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Updated over 11 years ago on . Most recent reply

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Tommy R
  • Wholesaler
  • Orange County, CA
0
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42
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Why can't you assign a short sale? I don't get it

Tommy R
  • Wholesaler
  • Orange County, CA
Posted

It doesn't make sense to me why you can't wholesale a short sale like you would a normal property

Can you please explain to me why this is?

Wouldn't the lender wand to get the property moved from a non-paying homeowner to a cash-buying investor?

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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
14,128
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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
ModeratorReplied

Because if you contract for the property and then assign it, you're going to get a cut. The bank figures that if there is a buyer who will pay a higher price than you're paying, that buyer should buy directly from them. The bank is taking a loss on the deal. You're making a profit. If they could sell directly to your end buyer, their loss would be less.

What they are really trying to avoid is when the people on the ground (you, your buyer, the listing agent or some combination) collude to present the lower offer as if its the only offer on the table. In reality, there really is a higher offer on the table - the one your buyer is making to you.

Now, banks don't seem to have a huge problem with paying real estate commissions on short sales, though they may cap these to a slightly lower amount than the usual 6%. I suppose that's because real estate commissions are fairly small and those people collecting them are bound by certain laws and regulations. An unlicensed wholesaler isn't bound by those same regulations.

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