short sale closing
I am very new to the real estate business. I have a question about short sales. If I want to do a short sale, I know I should have the back end covered by having investors I could assign the property to. What I am confused about is, at closing, how would I go about assigning the contract to the investor. This is considering the fact that i wouldant have the cash upfront to close the deal with the lender.
I hope that made sense 
Also what kind of forms or contracts do I need for short sale transactions? where can i find them?
Thank You very much for your help.
Gary 
Gary
I'm thinking the same thing.
If I can't find an investor that would like to do some short sales then I am thinking about forming a small syndicate and let them be my funder. Of course I would want to be in charge of the group investors
Hope this will give you an idea.
Are there any investors out there who would back me on a short sale on high end homes I already have a doctor who would buy and re-fi the property to cash us out.
Read Dwan's two articles on FAQ's about Real Estate Short Sales and Real Estate Short Sale Secrets.
That should give you a good idea of how a short sale works and an example.
Contracts? There are some contracts if you click on the "Freebies" link at the top of the page. Also you may want to check out Free Forms from Legal Wiz.
Please note, most banks will not allow you to assign the contract to another investor/buyer. The reason the bank will short sale the property to you is to secure their money you are going to pay them instead of hoping for anything at the foreclosure auction. If you attempt to assign the contract, then they may not accept the offer because it would be contingent upon you finding a new buyer.
I'm not saying it's not impossible, but it's harder to do it that way. In order to flip the property after you short sale, then you will most likely have to purchase it before it goes to the foreclosure auction and resell it to the new buyer.
Example:
FMV (Fair Market Value) = $100K
1st lein = $60K
2nd lein = $40K
Repair costs = $10K
You short sale the 2nd lein and get it discounted to $10K. You purchase the property at $70K. You then turn around and sell it to an investor for $75K, netting $5K and leaving the investor a net profit of $15K (after repairs). This is a combination of a short sale and wholesaling. You may want to review the two techniques further by reading the posts on this website.
Tanya
Quote:
Hi Tanya, I'm very motatived by your commit and would like to learn more about short sales. I live in Orlando and recently attended a CFRI meeting. Please give me a call at (407) 428-5860 Thelma Rowe
On 2003-03-13 13:03, tanya1215 wrote:
Read Dwan's two articles on FAQ's about Real Estate Short Sales and Real Estate Short Sale Secrets.
That should give you a good idea of how a short sale works and an example.
Contracts? There are some contracts if you click on the "Freebies" link at the top of the page. Also you may want to check out Free Forms from Legal Wiz.
Please note, most banks will not allow you to assign the contract to another investor/buyer. The reason the bank will short sale the property to you is to secure their money you are going to pay them instead of hoping for anything at the foreclosure auction. If you attempt to assign the contract, then they may not accept the offer because it would be contingent upon you finding a new buyer.
I'm not saying it's not impossible, but it's harder to do it that way. In order to flip the property after you short sale, then you will most likely have to purchase it before it goes to the foreclosure auction and resell it to the new buyer.
Example:
FMV (Fair Market Value) = $100K
1st lein = $60K
2nd lein = $40K
Repair costs = $10K
You short sale the 2nd lein and get it discounted to $10K. You purchase the property at $70K. You then turn around and sell it to an investor for $75K, netting $5K and leaving the investor a net profit of $15K (after repairs). This is a combination of a short sale and wholesaling. You may want to review the two techniques further by reading the posts on this website.
Tanya
Tanya, your reasoning for a lender's unwillingness to permit an assignment of their short sale approval is correct, but there is another reason. The empowered individual or body of individuals responsible to accepting a short sale proposal make certain that they CoverTheirAsses. They don't want an audit to reveal that they had agreed to accept less than possible.
When presented a short sale proposal for consideration, the mortgagee is required to maximize their net recovery. Acceptable Recovery Ratios (ARR) vary from mortgagee to mortgagee, but as a rule, if they learn that someone else is to profit... at their expense... they'll rescind their approval... and in some cases seek to have a bonafide sale reversed.
A red flag goes up if the named purchaser in the mortgagee's approval letter isn't on the final HUD1.
That's why I suggest (and briefly discuss in A Short Sale Primer) that an LLC be created and used (as the named purchaser) if the named purchaser doesn't intend to complete the purchase.
By creating, then adding members to an LLC, and assigning certain interests to members... The Contract Purchaser remains the same (no red flags). An assignment fee can be disguised as a member's cost for joining into an LLC. LLC's are inexpensive to create and register, and an excellent entity for acquisition of REO, preforeclosed, and preforeclosed short sale property.