All Forum Posts by: Ted Akers

Two years ago it was not unusual to see short sales take 4-8 months. Today 8 months is a very long timeframe, even with the transfer from BofA. The listing agent, or whoever is negotiating the file, may not be experienced enough to get everything the bank is requiring to them and to move the file along. Buying the individual note from M&T is very unlikely and probably not worth your time pursuing.

Regarding the price M&T will surely require a recent BPO; but keep in mind that the only reason to pursue short sales is for a potential discount, and that retail buyers will very seldom sit through the short sale waiting period (in this case a very long waiting period). At this point I would hang in there, but only if there is a discount to be had at the end of the day. As Jon pointed out, this one does not appear to be a likely deal probably due to the parties involved.

It is possible but will depend on that seller selected escrow company. Many in California will do back-to-back deals, but likewise some will not. You are always much better off having your purchase contract require use of your "investor friendly" selected escrow company. Most sellers will not kill a deal based on who escrow is. It is normal that the seller selects escrow; but it typically is the relationship of the realtor involved, rather than the seller. If that does not work and the escrow company does not want to do a back-to-back transaction most transactional funders will not fund with a split escrow (your end buyer closing with a different escrow company) but it is possible.

Stephanie is entirely correct. Most state have passed distressed property laws in the past 3-5 years, and I would be shocked if California has not. Colorado includes restrictions for upfront fees and other activities wherein you do not want to represent yourself as a consultant or "there to help them". You only want to represent yourself as an investor with a solution to their problem. Definitely check out the California statutes. As to realtors, most banks will not accept short sale offers without a listing realtor involved and submitting the offer.

I have to seconds Karen's advice to find an attorney. California is entirely different from the rest of the country in regards to lending. I have not checked for about two years, but CA has had a 10% usury limit, unless you are a regulated lender under the state DRE.

I think you would be better off forming an LLC (with you having a majority interest to control the property) or a Joint Venture (again with you in control of the property) compared to a Note and Mortgage. Either form can dictate all of the details including rates of return or profit splits and could avoid time consuming and expensive foreclosure action if the deal does not work out. Establish a time frame for either scenario under which you have rights to take over disposition of the property. I am not an attorney or CPA. In either scenario you want an experienced attorney and tell your rehab partner those legal fees are part of the transaction to be paid upfront or repaid upon sale of the property.

Great job @Seth Williams

. Very funny, and extremely well done. Thanks for the early morning laugh.

The vast majority of HUD appointed title companies choose to not close both transactions. It is typically just a preference that they wish to focus on their HUD allocation of properties (their bread and butter), and do not wish to participate with more involved A-B-C transactions. Thus, a split escrow with two title companies is usually necessary. Most transactional funders will not close a split escrow, but it is possible if you can schedule your end buyer to close and have funds in escrow with the second title company before having to disburse on your A-B purchase.

Lawyers Title is a good suggestion and usually Fidelity Title. First American used to be, but not so much these days. One thing to keep in mind is certain offices of national firms that do back-to-back closings will not do them, depending experience or comfort level of that office. "Wet Funds" is a term most understand, but you may want to be explicit to them that both transactions will be "separately funded". Do not ever use the term simultaneous closing, as most interpret that as using the end-buyers funds. Keep calling. Back-to-back transactions are being done nationwide, although it is getting tougher to find sophisticated investor friendly title companies. Good luck.

John is correct that short sales cannot be assigned. The majority of short sale approval letters are now including limitations on resale, although not all of them. The typical restriction is a prohibition and/or deed restriction preventing transfer of the property for thirty (30) days, and if you resale for over 120% of your purchase price the restriction is for ninety (90) days. These are much more challenging to fund, but if you have a solid deal and a financially committed end-buyer funding is available.

Eric has made a couple of good points. A title closer experienced in back-to-back transactions is very important and most deals are being done with cash buyers. If the end-buyer is using a mortgage you are likely looking for extended term transactional funding, which is very similar to a short term hard money deal but typically with less equity cushion for your funder. In those scenarios if you require fairly substantial "non-refundable" earnest money it will greatly increase your odds at finding a funder. I also require that there be no remaining contract contingencies for the end-buyer, except for a title update and possibly an appraisal if a mortgage is involved.

Hi @Brian Bremer 1.75% has become the norm for transactional funders with a few out there a bit higher. However, up front fees are not the norm for most transactional funders.