REO, double closing process?

8 Replies

When wholesaling a non-assignable reo contract and you have to do a double closing do you have to "buy" the property to close on this from the bank? Then you "sell" the same property to your end buyer, while at the title company? My question/concern is, how does one "buy" the property in the first place in order to close, for the first part of the deal? Cant I just use the funds that would be coming my way from the end buyer in the sell portion of this deal? Or do I actually have to have cash/financing on hand in order to buy on this part of the deal during closing?

@Pedro Oliva

Some closing attorneys will allow you to just use your buyers funds so you can in theory " close " on the home for a brief moment.  More closing attorneys will require you to get transactional funding in order to do this.  

What I would suggest is see if your closing attorney will make you a " loan " for a brief moment and charge a small nominal fee for doing so, in order to keep everything on the up and up.  

Good luck

You should find a investor-friendly escrow company that would agree to do "two closings" in one transaction. Technically it will be only one closing. For you it will be an assignment where on HUD-1 you will be paid a pay-off as a lien holder. Double closing always require two separate transaction, even if both are done on the same date. Some companies provide transactional funding for this one closing day at a 5-7% fee. I don't know if an attorney will provide as transactional funder unless he is allowed to do that in your jurisdiction.

@Pedro Oliva  

More REO's these days are being approved under contracts that preclude assignment of the contract. If assignment is prohibited major title companies will not allow the use of the end-buyers funds to be used for your purchase because assignment violates terms of the contract. In these scenarios you typically will need to fund your purchase or use a private funder or transactional funding. Transactional funding costs have decreased over the past few years and are less than 2%.

@Alex Bezu I realize you are an attorney, but you are dead wrong on that. A double closing, 2 different HUDs are required, as the contract can Not be assigned. The buyer on the HUD from the bank must be the buyer named in the original purchase contract. REO purchases specifically prohibit assignments.

Originally posted by @Alex Bezu :

You should find a investor-friendly escrow company that would agree to do "two closings" in one transaction. Technically it will be only one closing. For you it will be an assignment where on HUD-1 you will be paid a pay-off as a lien holder. Double closing always require two separate transaction, even if both are done on the same date. Some companies provide transactional funding for this one closing day at a 5-7% fee. I don't know if an attorney will provide as transactional funder unless he is allowed to do that in your jurisdiction.

 Transactional funding has been well below 2% in costs for a few years now.  It is possible to get it as low as 1%.

Well you need to do a little googling on it.  It is a way of funding a very fast flip when a property needs no rehab.  It is a way to buy and sell a property with none of your own money.

They are hard to put together though since you need to arrange a buy and sell at the same time.  You are sometimes limited by the purchase contract and also often limited by the end buyer's financing.

THE QUESTION I HAVE IS WHEN YOU ARE DOING A DOUBLE CLOSING AND YOU DONT WANT THE BUYER AND AGENT TO KNOW THAT YOU ARE DOING A DOUBLE CLOSING HOW DO YOU SHOW THE PROPERTY. WHAT DO YOU SAY TO THE AGENT DO YOU PAY THEM 

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