Explain Double Closing In Detail Once And For All, Please.
I have read so many different threads on double closings. I am close to doing my first short sale in NJ. I am a loan officer and had a situation where an investor had a house from seller that was in forclosure but was trying to sell and I belive do a double closing to his friend the buyer. We were trying to do the loan for the friend/buyer but no bank wanted to do the loan because of seasoning. The bank wanted to see the investor on title for aleast 6 months because they dont do loans on flips.
Can some one please explain in detail(very detailed).....how a double closing works and what should be done to prevent any problems.
When doing a double closing, is there differences when doing a closing for someone paying the bank cash than someone paying the bank with a loan from a lender. Does double closing mean no out of pocket cash from me, who helps the seller and finds a buyer?
I m just worried because this is a tough business especially when you go door to door knocking trying to help these people and I'd hate to really get a deal and screw things up in the last minute.
Lastly, can any veterans please refer me to a title company in NJ that they use who does double closings that I can work with. Thank U All.
It's all about getting paid. Personally, I think that trying to effectuate a double close/simultaneous close in a preforeclosure short sale transaction creates more problems for an already problematic set of circumstances.....though experiences do vary.
The key to success is to have as much control as possible. You must have a prequalified title company and/or closing agent who will agree to participate in an unconventional transaction at a time when this practice is becoming more closely scrutinized.
If you must invite risk, you must have your 'buyer' pay cash... or have a relationship with a lender/title company that fully appreciates the 'double close/simultaneous close' transaction.
The more you leave to chance the more likely your deal will die on the vine...
As far as shorts are concerned, it's BEST to prequalify and complete your own purchase, effectuate minor repairs, and sell retail....
Trying to combine acquisition techniques create a set of problems that jeopardize an otherwise perfectly do-able deal.
Short Sale Pro,
Thank you very much for contributing, I understand what your saying.
Double closings or pass thru's etc.
As mentioned in the response get control. But I further suggest calling local or nationwide banks and speak with a single family home loan officer and ask if they finance "unseasoned loans", some will, I know Wells Fargo does. Also call title companies and ask if they are familiar with double closings or open title style closings, you will find some still fo. A title company will close your buyer first to have the funds from a loan company, then close you and the seller and give you the remaining dollars, all within 10 minutes so your name actually is a pass thru on title (I recommend setting up a LLC for this) Also make sure you have all your costs in line, you will have some duplicate closings costs from you and the seller then you and the buyer, I always plug in $2500 just ot be safe and if it is lower all the more better from me! Once you have your team together you will find it much easier. So in a nut shell "yes you can buy/sell property with no money out of your pocket."
gold51
Thanks so much for your input, it gives me a better understanding of it all and what I m up against.
ssp, i am working on a deal right now that i am planning on double closing w/o a cash buyer. i am going to put the prop into a trust and the sellers are going to be benificiaries until the closing and at clsoing my attorney will record the ben rights and i will recieve the difference. the bank should lend on this because they are going to think that title has not been tranfered because the sellers will show up as benificiaries. this is what my attorney sugested i do. i dont see the problem with this. why are you saying you cant do it?
thanks, Ryan
ssp, thank you for the reply. what do you sugest i do then? The loss mit rep. knows that i am buying the prop and knows that i am the one trying to get the SS approved even though i am not the owner. What he does not know is that i am going to flip it. what would you suggest in this situation? what would be the most ethical? should i try to get a hard money lender and then wait a month or two and try to close. wouldnt i then have seasoning issues? what will happen if they find out? will just the short sale be killed? if that is the case it is not a big deal because at this point i can still make a decent profit by selling at the same price and paying off what is owed. the short sale is just extra. thank you for you time, Ryan
The short answer is to hope that the mortgagee is overworked, and really doesn't much care... and won't raise any questions...
But have your response ready, and well rehearsed if questions are posed to you. Afterall, it's your deal. You set it up. Who better to explain it than you. Hopefully, your explaination will conform to their ss criteria.
It's best to know and accomodate their criteria early on
in the process.
ssp, so you say i should just do what i plan on doing? you confuse me by saying that it is risky to do a double close this way and just tell me to be careful and know what to say. at the same time you didnt give me any suggestions on what you would do. can you please break down the proper way to do a short sale? im not sure how you guys are doing this. I am assuming that you are just paying cash for them at this point and then putting it on the market and hoping there is no seasoning issue. correct? thanks, Ryan
The short answer is that I do not advocate the practice of buying and flipping preforeclosure short sale acquisitions... Hold and repair builds equity where little or no equity existed.
Foreclosing mortgagees will/do want pretty close to top dollar to maximize their net recovery. That's not going to change. Consistently, the best ss opportunity will be an undermarketable home in need of repairs whose value would increase dramatically with repairs, cosmetic or structural. Having the ability to purchase such a property at less than it's as-is value with an eye to value added repairs is a great thing. And, the process of acquisition, rehab, and resell can be repeated.
Though cash is king... either conventional finance or HML for PFSS purchases is fine. Seasoning, to my thinking, is a non issue if you take title, make repairs, and then market your property at the new, enhanced market value. The profit will be on the resale.
The beauty of PFSS is that you can acquire a property at discount... then increase it's value and marketability
Aside from the risk of having the deal implode, the margin of profit on a quick flip or assignment is too small... and the number of bonafide short sale candidates is finite.
Historically, real estate is not a liquid investment. In my opinion, short cuts, or a cookie cutter approach will not produce long term, career building results.
Your original problem was of seasoning. My loan officer has me deed the property into a trust named "Seller Name Trust." Then the funding bank will assume the trust will assume there is just direct chain of title and assume that previous owner is selling the house even though the truth is that the trust is owned by the investor.
Simply have your mortgage broker find a lender who doesn't care about seasoning.
Falk,
What software are you using to come up the comps? What would you recommend? Should I call appraisers in my area to come up with the software I should us in this area?
Thanks,
Mike