Confused About Closing A Wholesale Deal
I am a little confused about the process of closing when wholesaling a property. I would appreciate if someone can feel in the blanks.
1. after the seller and I sign a purchase contract I would begin title work by getting a title search and setting up a date for closing
2. After I assign the contract to another buyer I would send that contract to the title company to let them know that someone else will be closing on the deal.
this is where I get confused. Is this considered a double closing being that I never take possession of the property?
Are we all in one room where the buyer pays the seller for the property and me my assignment fee?
I here a lot on the forum that you should keep your buyer and seller apart but how can you do that if your buyer is the one with the cash?
I know its a lot of questions but I really need help. Thanks to anyone who can help.
I'm not an expert here, just learning the rope too. But from what I understand, a double closing means you buy the house and go through a transfer of deed into your name. You then resell the house and the deed is transfered to your buyer. Two closings, two sets of closing costs.
With an assignment on the other hand, there is only one close, and you assign the sale contract to your buyer.
You can keep your buyer/seller apart by scheduling them to meet at the closing company/attorney at different times of the day. That is part of their job. In title escrow, the money always goes through a third party who make sure all notes are paid off that need to be, and that the seller gets their monies.
HTH,
Robert
[addsig]
NYDeveloper,
If you have found the property, put it under contract, and then found an investor and settled on your fee to assign the contract to him/her you need to do nothing more than collect your assignment fee upon closing.
On the other hand, if you have found a property and negotiated a deal considerably below the fair market value and when you wholesale it you stand to make a very healthy profit, you may elect to do it by way of a double closing. Your call.
Also your choice but I personally would never have my seller and buyer in the same room at the same time at closing. Good Luck.
Dave
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"Opportunity is missed by most people because it is dressed in overalls and looks like work." (Thomas A. Edison)[ Edited by dealfinder on Date 06/11/2004 ]
I also am very interested in how this would work?
I agree that the Buyer/Investor and Seller should be kept separate.
BUT....
I may be missing something... but wouldnt the Buyer/Investor and Seller meet when the Buyer/Investor does his own inspections/Due Dilligence on the property?
Any ideas?
Not to be a Nag...
but once again..
What stops the Investor/Buyer and the Seller from making a deal when the Investor/Buyer is there to check out the property for himself?
I find it hard to believe that these deals are to be made without the Investor ever seeing the property for himself!
I'm not a pro at this, but once you have it under contract, YOU have it under contract. The seller can't just cancel and sign with someone else.
It would go like this:
1. Find a house that is priced low enough to wholsale (meaning there's enough room after your profits are factored in for YOUR buyer to make some money, like 10k+).
2. Get the house under contract, schedule closing. If your seller is going to be in the home (probably will be), then they need to know you will be flipping it so you can schedule other potential buyers to check it out.
3. You find a buyer before the closing date. You assign your contract to the new buyer.
4. Seller still sells on the closing date and collects their cash. Your buyer also signs closing papers and provides money in this day, but not necessarily at the same time as the buyer.
5. Also on this day of closing, you collect your fee, which is the difference between your buyer's cost and the cost you agreed to pay for the house.
Voila.
If the documents can be signed in any order, how are the funds dispersed? Could someone please explain this to me?
Murphy
The buyers and sellers can sign in any order. The title company will post the funds in the order they need to be in. That is their job and the only thing you need to worry about is making sure the buyers have their loan approved, and closing instructions from their lender at the title company at the right time, meaning the day before closing or sooner.
So as long as everybody sign on the same day, everything will work out.
Murphy
What if the investor that you assign the contract to does not show at the closing?
Any legal way to prevent this from happening?
Micah,
The contingency that you mentioned, do i have to insert it into the contract?
Murphy
Something that no one else has mentioned yet would prevent your seller from going around you and selling to your buyer. Have your seller sign a Notice of Purchase and Sale Agreement. You and seller both sign and have it notarized. So, then, you can record it and it secures your interest. If someone else tried to close around this recording, it would certainly cloud the title b/c you interest is prior to theirs.
The Seller doesn't need to sign the notice of Purchase and Sale in order to get it recorded. Might be helpful though.
JohnCl