Explain a Short-Dual Close Flip

[Steve A]

Please explain the deal that’s happening around me…

I want to buy a house to live in. In June, I saw a short sale listed at 550K. After falling out of escrow a couple of times, it hits the MLS again last month. I put in an offer and wait. And wait some more. Then on Monday, I get a letter from the listing agent (via my agent) with a counter offer. Really just a request for a best and final offer. We up the offer a little and wait. I ask my agent to snoop around.

This is what she tells me, an investor is now involved and is calling the shots. If my offer gets accepted, the deal will be a duel close, with me buying from the investor, not the bank (or the original owner).

Can someone explain how this is happening?

What value does the investor have in the deal?

My agent says that the investor has not yet agreed on a price with the bank, and will do that once he evaluates our offers. Why kind of agreement would the investor have that gets him in this position?

This is the second deal in a row that an investor has gotten between me (potential buyer) and the bank.

Not trying to bash the investors at all. Just trying to understand the game so I can be a little more competitive.

Thanks.

[Mitch Freed]

The type of agreement the investor may have with the seller is an "Option" to purchase.

Now the option technically bars the seller from selling to anybody but the investor...so if this is the case...the investor can only enter into a contract with you "Subject To" them exercising their option. This would have to be disclosed to you.

The investor also could have gotten title via quit claim deed...and then they would show as the owner of record. This would show up on a chain of title.