
A property
A buyer
A seller
Consideration
Date to close
With that being said, consideration can come in many forms. Cash, Check, Money Order etc… and also promissory note. I have not seen a contract in twelve years accept the promissory note.
Good luck