I need help with this deal!! What is the best way to close this one?

Question

Hello, Can anyone help? I'm stuck!!! I have just finish a short sale and it is ready to close. But I'm not sure the best way to close on this deal.  When I started this deal I thought that I would be assigning my contract to the buyers, I was told that since the end buyers are funding with a conventional loan that there might be a problem with their bank releasing the funds because of the assignment of contract.

I did some research on the web and found some good ideas but one of those ideas really got my attention, not sure if this will work. One person said that I could have the closing company add my fee in the "Title Charges area of the HUD statement (in the 1100 section) add a line that says Clear Title and your company name (other than the company doing the negotation - perhaps a sub company of yours). If they question it just let them know that this was the fee to clear the title. Most likely it will not even be questioned and will be paid." Has anyone ever closed a short sale in this way or have any ideas on how I can get paid from this deal.

Any pointers anyone 
Please Help!!! 
Thanks

Justin S. · Answer

There are conventional lenders and title companies that will do a double close, you just need to do some reasearch.  90 seasoning is for FHA only.

A-B closes with transactional funding.

B-C closes with conventional funding.

Gio F. · Answer

JB
             To helps us help you which in turn helps all of us learn ....       
           Do you have approval from the bank? 
          
          What was the banks Appraised Value?  
          
          What's your GROSS purchase price?
                     
          And your Net? 
                    
                    Which State are you in?
                    
                    What's your state's excise tax?

Raul A. · Answer

Check here, for a quick summary on "Option Contracts".
lawyers.com

It becomes equitable once you exercise your option to buy. As long as the Seller & Buyer come to an (unilateral) agreement, and everything is DISCLOSED. You can market and list the property, as you wish ( written in option agreement). That's where the P&S Agreement, comes-in to play. I make my money when I buy low and sell high.

Samething when dealing with a Realtor P&S Agreement (shortsale deal) attach an addendum...basically saying what an option says.

**** I believe this topic has been covered here before here's the name of the thread:

- "Ohio Division of Real Estate's take on option contracts".

People verify everything, what everyone says here. Always check with your lawyer & title company, they'll let you know what can be done. LEGALLY of course. Call them or check with your local real estate club, who are investor friendly...network!!

Karen Parker · Answer

JB, I'd also like to mention that while you can get some very good advice on this forum, keep in mind that many of us may be in different states with different laws. Its always best to consult a real estate attorney. Especially when it comes to something like mentioned in the last paragraph of your first post.

Raul A. · Answer

JB, regarding your short-sale. Use an "Option" contract, these are the benefits: 
          
          1) you can buy and sell the property immediately.
          2) you have equitable interest in the property (gives you control).
          3) you have the right to list it, market it, and sell it.
          4) you avoid homeownership (seasoning) issues (file notice of option).
          5) All parties involved are FULLY disclosed. 
          
          Like  Justin mentioned, 90 day seasoning is for FHA only.  Tell your end-buyer to use Conventional funding instead or flip to a cash buyer (investor), no seasoning issues required here. Know your real (CASH) buyers and ask them what properties they are looking for, what area, etc. Most of these guys/gals hang around the county courthouse steps. It really depends on your spread, how much you want to keep or give away in order to close this deal. Are we talking 1 time or volume deal(s)? 
          
          I know of a title/escrow company that will help you with your double-close, transactional funding, etc. (corporate office located in FL). 
          
          Send me a PM or email me, if interested.
          
          My 2 cents.

Karen Parker · Answer

JB, unfortunately most transactional funding is only for a day or 2 max. That is that I have found myself but I have not looked for any beyond that. You might try checking around online or maybe even see if you could get private money very short term to cover it. You might start here on this forum with the posts under: Seeking Financing, Money, or Loans. Anything but letting the deal fall through :D As I said above, seasoning for most conventional loans is about 2 weeks unless it is FHA then it is 90 days.

Will Barnard · Answer

JB,
You can not assign a contract on a short sale or REO (bank stipulations, not a legal prevention) and so you have two choices:
1. Close with your own funds (or borrowed funds from private financing), then wait out any seasoning time frames you may experience with your end buyer's lender
2. Double close (transactional funding is not necessary so long as you choose the title company and they can do double closings) In doing this, you need to disclose to your end buyer's lender and they must agree, you must stipulate in the contract that the contract is contingent upon you receiving title. If you do not disclose this to the end buyer's lender, when they pull the title report, it will not show you on title and hence, you have a problem.

If it was not a short sale, you could have assigned the contarct and had your end buyer come up with the asignemnt fee in cash (their lender will not consider that portion as part of the aquisition to loan on) or you could carry back a note for your assignemnt fee and have monthly cash flow. Then you could also sell that note (must be for a discount to a note buyer for at least a 10% discount) and cash out. Unfortunately, that is not the case here.
With $80k in spread, you don't want to lose the deal. My advice would be to get the private funding to close and if need be, wait out the seasoning. You could even do a short term rental agreement with your buyers until the seasoning was over to cover your holding costs and possibly even cash flow it.

What is the price you need to close your A-B transaction?

Karen Parker · Answer

Nationwidepi, of course #1 is always valid but #2 is dependent on where he is. Here in Florida, the laws on short sales and what the title companies will and will not do changes faster than you can shake a stick at it and currently no title company I have found in Florida will do a double close without the transactional funding. Period.

Justin S. · Answer

JB-

I've heard of some doing it for up to 30 days.  They typically cost 2-3% of the A-B transaction purchase price.  A good title company that handles double closes can probably refer you to a lender.  $80K spread is a nice spread, what are you buying it for?

I need help with this deal!! What is the best way to close this one?

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