BiggerPockets

Hard money is pretty much the only way to go if the house is really in rough shape. If its decent, and I've seen a few (very few) decent REOs, you could get conventional financing.

I'm confused by your questions, Robert. Are you talking about buying short sales in pre-foreclosure? Buying REOs? Or what? I get that you're wholesaling. Those are handled in one of three ways.

One is an assignment. You get a contract that lists you "and/or assigns" as the buyer. You then assign this contract to your end buyer. They close directly with the seller, and you get your assignment fee. Doesn't work for short sales and REOs because they know "and/or assigns" means someone else is making a buck and they don't want that.

Second way is a double close. You have two separate contracts. One as buyer with your seller. A second, at a higher price, with your end buyer. End buyer brings money to the closing, and that money is used for both transactions. Not all title companies will do this, so you have to find one that will and then get the transaction to go through them. Conventional financing won't work for the second transaction because the lender will figure out you're not on title and nix the loan. Hard money will work OK.

A third way is to get an option, then sell the option.

I've also seen a process where an LLC is formed to buy the property. The end buyer buys the LLC.

But, I'm not sure why you're asking about delinquencies. Having to pay delinquencies would only come into play for a subject to. Otherwise, its a straight transactions and the delinquencies are wiped out.

Pretty much. You may have to put down a deposit.

Wheatie, I am curious about the situation of a double close (or simultaneous close) in a short sale situation...if one were to find an end buyer and a title company who would do the transaction...could one possibly take title subject to the underlying mortgage right after the short sale was approved..you would be on title when the end buyers lender pulls a prelim..then the end buyer could purchase the property with conventional financing because you are on title. In closing the underlying mortgage would be paid off and you would make whatever the spread was between the approved price and the price you sold it to the end buyer for.

I asked the same question to my good friend who is a title agent on Friday and it looks like I may have run into a little roadblock with the double close...say i get the short sale approval and then transfer the deed so I can close with an end buyer....when I close with that end buyer I am now the seller correct? The foreclosing lender is going to require a HUD 1 sent to them along with the money...the HUD 1 will show that I closed with the end buyer and then used those funds to close the short sale. The HUD 1 will show the excess funds which I am walking away with. The banks approval letters clearly state that, in a short sale, any funds in excess of the approved price are their property. I haven't attempted a closing like this, but given the full disclosure the title companies are required to provide I am thinking the bank will reject my closing if the HUD 1 shows I am walking away with funds.

Jake, how is your title company handling this without witholding information from the foreclosing lender?

Furthermore, if anybody else has run into this little problem please let me know. Thanks!

To close your first A to B transaction you can use companies doing transactional fundings. Short 24-72 hours fundings.
Mostly they charge from 1-2,5% from total funded amount plus one time fee ( $250-$700) fees. All paid from the closing. No out of pocket expenses.
If you need some help respond. :wink:
If you have to intent to resale it to the end buyer they have to bring their own funds or financing to the B to C closing.