This article is part 2 in a 5 part series where I will explain the various methods available for closing REO wholesale deals and getting around the bank’s “No Assignment” clause.
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Using the Quitclaim Deed Method to Wholesale Real Estate
Last week, I explained the mechanics of using a simultaneous closing, and this week I will discuss using the Quitclaim Deed Method to get your REO wholesale deals to the closing table.
When using the Quitclaim Deed Method, you will be adding your end buyer onto the purchase contract that you have with the bank, and then giving them a quit claim deed after closing in exchange for your wholesale fee.
Once you have a property under contract with the bank, and once you have an end buyer lined up to purchase the property, you will need to draw up an addendum (or have the agent do it for you), which states that you will be adding an additional buyer onto the purchase contract. This addendum will need to be signed by both you and the bank.
When presenting the agent with the addendum to add an additional buyer, I simply explain that I have to decided to bring on a money partner in the deal, and that I need for them to be on title as well. I have only closed a handful of deals in this manner, but I never had a problem getting the bank to sign the addendum. You do run the risk, though, of having the bank refuse, so you might want to have a back-up plan in mind, just in case
On the day of closing, the end buyer will show up with two checks- one for the purchase of the property, and one for the wholesale fee. Immediately after closing, a quit claim deed will be executed which will remove me from title, and in exchange, my buyer will pay me the agreed upon wholesale fee.
One of the advantages of using this strategy as opposed to a simultaneous closing is, since there is only one transaction taking place, there will only be one set of closing costs to pay.
If you decide to close your REO wholesale deals in this manner, I recommend having a competent real estate attorney draw up the proper documents for you to ensure that both you and your end buyer are protected in the transaction.
Next week I’ll be back with yet another way to get your REO wholesale deals closed, so stay tuned…
Photo Credit: Bohman