Real Estate Investor · Santa Monica, CA · Member since 2008 · 2 posts · 0 votes
Hello to all,
I am relatively new to investing with just under two years under my belt. Yesterday, two of the homeowners I've been working with over the last few days agreed to sell me their homes through a short sales.
I am interested in wholesaling these deals to a rehabber. I understand the short sale contract typically cannot be assigned. I would greatly appreciate the help from the decades of experiece of the investors in this forum to figure out the best way I can wholesale.
In this market, is a double close ideal? Is it a land trust? Is it an option contract?
I've heard that lenders and title companies are getting weary of land trusts. I also understand a double close affects chain of title. And I've noticed more and more postings on the internet about using options to tie up short sales.
Are the properties under contract?
Have the banks agreed to sell them short?
Great questions! If the answer is 'no' this is analogous to deciding you want to climb Everest. You have only begun the long preparation for closing the deal.
Great questions! If the answer is 'no' this is analogous to deciding you want to climb Everest. You have only begun the long preparation for closing the deal.
That maybe true but you always need an exit strategy. So it's important to make these decisions now.
If you wanted to wholesale the Short Sale you could take the property subject-2 and the wholesale your subject-2 deal to an investor who does short sales or rehabs properties. If your contracts are set up right you should have 30-60 days to back out of the deal if you cannot locate an investor.
I would advise the best way to get a short sale on contract is with an option agreement for purchase and sales. Pay the homeowner $10 for an option to purchase within a time frame that you set that is long enought to negotiate a short and find an end buyer. The option agreement will look just like a purchase and sales to the lender, they won't even know the difference...all they see is the purchase price you write on there...which the agreement will state is based on an estimated debt and may change due to negotiations. The paperwork is simple and the homeowner will feel much less threatened versus the other options of land trusts, deed transfers etc..and you are just as secure.
Here you go:
The sales contract or agreement, lease or option, or rental of real estate by an unlicensed owner of real estate who owns any interest in the real estate if the interest being sold, leased, or rented is identical to the owner's legal interest" If a person signs a sales agreement then he/she has a type of equity ownership according to blacks law dictionary it is a form of doctoring that allows or grants a person the intended purchaser the right to hold a part of the realty in which you have bargained as a position in equity same as a realtor when they bargain or establish the commission structure however possession by true simple fee interest must be met by state conveyance laws the possession stops you from taking possession until a true passing of clear title occurs. The power of sale has been established on paper whereas you are now going to sell your equity for cash to someone. You have an established right of claim when all parties have signed your contract if this is the case then you have a legal contract your considered by your binding rights as an equity owner then you are backed by the state. Your a part owner but not owner in fact sense the majority of equity shares favor the sellers this is called fee simple ownership in many cases unless the property is owned outright with a clear title then ownership is considered a true owner of record. Then you have the right to sell market our investment property while you’re under contract.
If you are new in this arena, sub out the short sale negotiation. Also, choose whether you are in the land trust camp or option contact. The pros and cons of each will be a future thread of mine. Either way, you are going to have an A to B, B to C situation.
See my "Short Sale Double Closing" thread.
I think you should get a coach to assist in the beginning. It will save you trouble, and probably money.
Sounds like a similar thread you started right Randal?
I think you would have a hard time finding an investor to pay you for a deal they have to perform the short on.
Any investor who is good at doing short sales has his / her hands full with short sale opportunities - I would think the last thing they need in today's market is a bird dog for that?
Now - if YOU complete the short sale - or have the bank agree to a price then you have a deal and soemthing someone would be willing to pay you for.
Yes Scott. I think that for the present, if I come upon a deal that will require a short sale, I will simply pass it on to someone I know in the area that wants to buy and has is willing to deal with short sales.