I have a wholesaling question

[Mike F.]

hey guys and gals,

I have a question regarding a wholesaling situation I may partake in.

I found a family that was looking for a property in a specific area with a specific number of beds and baths (we'll call them the buyers). They are qualified and pre approved for an X amount of dollar loan and are looking to buy ASAP.

I also found a "for sale by owner" seller that was selling his home in the area that the buyers wanted, with the right number of beds and baths, well within the buyers budget.

Now I have negotiated the price that the seller wanted down quite a bit lower than his asking price and I am ready to have him sign a purchase agreement. Here is my question-I plan on doing a double closing on this deal using transactional funding for the first sale (AB). How would this scenario work when the buyer is using a mortgage for the second (BC) sale? I have only done simultaneous closings with all cash sales and never with one side using a mortgage for funding. Is it even possible to do a transaction like this and if so, what specifically do I have to do to make this all work for everyone involved? I would assume that I'd have to deal with the buyers lender at some point.

Any help and/or information on this scenario would be greatly appreciated.

Thanks!

[Jackie Lange]

Your buyer will probably not be able to get financing if you do the deal the way you described. There will be no "seasoning" in your ownership. Plus there is a big expense for transactional funding so you want to avoid it.

A better way to close this deal, is to be honest with the sellers and tell them you are not buying the house but will find a buyer. When you do, offer to release your option for a fee. Then let the seller and buyer go to contract. Your Option should be turned in to the title company along with the original contact and the secondary contract with the real buyer. The Option will show up as a line item on the HUD-1 and you will be paid out of the proceeds at closing.