BiggerPockets

Hmmm..interesting chain of events. Can you find out who is selling the property?

One short sale strategy is an investor gets a house under contract...starts negotiations...then lists the house with an agent.

In this scenario, the owner of record is not the person you, the end buyer, are buying the house from.

So check and see who the owner of record is and match that name against the seller listed in the offer paperwork you initially filled out.

The type of agreement the investor may have with the seller is an "Option" to purchase.

Now the option technically bars the seller from selling to anybody but the investor...so if this is the case...the investor can only enter into a contract with you "Subject To" them exercising their option. This would have to be disclosed to you.

The investor also could have gotten title via quit claim deed...and then they would show as the owner of record. This would show up on a chain of title.

Yes. Cineworks..."I am (not this particular case) the flip investor on the transaction that you are buying and have been doing it for 3 yrs in Ca...call it dual close/ double close/ dry close/ simultaneous close...they are all the same language.

Let me give you some competative edge. These kinda transactions are legal as long as there is disclosure.

First, you want to understand the level of experience this "investor" has doing this kinda double transactions by asking your agent and have him do some credibility check with listing agent and "the investor". You "walk away" and don't bother with the transaction and waste your time (if you listened to me you had be glad you did) if the following is true:
1. Investor has not done any double flip and this is his or her first transaction.
2. If the Seller's mortgage company is a Countrywide, Bank of America or Wellsfargo (i don't want to explain, it takes too long...i been in this business long enough...they all have anti-flip provisions...that means THEY CAN NOT IN NO WAY BUY AND SELL ON THE FIRST CLOSING AND THEN SELL TO YOU ON THE SECOND CLOSING...BECAUSE of the bank's Short-sale approval terms and language to the investor that prohibits investor to do that...i know these greedy bank has our TARP money and they are doing this to us...that is just outrageous...that is another topic).
3. If your price paid is LESS than MLS listed price, the first PRICE investor's offer to the foreclosure bank will never be approved, GUARANTEED.

If you like the house and you can accept the price and the investors is experienced plus this is not a Countrywide, Wellsfargo, Bank of America then you have 50% chance of success...owning the property.

Good Luck.

P.S. By the way. Don't buy REOs too because YOU WILL NEVER GET IT. The only way to get the REO home is go to REO OPEN HOUSE of the "LISTING AGENT". He wants to make the 6% commission and thus WILL TURN DOWN ALL REO offer by other AGENT and WILL accept your offer instead only if YOU DON"T HAVE agent. I am giving you quick and competative info here...i am in the trench everyday and this is what is happenning...REO agent only sell to their own list of BUYER's if you are on their list.

Originally posted by Steve A

Can someone explain how this is happening?

As already stated, the investor has an option contract with the seller. While the investor is negotiating with the seller's bank for a short sale, the listing agent is trying to market the property on behalf of the investor.

Originally posted by Steve A

What value does the investor have in the deal?.

A good investor will bring to the table an ability to negotiate a better price from the bank which should translate to a better price for the end-nuyer (you). A bad investor will add no value and you will be wasting your time.

I would not worry so much about the investor, but instead focus on value. Your agent should provide you with data that shows you are getting a house for less than market value. If, at the end of the day, you are getting a good deal, then I think you are better receiving value from this transaction.

Originally posted by Steve A

My agent says that the investor has not yet agreed on a price with the bank, and will do that once he evaluates our offers. Why kind of agreement would the investor have that gets him in this position?

The seller has previously agreed to let the investor negotiate with the lender. Chances are the investor is already negotiating with the lender and is just trying to create a larger spread for himself.

Originally posted by Steve A

Not trying to bash the investors at all. Just trying to understand the game so I can be a little more competitive.

In these times, investors have opportunities to carve out a niche and add value to these transactions. Where many RE agents fail to perform, investors bring a unique skill set to negotiate with lenders and to help protect the sellers.

In keeping with the ADDED VALUE theme, focus your efforts on two key points. 1) be sure that you are getting good value from your purchase. 2) make sure the investor is not a hack.

You can do this by having your agent contacting the listing to see if he or she has actually closed a transaction with this investor previously. Chances are, if this investor is experienced, the listing agent would have closed a deal with the investor before.

Good Luck!

That is correct...and the wording in the approval letters isn't set in stone...if correctly negotiated one can get the bank to remove that anti-flip wording and thus close a normal A-B-C transaction.