My 1st short sale...

[H. M.]

I have listened to a few short sale gurus with different approaches on back to back deals:

1. Use a purchase contract and do not disclose the "b to c" agreement to the foreclosing lender it may kill your deal.

2. Use an option contract and disclose everything to everybody or else!

I have always believed in full disclosure, is that being naive?

Does it matter what agreement I use on the A to B any more now that FHA is waiving the 90 day seasoning stip?

Lastly, do most of you negotiate your own or out source it?

Thanks for your thoughts, I'm definately feeling outside of my comfort zone.

H.M.

[Scott Hubbard]

Originally posted by H. M.:

I have listened to a few short sale gurus with different approaches on back to back deals:

Not disclosing is fundamentally a poor choice and WILL come back and bite you.

Originally posted by H. M.:

1. Use a purchase contract and do not disclose the "b to c" agreement to the foreclosing lender it may kill your deal.

In a back to back close, the B to C transaction need not be disclosed since your using your own funds to perform unless the lender requires disclosure in the approval letter. In your A to B purchase contract, you should disclose your intention to sell.

Originally posted by H. M.:

2. Use an option contract and disclose everything to everybody or else!

You need to always disclose and the choice of the contract should not matter.

Originally posted by H. M.:

Does it matter what agreement I use on the A to B any more now that FHA is waiving the 90 day seasoning stip?

Despite the great news with the FHA, the rule change is ineffective for a back-to-back closing. The seller must be on title (owner of record) while the underwriter is doing their due diligence. So, effectively, we would have to close and hold for several days while recordation and due diligence is performed.

Originally posted by H. M.:

Lastly, do most of you negotiate your own or out source it?

I am a big advocate of outsorucing negotations mainly becuase I am a negotiator. But also, it is because an experienced negotiator pays for himself by getting deeper discunts more consistently.

There are several negotiators on this site, so you can probably find few while your here.

[H. M.]

Thanks Scott for your quick reply.

As stated, I'm all for full disclosure.

Regarding the seasoning issue, are you saying that 1 day transactional funding wouldn't work here?

[Justin S.]

Only for FHA buyers. If you have a cash or conventional buyer with no seasoning requirements, you are okay.

[H. M.]

Thanks Justin, sounds like I would either have to ignore FHA end buyers or have a hard money source lined up.

Am I understanding this right?

HM

PS New to this, don't know how to capture lines from your replies yet.

[Scott Hubbard]

Originally posted by H. M.:

Thanks Justin, sounds like I would either have to ignore FHA end buyers or have a hard money source lined up.

Am I understanding this right?

HM

PS New to this, don't know how to capture lines from your replies yet.

I automatically exclude FHA/VA buyers... Sometime agents will ignore this and submit FHA/VA buyers anyway. So, if your spread allows you to fix and flip, then you might consider this since FHA/VA buyers are 100% market value purchasers.

I have found this rarely to be worthwhile since FHA guidelines can be more strict and there is much higher failure rate with FHA buyers. However, since the new FHA guidelines I may experiment a little if the spread allows.

In my opinion, your Retail Flip strategy should only include cash and conventional buyers. FHA buyers should be an alternative strategy when your spread will allow for a fix and flip play.

[Maryann L.]

We disclose almost everything. On the B-C we have a contingecy that states a short sale is being performed and the sale to the C buyer is contingent upon the successful negotiation and release of the note. Of course we don't let on what we bought it for and the first time ever an A seller asked me what price the bank accepted and I told them, but I guess if they ever asked what we resold it for, I'd probably say I can't disclose. Always when I think I might be prepared a 1st time situation pops up.

[H. M.]

I'm convinced, it's better to disclose in the A that it will be re-sold and in the C that it is contingent upon an approved short sale

I am still unsure...about the back to back 1 day closing using transactional funding, is it do-able or not? Some say yes others no.

HM

[James Ward]

Yes it is very do-able. If you are unsure, call a transactional funder and ask them questions. Also call a title company and ask them questions. Plus, ask questions on here.

Lots of us do business, and are always happy to help!

[H. M.]

I want to thank all of you for sharing your experiences, this is a great forum.

My experience has been just the opposite, local rei's seem very closed mouth about what they do.

I have already found a lot of useful stuff here. And I do intend to search the forum further regarding transaction funds and investor friendly title companies. I'm in an attorney state, but the re attorneys I have spoken to are unfamiliar with back to back closings.

HM