All Forum Posts by: Ryan Webber

First off, I would guess that ALTA's influence is different in different parts of the country, but in my part of the country, nobody cares about ALTA. ALTA is a trade organization that most title companies are not a part of.

Secondly, as far as I could find, ALTA does not specify that you can not do a double/simultaneous closing.

In their Uniform General Closing Instructions, they do reference a simultaneous closing situation in Paragraphs J.1.a.i and K.4.a.i as a "double escrow, double closing, flip sale, pass through, or equity skimming" transaction, and they only stipulate that you can not move forward without full disclosure of the situation to and authorization from the buyer's lender.

In a wholesaling situation that would most likely be a hard money lender or a commercial lender, and neither one of them will care. And it would seem to not apply to a cash transaction.

It also states that an exception to this rule of disclosure is in transactions with single family residences where the seller is a federal government organization, which would mean HUD and Fannie Mae REO's.

Now Paragraph G.7 reads:

You could interpret the initial part of that paragraph to apply to a simultaneous closing, but I think you could strongly argue that a simultaneous closing could be a type of "trade equity" as specified in the latter part of that paragraph, and then Lender authorization would be the only requirement.

There is really no reason the title agent should care if the buyer's lender is fully aware of the situation and okay with it.

Here is the link to ALTA's guidelines if you would like to read it yourself:

http://www.alta.org/images/PDF/09-05-15_UniformGeneralClosing.pdf

Bill, if your title agent referenced ALTA as why they wouldn't do a simultaneous closing for you, I think you should find another agent.

Wait a minute. I think I remember having a very similar conversation with you way back. If I remember correctly I think we finally came to the conclusion that you had never wholesaled a property, so it was probably best for you to not be telling people what they should or shouldn't be doing in an area that you have no experience with.

Or maybe that was just my conclusion. :D

Title insurance is not normally issued until the title company can verify that all deeds and mortgage documents were properly filed. Usually they verify this by filing the documents themselves. Yes, this type of transaction is atypical for many title companies, but it does not inherently pose any increased risk to the title company. They still control all the components (the deeds) that would pose any risk to their title insurance.

This seems to me to be an issue of fear and not fact. Just as many realtors will quickly tell you that wholesaling is illegal. Just as some title agents will still tell me that I can't do double or simultaneous closings, even after I've done 100 of them. Its fear, not facts.

Focus on finding an investor friendly title agent and you shouldn't have any problems. That's really the bottom line.

Sorry I arrived so late to the party, but there's some hot air in this thread that I need to let out.

I have personally done and STILL do these transactions on a regular basis.

Yes, there are many title agents out there that will not do them, but there are absolutely title agents that will. It is not a common transaction for a title agent to deal with, and that is why most of them don't want to

First let's talk technicals. You do NOT own a property when you pay for it. To "own" meaning having full rights to it. You do NOT even own a property when you have received a deed for it. You only technically own a property (outside of some owner occupant situations) when you have FILED an executed deed in the official public records. Having buyers and sellers sign documents out of "proper" order is a technicality that most title agents across the country do on a daily basis. This is the whole point of having an escrow agent/company that holds funds/papers until everything is fully executed/funded, and then releases/files everything in proper order.

Splitting hairs over second by second timing of execution of documents is stupid. I have never seen or heard of anyone pursued legally for a "simultaneous closing" or however you want to phrase using the buyers funds from the second closing to fund the first closing. If anyone has any actual statutory or case law to back up any of these allusions to fraud I am EXTREMELY interested in researching them.

This whole argument is based on the fallacy that funding is the key to ownership. That if and when you fund the transaction THEN you own the property. That is completely FALSE. Funding is a procedural step to the process of taking ownership in real property, but it is NOT the sole or final determinant. You can pay for a property a hundred times over and still NOT own it. You don't own it when you've paid for it. Now you might have legal recourse against whoever you gave your money to, but you still don't own a piece of property just because you gave someone money for it. Funding is not the test of ownership.

Bill, I really hope you have something solid to back up your claims of fraud. Please enlighten me about these crack downs on this closing strategy.

My advice: read the highest quality information you can find at the cheapest price that you can find it at.

My experience is that you will find the highest quality information - quality being objective, sound, well tested, and multi-perspectived - right here on Bigger Pockets.

Oh and wait, its FREE here, too. You can't beat that price.

So before you go spending your limited dollars on any guru's package about wholesaling, you should invest your time into reading the Wholesaling Forum right here on BP. Then you need to post your questions on the forum or contact one of the experienced wholesalers directly with them.

It seems like he's having some financial problems.

http://www.heraldextra.com/news/local/central/orem/article_cf50fd91-732c-5ec0-bb36-bb2959eb81c3.html?mode=story

Lol. That's all mine, Tod. I appreciate the compliment. :D

Its going to be ordinary income.

There are some tax advantages to how you can set up your company's payments to you (paying yourself a "reasonable" salary which is taxed as ordinary income and then disbursements above that are not taxed as ordinary income). Talking to your accountant about all that is a really good step before you set up an LLC or other entity.

If you have an LLC then do the contracts and checks in your LLC's name for liability. If you don't, then just get them in your own name.

