Question About Double Closing...
I am looking for a lawyer in San Antonio that does double closing. I talked to a lawyer who said he would be willing to do it if sufficient disclosure occurs. When I asked him what he means, he said the other party must know I do not possess title.
Does not that defeat the purpose of a double closing?
Not at all. The Buyer should also sign a Disclosure when you are first given a Contract on the property that states, "Seller is not the Owner of record and does not represent the Owner." It should also be contingent upon passing clear Title from Owner to Buyer.
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No, No, No..... I am saying that I have a property under contract. I am wanting to do a double closing. I have a buyer. I want to sell the property to the buyer. Put the buyer's funds in escrow and purchase the property with those funds. Afterwards, I will pass title to the buyer. If I disclose that I have not purchased the property, the buyer may say, "hell no, I am not giving you my funds until you possess the title."
Gerald,
If you have a buyer and he thinks its a good deal...He's isn't going to give a hoot who is on the title!
So what...disclose it to him you wholesale properties and that you'll have more where this came from.
He won't back out, he might even become your best customer.
JB
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But, what keeps my buyer from going to the seller and asking the real price. And, then telling the seller to sell the property to him for more money.
Gerald,
Why would he do that? He has someone who is finding deals for him. This is time and effort he does not have to waste looking for deals. If you are selling to an investor, which is who you should be selling to, you should be able to do a simple assignment, without all the hassle of a double close. I always disclose my profit to my buyer when I am wholesaling, and I want my wholesalers making money when I am buying from them.
Thanks
As long as your profit is not very large, an assignment is ideal. A savvy investor might balk at paying several thousand dollars just for the right to buy the property (things can go wrong). The way a double closing works is that the Seller signs the Deed over to you, and it goes in escrow. You sign a Deed to your Buyer, and it goes in escrow. If the Buyer brings eniugh money to closing to fund the transaction, both Deeds get recorded. So, you will use the funds from the second transaction to fulfill the first. As long as the Buyer knows you are not the Owner, it is fine. I always disclose that to the Buyer with an Addendum to my Purchase And Sale Agreement. If you sell something, the purchaser has every right to believe that you own it, since you are selling it--unless you state otherwise. If you say you do own it, that is fraud. If you say nothing at all, that could be interpreted as fraud by omission.
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Double close with full disclosure means that your buyer can not be financing with a traditional lender. Most lenders will not allow their funds to be used to close the first transaction and will not allow the buyer to enter into a contract with the non-owner.
But isn't it possible to for the buyer to run into seasoning issues id a double or simultaneous closing is performed? If so, that means that the whole deal will come to a screeching halt. How many times have you seasoned investors ran into this??...And am I right in assuming that an assignment is the only way around this dilemna?
I am looking to flip some REO's and I was needing some sound advice as to how to do so.
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There are still plenty of lenders who have no seasoning requirements if the comps support the sale price. I have not encountered problems with funding transactions in which the Seller is not yet the Owner; it must be a geographical occurance.
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It has been my experience to elimainate the double close and get POA over the current buyer and do an assignment. This would eliminate extra closing costs all together and you wouls not run into any seasoning issues. Or put the property into a trust which also elimates seasoning issues.
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Thank you
So tinman are you saying you get a power of attorney over your buyer, then you fill out the assignment of contract in his/her place? So the only thing your new buyer has to do is come to closing w/ funds? Seems like it could be somewhat of a hassle to get the buyer to agree to a POA....am I right?
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It's a pretty simple process. If they seller is selling you the property and you are assigning it. Why would they care? When you think about it, it actually is better for them. Once they sign the paperwork they are done to move onto something else. It is very convenient for them if they are moving out of toen.
Lori
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bnorton....you said that you always tell the buyer your assignment fee. What' s the most you have assigned a property for? The reason I' m asking is because i want to know if any investor ever had a problem with giving you the amount you were trying to get?
Murphy
I generally get an assignment fee between 3K and 10K. One time I did 17K, but that is not the norm. I have some land deals in the works, and for them, I will ask between 50K and 100K. The fact is that as long as the deal is good for your buyer, they don't mind. Now they may have an objection if you are making more than they are, but that should never be the case. The idea is to build up a buyer base who consistently keep coming back for more. Making one big hit, and no repeat business is not the way to build a successful business.
Tinman, do you record the POA at the clerk of the court? The one time I tried to use a POA at a closing, I was told by Chase that the POA has to be sent to underwriting and recorded. Also, do traditional lenders balk at an assignment contract?
I am in a situation in North Carolina where I am having problems finding a lender that would finance a buyer who would purchase a property that I am purchasing but have not closed on it yet. It seems like the Predatory Lending Laws in this state prohibit "flipping" but I believe these laws are to protect buyers against outrageous fees from lenders. Do you know of any lender in this state that would lend money under these circumstances?
Quote:
On 2004-11-02 13:34, LeaseOptionKing wrote:
There are still plenty of lenders who have no seasoning requirements if the comps support the sale price. I have not encountered problems with funding transactions in which the Seller is not yet the Owner; it must be a geographical occurance.