BiggerPockets

If they're paying cash, you'll be fine. Financing is where your life gets difficult. Lenders will do a title search and discover you (the seller, typically in wholesale deals) are not the owner. They may not like that. They may have seasoning requirements that require the seller to be on title for a specific length of time. They may also use the price you (wholesaler) pays rather than the price your end buyer pays as the value. That means your buyer will have to pay your fees in cash.

And, I take it if the end buyer is paying cash, there won't be a need for a contract. ;)

Originally posted by J O

And, I take it if the end buyer is paying cash, there won't be a need for a contract. ;)

This is also incorrect. The method of payment is not at all releveant to whether you need a contract, because you ALWAYS need a contract (or an option to buy).

Thank you guys.

If I'm assigning a contract with financing, how long is the title seasoning and when do I get my assignment fee?

Originally posted by J O

If I'm assigning a contract with financing, how long is the title seasoning and when do I get my assignment fee?

First, make sure you see my post above...

First, title seasoning has nothing to do with you. It is a requirement that a lender has that says the last sale of the property needed to be at least x days ago (generally x is 90 or 180).

So, a lender might say, I won't make a loan on a property if the current owner (that it's being purchase from) hasn't owned it for at least the past 90 days.

With a double close, you are the "current owner" prior to the sale, and you will have only owned the property for a couple hours (not 90 days). So, lenders won't approve that kind of deal to lend against.

Now, assigning a contract is the act of taking control of a property (via a contract) and passing it to another buyer.

With assignment, you *never* actually own the property.

Because you don't own the property, the "current owner" is whomever you took control of the property from, and as long as they've owned the property for 90 or 180 days (or whatever is required from the lender), there shouldn't be any issues.

Ok. I just spoke to a title company guy. NOW, I see why it's important to have cash buyers! On financed lender deals, banks want as much money as they can. So if you're double closing or assigning on financed deal, it's going to be harder; unless, of course, the bank says it's ok when you disclose it.

Title guy told me you can get into trouble with fraud if the banks find out you didn't disclose that you were buying and selling. At this point, I realize: that's why it's important to have a cash buyer and a motivated seller (that's not a bank).

He also said he deals in buying and selling, not double closing, The best thing to do is use transactional funding when buying and selling. It looks like a clean transfer.

I really don't like the term wholesale in RE! It's something I'm sure some guru came up with and everyone jumped on the bandwagon. You buy a property and you sell it, period. The kind of deal doesn't even need a name. Who you sell it to is not important either. If you have a dump and you sell it to some guy who will fix it up, just because there is a process between the buyer and the highest and best use end user of the property which is accomplished by a middleman buyer/seller, that got the name as a wholesale deal, doesn't really matter. If you have a house that needs repairs but you don't do repairs and you sell it to someone who intends to live in it, that is to the end user, that's a retail deal, as discussed now in investor lingo only, would you change the name of your deal if that buyer fixed it and sold it 90 days later, does that matter to you? No, you sell properties to who you can, when you can at the highest price you can, taking into consideration the type of property, it's current value in the condition it is in when you seel it, that's with all sales.

Back to your aunt, is she the end user? If she is, forget the wholesale jargon. You're buying a property to sell to an end user, you're flipping the house. If she has cash, you can find any house you want to, put her and yourself on the contract as buyers....(if she will pay you your fee later on when you deed your interest in the property back to her). Then just buy it! You can do the same with your friends and enemies as well!

As to fraud and selling, I don't think you title clerk understands what the fraud angle is, where you are cheating the bank out of saying it's worth X dollars and you sell it immediately for Y dollars is not fraud. There are other elements to this to make these transactions fraud. If you make improvements to a property and sell it for more, it's not the same property and there is not a leg for anyone to stand on to claim fraud. There is no law against finding someone willing to pay a higher price for anything in this world than what you paid for it! It's when you sell something you don't own, not in title to and you don't acquire the property in the manner you disclose, IMO.

When I bought my last REO, end of last year, the bank wanted to know if this was an investment property or if I intended on living in it. I said I intend on living in it, but anything I have is for sale! That's the answer they got and they had a 30 day hold on it I believe (that I did not pay any attention too, I was the quickest purchase transaction tyhe closer had ever had...I skim and sign as quickly as I see the signature line! (That's another subject, but I can always hook'em if they pull something, another story) That was fine with me. This was with Lenders Services and I bypassed the Realtors and talked directly with them on the deal.

If I had wanted to sell the thing, I would have entered into a contract the day I bought it, gave possession prior to closing and closed 31 days later! Not a thing they can do about it, period!

You can follow what Jon and Scott said above too to spin the house off to your Aunt of friends as well. I'm not saying the terms are incorrect, but these are concepts and stratigies that are named to convey how properties are turned over, getting caught up in them as if they have some weight or rule or law is not correct, you don't need to go there.
A double clsoing is simply when you and your buyer show up at closing when you buy it (or close to it) and the money used from your buyer is used for you to buy from your seller, this practice is now considered a fraudlent act since you're really not in title when you sell. Anyway, this is an arrangement that can also be used if you are a real cash buyer and you are selling immediately to someone else, the reason to do this is that the title company only does one title search and may give a break on other charges in closing as well. Doing a double closing has nothing to do with any investor strategy other than it is a closing process that can be used to accomplish simultaneous closings, which is not illegal. By the way, you can buy on a promissory note with 100% financing from a seller, owner occupied home from Mr. Homeowner and then use your buyers money to payoff that note five minues after you made it!
These are basic transaction functions. They are simply tools in the box to use when buying and selling real estate. How you sell and who you sell to should never be thought of as some limiting market, like an oil wholesaler sells ony to retail gas stations, not what is meant at all. For all you know, your Aunt might get a better offer the next day and decide to take a profit! When the IRS puts Real Estate Wholesale Investor or Retailer of Real Property in the IRS tax code as a profession, I'll change my mind (LOL).

I'm sorry your thread is the one I picked to ramble on with, I'm sure these points could have been made shrter as Jon and Scott did, fine explanations guys!

Originally posted by J O

And, I take it if the end buyer is paying cash, there won't be a need for a contract. ;)

You ALWAYS need a contract

A double clsoing is simply when you and your buyer show up at closing when you buy it (or close to it) and the money used from your buyer is used for you to buy from your seller, this practice is now considered a fraudlent act since you're really not in title when you sell.

What is the statute that says this is fraudulent?

Originally posted by wheelhouse

A double clsoing is simply when you and your buyer show up at closing when you buy it (or close to it) and the money used from your buyer is used for you to buy from your seller, this practice is now considered a fraudlent act since you're really not in title when you sell.

What is the statute that says this is fraudulent?

ALTA has the condcern. Fraud is defined and includes deceit to gain a financially. So, if you look at this closing, second by second, you sign to buy, then you sign to sell, but at the moment you signed documents to sell, you did not own the property sold since it was not paid for. Yoiu can't pay for it because you have not sold it yet to get the money to buy it. Selling something you don't own is fraud. While it was done for decades, only now do they split these hairs to crack down on the investor stratigies. Bill

PS. By the way, I have posted this before, if you have a seller that will accept cash for his property immediately after closing (no quicker any other way) the seller can sell with a note and you sign the note, then sell the property, get the funds from C and then payoff the note. Double or simultaneous, which ever, the title company will accept that transaction over the objections of funding the first transaction first. Bill