BUT . . .Let's do a reality check here, though. Unless you have significant personal assets that you need to protect from business liability, the last thing you need to be worrying about as a new wholesaler is setting up an LLC. Focus on doing something so that you can owe the IRS money first.

This is really one of those "1,000,000 Seemingly Important But Really Nonessential Things Newbies Stay Up Late At Night Worrying About Before They Actually Do A Deal" questions. The problem with focusing on 1 of those "1,000,000 Seemingly Important But Really Nonessential Things Newbies Stay Up Late At Night Worrying About Before They Actually Do A Deal" questions is that you have an extremely limited amount of energy/time/money/effort to put into your new business. If you spend that precious little energy/time/money/effort on 1 of those "1,000,000 Seemingly Important But Really Nonessential Things Newbies Stay Up Late At Night Worrying About Before They Actually Do A Deal" questions then you are dramatically decreasing the odds that you will put enough of your energy/time/money/effort into one of the "Very Few Essential Things Newbies Need To Do To Get A Deal" things that will actually bring you success in this business.

You need to become a psycho jealous husband with your energy/time/money/effort when you first get in this business. The odds of you actually succeeding long term in this business are so slim that unless you become an absolute maniac with figuring out and DOING the "Very Few Essential Things Newbies Need To Do To Get A Deal" then I am so sorry, but you will fail in this business.

Prioritize what you need to be spending your precious limited resources on, and get psycho jealous husband with it. That's your only real chance for success in this business.

If you get your buyer to pay you the earnest money directly and not to the title company, then you could use that money to pay your earnest money to the title company. The buyer's earnest money would still go against what he or she owes in the transaction, but you would already have it in your pocket.

This is actually how I set up most of my transactions. I require my buyers to pay $1,000 non-refundable earnest money directly to me, NOT to the title company.

Depending on your state's laws, they will have to sign off on it for the title company to release the money to you if the transaction goes bad, and that doesn't always go over well. So, I make them give it to me directly, and I make sure I cash the check quickly if I have any concerns.

This whole idea of "fairness" with pricing your wholesale deals strikes me as silly. This is a free market economy, and its not about fairness. It is about supply and demand and the price you "should" sell your deals for is determined by the market.

An experienced investor will most likely have a definite price that they will pay up to for a particular house. Let's say its a $100,000 house and the house needs $15,000 in work. Let's say the investor works off of the 70% of ARV Minus Repairs model that is commonly discussed on this forum (though most rehabbers I know do not use this model). That means that the investor will pay $55,000 for the house (100,000*.70 - 15,000).

Now this is what I know. Whether I bought that house for $52,000 or $42,000 or even $22,000, I could probably sell it in a day for $55,000. And I absolutely feel NO need, desire, or pity to sell it for less than $55,000, no matter what I bought it for.

The whole idea of basing your sales price on your purchase price is flawed. Actually that very mentality is what leads to newbie wholesalers trying to sell lemons as "smoking" deals.

Your sales price should NEVER be based on what you bought the house for. Your sales price, as a wholesaler, should be based on what an experienced cash investor WILL PAY for the property. Figure that number out and work back from there. Whether you make $2,000 or $20,000 or 5% or 50% of that number, who cares?

When you can accurately figure out what you can wholesale a house for, then whatever you can get the seller down to below that number will determine your paycheck. The SALES price does NOT change, only your BUY price.

In my example, if you get the seller down to $52,000 then you made $3,000. If you get the seller down to $40,000, then you just made $15,000.

But to say NEVER make more than $___ on a certain deal, smells downright communist to me. Limiting your profit margins based on "fairness" to another investor who is going to make a great payday on the deal anyway seems ridiculous to me. If you hustle and find a seller that is willing to sell that house for $35,000, you just EARNED a $20,000 payday, and there is absolutely no reason you need, should, or have to pass a larger share of the profit onto your buyers. There is nothing immoral about not sharing more of your profit when you are selling a great deal to someone.

That's what a free market economy is all about, and I for one am okay with making as much profit as the market will bear.

On the reverse side, I've never once had an investor tell me, "Hey I know you paid too much for this property but I'll buy it from you anyway to help you out." With this whole sharing mentality, why is it that a wholesaler should share the profit on one side but not share the loss on the other? That whole mentality favors the buyer disproportionately.

My vote is to let the market determine your sell price, no matter what you bought the house for. Most of the time with my wholesale deals I get base hits ($3,000-$5,000), but every once in awhile I put one right over the fence ($15,000+) and that's just fine with me. :D

HUD will just require certain documentation from the wholesaler, including their financing information. I don't remember exactly what else they wanted. It wasn't anything crazy but it was a bigger pain in the butt than a typical wholesale deal or even another REO.

The title agent is key to the whole process. Make sure that you get to pick the title agent, and find one that is very comfortable with double closings.

I'm assuming your buyer put in his bid as an investor. If he put it in as a owner occupied then as a realtor I would run screaming from the deal.

Sorry, Nick. I didn't check the site for awhile and I missed this whole post. :roll:

Next time call me. If you're in the trenches, I'll be more than happy to help.