How Can A Short Sale Be Assigned To Another Buyer?
Thanks for all the wisdom you share on these forums!
On 07-10-2003 ShortSalePro replied to a message inquiring about assigning a successful short sale to another buyer:
"The mortgagee could balk, and rescind their approval if the 'assignment fee' is listed on the HUD 1.
It's best to develop your business plan early on, and structure the deal(s) accordingly. If you are the named Purchaser, you had better be prepared to close. It's never easy switching horses or riders in mid stream.
Is it possible to assign your interest in an approved contract? Yes. But not without first laying the proper foundation. "
My question is, If my plan is to wholesale the property to another investor once the short sale is successful, how would I structure the deal going into it? What would the proper foundation be? I'm assuming that I would not know exactly who my buyer is until after my short sale offer has been accepted.
Thanks again for your support!
If your plan is to flip once the short sale is successful... then you realy don't have a problem. But, if you want to assign the deal once it's been approved (it isn't successful until you've closed) then you will have problems. The ss approval will probably expire in 30 days. I've addressed this issue before.
Are you saying that a short sale must be completed and new buyer must be found by us in 30 days?
Gratefully,
Marlene
Thanks ShortSalePro! That's what I was wondering. A flip seems more reasonable than an assignment of contract in this scenario. I appreciate your help.
Marlene:
No, what I believe Shortsalepro is saying is that the offer for a discounted payoff (short sale) will generally expire within 30 days of acceptance. You will have to close within that time. What you do with the property after you purchase it is entirely up to you.
You're right, Jorge. Once an approval is granted, they'll want to close ASAP. Their approval numbers are predicated upon closing in 30 days, at the terms and conditions clearly articulated in their written approval. Deviate from those conditions, and you run the risk of having the approval revoked, and/or the closing rescinded.
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Imagine, if you will, someone living in the tropics seeking, as a treasure, a block of ice. (In this case the block of ice is a short sale approval. ) They doggedly pursue the block of ice, but make no provisions of what to do with the block of ice once they get it. It's precious, and unless care is taken, it won't last too long before it melts. Before they went looking for the block of ice, they should have had a refrigerator, a cooler, or someone ready, willing, and able to buy their block of ice.
So, it's good to know what you will do with it once you get it.
Do a double escrow close. Most title companies can do this. Hopefully your buyer/investor pays with cash. If he is using conventional financing, you may hit dirt when the S/S deadline strikes 12. And/or the buyers lender will want to make sure that whoever is the "owner/seller" appears on title on the prelim schedule B. If you try to assign the contract, you stand a chance of blowing the whole thing. The lender is not negotiating with you so that you can make money by selling to someone else. If the lender feels this is a very popular property, do you think they are going to sell it for less than they are owed? Probably not. Go ahead and do a simultaneous close and the lender will think you are buying it. Whatever you do with it afterwards is your business anyway
ah yes, the elusive double closing that is so often written about in the books. keep in mind that with a so called "double closing" you run the risk that your purchaser would default (fail to fund the deal). if your purchaser defaults and you aren't able to close yourself you too would be in breach of the contract between yourself and the seller even if you assigned the contract. (an assignment will not absolve you from your contract obligations unless you obtained a release from the parties).
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My question is, If my plan is to wholesale the property to another investor once the short sale is successful, how would I structure the deal going into it? What would the proper foundation be? I'm assuming that I would not know exactly who my buyer is until after my short sale offer has been accepted.
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This is an ideal situation for a double closing. Any decent lawyer should be able to structure this for you.
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On 2003-08-26 10:33, alubeck wrote:
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My question is, If my plan is to wholesale the property to another investor once the short sale is successful, how would I structure the deal going into it? What would the proper foundation be? I'm assuming that I would not know exactly who my buyer is until after my short sale offer has been accepted.
This is an ideal situation for a double closing. Any decent lawyer should be able to structure this for you.
Decent Lawyer? I'd look for a knowledgable one instead <IMG SRC="images/forum/smilies/icon_wink.gif">
Legal Note: This statement is only a joke. It is not intended to provoke said professionals to legal action. Please refer to status 9 Quid pro quo document 10 concerning "Humor". [ Edited by SavvyYoungster on Date 08/26/2003 ]