All Forum Posts by: Burt L.

Thanks, Michael Quarles - I had confused the different list providers with the different list types. I think the different list types are also mentioned at the yellowlettermail site.

I spoke with another title company and another real estate attorney on the double closings and required disclosures. The second title company said that in some situations separate Settlement Statements of the respective buyer and seller items are used instead of a HUD-1. I'm not sure when the separate statements can be used.

The attorney thought that RESPA would apply to any residential property transaction, requiring a HUD-1 instead of separate settlement statements. A realtor who wholesales said to list the fee as a Construction Fee on the sellers side of the HUD. Apparently alot of it has to do with how the fee is classified on the closing documents.

Yet another attorney said that if the wholesale fee is paid in full before closing, that it doesn't appear on any statement and he encouraged me to get the entire fee up front. That is hard to do on a larger fee, and seemed easy for him to say though. He also owns the other title company I've spoken with.

I appreciate what K. Marie Poe also added - that if the buyers don't learn of the fee until closing, and they are still struggling with what the final ARV will be, there could be large problems, just as my contract is expiring.

I'm still trying to fill in the blanks on what isn't taught about closings - it would be nice to just pay for transactional funding as Steve Babiak mentioned some time ago, but thats not an option in my local market. I think I'm still "knocking at the right doors" to get to a solution though.

I called them about my area and was told they only send lists of each county to three investors, and that each of my counties were already spoken for. If someone didn't renew next month, I could get in line.

I would also like to know the ranking by Michael Quarles of the different list cos - Melissa Date, etc. and what the quirks of the Inherited List is. I understand you get some of the most upset callers of all, as well.

J Scott - What I"m stumbling through saying is that even if I use transactional funding and they are two different transactions, I still have to disclose the price I am reselling at to the seller. The title co has said they have too much liability with the seller, otherwise. This sounds confusing to me also, but that is what I am being told by two title companies.

Its up to me to find the "work around" in a new title company environment.

The replies are much appreciated. I spoke with another title company and the rules seem to be pretty consistent - Assignments aren't a problem, but the seller has to receive notice of the assignment, but not the amount of the resell fee. But if they ask during the closing, the title company has to inform them of the fee.

If the closing involves a traditional loan, the fee will be on the HUD-1 for both parties to see, but if a cash buyer then it is shown only on the buyers Settlement Statement. The same rule applies here if the seller asks about the fee at the closing. In this case, the seller has asked about a remote closing to avoid the trip to the title company, but I don't know what order the closings are done in, and if a remote closing affects anything.

The Notice of Disclosure Bill Gulley mentions seems like an excellent idea. The title company also said I could put in future contracts that a seller is required to sign the necessary documents to complete the transaction.

Both J Scott and K. Marie Poe inquire about the required timeframe to remove the need for the disclosures, and what prevents me from closing with transactional funding to protect the Buy Side of the deal. I don't know what time frame is required as its somewhat hypothetical, but know that the same-day closing isn't long enough. I wish I could help more on this.

I would be thrilled to use transactional funding and avoid the issue, and I've been told I can do that, but still have to disclose the re-sell fee to the seller, not just that the contract is being assigned. I'm probably better off taking my chances with the buyer being unhappy about the price to them. Its still alot of work to get to a conclusion that is much more uncertain than using tranactional funding and keeping it two entirely separate transactons as apparently used to be the case.

The property has an ARV of 300-310k, purchased at 150K, needing a rehab of 60K. I would like to believe there is room for a fee of 25K. What a learning curve this all is.

Yes, I would like to use transactional funding and do a "wet" closing. I was surprised that the title company would only offer this as a "dry" closing as I've heard them offer their own transactional funding before in front of REIA groups in the past. Maybe it is part of the liability piece of it they are now concerned with; it seems something else is at work in this now.

Here is a link to the thread where Ryan writes of the importance of double closing - even in smaller deals. Apparently this isn't an option for me, from this title company anyway. I don't know of another one that presents themselves as investor-friendly locally, though, and I'm a little "stuck" at this point.

http://www.biggerpockets.com/forums/93/topics/11649-double-closing-vs-assignment

Opps, didn't do a link-aplogies for the copy and paste required.

Steve Babiak - If I use transactional funding for a double closing, I still have the same challenges with either the seller or the buyer. But hard money is really out of the question, and has the risk of the buyer not closing and holding a property I couldn't carry, at high rates anyway. Maybe I"m missing something on your reference to transactional funding vs. hard money.

Investor-friendly title cos are getting hard to locate in the area.

I spoke with the owner of one of the few local title companies that do investor deals, and he informed me of new requirements for doing assignments or double closings.

To do an assignment I one must return to the seller and get a Sellers Acknowledgement that the contract will be assigned even though the assignability is already part of contract. The seller will not be advised of the price to be sold at, but just that the contract will be sold to another buyer.

To do a double closing, one must again get a Sellers Acknowledgement, but it must also include the amount the contract will be sold at. In the double closing example, the buyer is not advised of the amount of the original contract and the seller is. One can double close "around" the buyers knowledge at the time of the sale, but not both parties.

The owner of the title company advised me to get a Sellers Acknowledgement and assign the contract. He believed the buyer will not care as long as its a strong deal. However, I've read where Ryan Webber -for one- double closes on nearly all his deals to avoid ticking off his buyers, even on smaller fees. As this deal has room for a strong fee, I don't agree with the title co that the buyer won't care. Once they see the number, the emotions start pumping over what should be "their money" for doing the rehab, and I see nothing but trouble. I would like to be able to close the deal with hard money as was also suggested, but thats not likely for someone starting out.

The owner said that many title companies are using this approach to avoid liability. This is the only title company I know of in the greater Denver, CO area that does investor deals. Another, Axis Title, was sold by its owner to pursue investing herself, fulltime.

Any suggestions on how I can better do this deal? I wanted to mention what may be the "new normal" about assigments and double closings.

@aaron m. Thank you for the disclosure approach; the ways to make disclosure could probably have been a thread on its own but seems related to the OP's question.

I enjoyed your presentation at the BP conference and the methods you've developed from experience.

In drafting your W/S contracts, are there items you draft differently for wholesale deals? The inspection clause would seem to need to run longer, as one often doesn't know who will be doing the inspection.

I understand that in some cases the end-buyer will want it rewritten if there are items unfriendly to them and they aren't present when the initial agreement is reached. I"m not so sure I"d want someone else drafting the contract for my own purchase if they knew they would be "stepping aside" .

Are there recurring, sticky items to avoid or include? If one is also an agent, the Adddition Provisions section would also seem to demand disclosures, if that is where they go.