All Forum Posts by: Ted Akers

I have funded many Florida transactional deals and would be happy to speak with you.

@Pedro Oliva 

More REO's these days are being approved under contracts that preclude assignment of the contract. If assignment is prohibited major title companies will not allow the use of the end-buyers funds to be used for your purchase because assignment violates terms of the contract. In these scenarios you typically will need to fund your purchase or use a private funder or transactional funding. Transactional funding costs have decreased over the past few years and are less than 2%.

Unless you are very comfortable researching title at the courthouse I suggest having a title company pull at least and O&E (Ownership and Encumbrances) Report.  The drawback with this is they will most likely charge you for it, and you may have to do many of them before winning one at auction.  Charges can vary noticeably and be from $75-$150 generally.  You may be able to find one used to doing them for auction buyers for fees around $50.  To qualify this, I am not familiar with Harris County auctions.  If you are researching title yourself make sure you are clear that the lien you are bidding on is a 1st lien position; and you also want to check for items which may not be of record yet, such as unpaid municipal utilities or fines.  Good luck!

If you made your offer to HUD as an investor there is no holding period for you, so you can resale it simultaneously. If you were selling to and end-buyer that is using a mortgage, either FHA or conventional, the mortgage lender will most always require you to hold the property for at least 90 days (referred to as "title Seasoning").

@Pamela Holmes 

HUD deals are not assignable so you have to close in the name you made the offer in. Your own funds, hard money, or transactional funding will be necessary. For transactional funders it is typically required that you use the same title company for both your purchase and your sale to the end-buyer. Many HUD appointed closing agents will not want to handle both transactions, but you do want to tactfully ask them such as: "I am considering reselling this property, would you like to handle both my purchase and resale?" If they say yes, tell them that if you do you plan on selling on the same day, but would separately fund your purchase and the end-buyer will fund their purchase. Make sure they are clear you are not trying to use the end-buyers funds to close on your purchase or they will say no quickly. If they do not want to close both transactions I have funded "split escrows" where the second transaction closes at another attorney's office, since Georgia I an attorney state. This takes some coordination on your part as transactional funders will require your end-buyers funds and executed closing documents be in possession of the closing attorney before funding the purchase, but it is not really different than the coordination required for wholesale deals. I hope this helps.

If you are selling to a retail buyer the mortgage lender will not accept an assignment as a method of transfer.  Maybe you can find a portfolio lender; but there are very few of them left after the last crash, and you would have to get your buyer to use your suggested portfolio lender.  Otherwise, you will have to purchase the property and go into title for the mortgage lender to fund the sale from you to the end buyer.  A mortgage lender will create another issue you need to be aware of.  Most will not provide a mortgage to the end buyer until you have been in title for 90 days (referred to as title seasoning).  You likely need a cash buyer for this deal; because the spread is not large enough for anything other than an assignment, and investors are not likely to pay the market value of $165k.  It would be a more likely deal if you could get it below $`150k.   

Hey @David Sicherman,

You should see it within the conditions of the short sale approval, or it may come as an addendum requiring signature at closing.  The more critical part is that it can include a Deed Restriction to be recorded to preclude sale within either the 30 or 90 day timeframe.  You cannot tell until you see the approval, although you can have your negotiator ask now if there will be resell restrictions.

@David Sicherman 

Do review our short sale approval carefully once you get it.  Most short sale approvals (FNMA and Freddie) will have an addendum requiring you to hold the property for 30 days; or for 90 days if you resell for more than 120% of your purchase price, and it generally comes in the form of a Deed Restriction.  Extended Transactional Funding could work but they are challenging funding's for the funder and are expensive, and the funder or a hard money lender is generally not going to put funds into a personal or company account in your name.  You might consider a joint venture partner and requesting the short sale bank to amend the contract from your company name to your company name "and" the name of your joint venture partner. 

Hi @Brian Huber 

Transactional funding is being used when the contract is not assignable such as with HUD, and these days many more REO's. What you may be hearing regarding double closings is not so much that they are not ideal, but that most title companies will no longer do them because they perceive risk in not having two distinct and separately funded transactions. This is definitely the case with short sales and more so these days with REO's, although not all REO's. Transactional funding rates used to be 2-3% but many have been below 2% for 3-4 years now.

HUD generally will accept POF's from transactional funding companies. However, some specific HUD offices or the listing agent may not accept them. When using them most do not require to see a bank statement, but some will ask for it. If using transactional funding the funds would not go to your bank account, but would go directly to title. Keep in mind that making an all cash offer does not preclude you from using transactional funding, or a mortgage for that matter. It simply eliminates you contract contingency allowing you to get out of the contract due to lack of funding approval. Some realtors do not understand this, but most do.