I have a few questions regarding contracts and timing 13 posts by 7 users

Posted: 05/04/2008 at 01:53PM

When I start my marketing, I plan to see a lot of potential short sale leads, probably more then I want! I can't afford to tie up all my funds in one deal and wait to resell it, so I plan to double close using the next buyers funds for a very short period of time (and probably a great cost to me, but that's the price i'll have to pay).

I have an agent that can list the property before I have actually purchased it, and manage the short sale, but I'm not clear on some details of the sales contract.

1) Let's say I find a property that would retail for 200k, and my goal is to buy it after the short sale for 150k. Do I sign a contract with the seller for 150k then have my team approach the bank to start the process? I'd hate to tie up someone's home at a bad time only to find out that the bank wants 180k, and that it's just not worth it for me.

2) Does the bank need a signed contract before they'll review the short sale packet and start the process?

3) Let's say the bank accepts a reduced payoff, how much time do I have to find my end buyer before the short sale expires?

Thanks,
Dan

Posted: 05/05/2008 at 06:07PM

Mitch,

Thanks for the info!

Your right that I'll need to be very careful about listing or advertising the property before I've closed on it, but the problem is I'll need to have my end buyer lined up by the time the bank is ready to close. I don't plan on informing them of a double closing as there really is no need for them to know, and I would technically be reselling it after I own it, albeit for a very very short period of time.

This is the best plan I can come up with to take advantage of the short sale leads. Since I can't part with the cash to buy them outright and resell at a later date I figured this was the next best option. Perhaps there's another path that I'm missing? I figured if I really am going to have this many short sale candidates, then I should find a way to work them!

Also, I only have so much liquid cash available, and I'm worried that they will ask to see proof of funds when I make my offer, is that typical? I'm afraid my limit me to lower priced properties.

Dan

Posted: 05/05/2008 at 10:57PM

why not just ssign the contract to your new buyers before your deadline ? for a small fee of course..... make your cash up front and just do an addendum to the PC adding the new buyer ?

Posted: 05/05/2008 at 11:21PM

Will,

Thanks for the heads up......... I was not aware of that in regards to SHORT SALES...... quick question:

What about bank owned reo's...... technically they are not short sales so to speak.

BTW .. nice website

Posted: 05/06/2008 at 07:50PM

[size=18]The answer is using the option contract for your short sales and double closing![/size]

Option Contract w/ Addendum
Gives you the investor the right to market and list for sale on the MLS and enter into a P&S agreement as seller. You can also counter offer back and forth with lender w/o getting sellers signature every time.

Notice Of Option
This is most important! 5 days after signed and notarized you must record this notice at the local county court house. This gives the investor equitable interest to the property. This prevents " Title Seasoning" issues and no break in the chain of title. (May need to change heading to “memorandum of agreement”

With this contract, nationwide title company, and funding you can double close properties legally and safely and never use any of your own money. The Title Company is know for it's " Blast" program.

This is the national solution for all of your short sale and foreclosure transactions and this title company is the creator of the nationally renowned BLAST© transaction; Buy Low and Sell Today! The BLAST© transaction is the method by which investors can buy and sell properties at the same time safely and legally. It is a program that is sweeping the real estate investment community and is being taught by the top real estate lecturers and coaches in the country.

" A" sells to " B" and " B" sells to " C"

who is " A" (seller in distress)

who is " B" (Investor)

who is " C" (End Buyer)

FHA will not fund on deals that seller has not been recorded as legal owner for 3-6 months (HUD Anti Flip Guidelines); therefore your " end buyer" on the " B" to" C" transaction can't use FHA financing.

If your end buyer is using FHA you may consider using the land trust.

Posted: 05/07/2008 at 11:20AM

You will need to fund the A to B transaction. I can give you the info for the docs and funding for 2 points.

Posted: 05/14/2008 at 07:44PM

Bellingham is right about what he is saying about this method.I have used it to death and so do all my clients ! The bank almost never ask" s for proof of funds so this is not a issue.The memorandum of option agreement for purchase & sale is a great way to also cloud title to the property without having to control the deed to prevent any funny stuff from going on during the short sales process.The thing not to forget about short sales is generally speaking there is no two transactions a like and anything can happen stay away from countrywide for your first deal and get a good mitigation company and always plan ahead your exit strategy 90% of all short sales get discounted but only 30% end getting fliped before the bank steps in and takes them bank !

Dont be greedy if you can flip a house to another investor and make quick buck $$$$$$$$$$$$$$$$$$$

Take
The
Money
And
RUN