Short Approved, Have Cash Buyer, Can I Double Close?
hi, i wanted to know if i can double close on this. i got the short approved for 80k and i have a buyer for 130. can i just do a double closing with him? is there something that the lender reciveing the 80k is going to want? like proof of funds or where im getting the money from? or will they only see the hud 1 that will be filled out showing the 80k? i have to let my cash buyer know tonight so any help would be great. thanks, Ryan
The requirements/closing instructions to close the approved short sale (congratulations) will be itemized in the formal letter of short sale approval.
They will most likely require an advance copy of the final HUD1 prepared by the closing agent... and they will require that any proceeds from sale over and above the $80K be payable to them...
So, best be on the same page with your closing agent.
shortsalepro, is that a no i cant do that? or is that a yes i can but its illegal? i dont get why i cant close with a hud 1 that says im paying 80k and then like 10 min. later close with my buyer and have his money transferred to me. why would the bank see the hud 1 from my buyer?thanks, Ryan
A double close is perfectly acceptable...
hmmmm. i have been reading a lot about this and there is a lot of controversy about it. so what i explained will work just fine? on the stament that the mortgage co sent me it says that the buyer or seller cannot profit at closing. but this will basically be two closings in 1 day so i wont actually be making profit at clsoing i will be making money at the second closing. right? im just nervous that this isnt legal or i wont be able to...
It is 100% legal and is actually what I would recommend doing. Record an affidavit and memorandum of agreement at the recorders office so that the title work will show you as being able to resell the property. Now just double close and collect your cash.
Be aware that there is going to be some additional closing costs invoved so you're not going to net $50k. You'll still make plenty of money!
NICE JOB
thanks myfrogger, one more question. how long before clsoing do i have to send them a hud1 for the bank to review it. they said they want a hud1 reviewed upon closing. it just seems like a lot of people say that is a "text book" way of doing it but it doesnt work. this will be my first and i dont want to screw up. thanks, Ryan
i am ryans partner on this. now when doing a double close, on the hud1 will it show how much we are selling it for. and will the bank either kill the deal and re-assess there appraisel, or will the profit go to the bank. i guess i dont get whole deal with the hud. myfrogger have you done this without any problems?[ Edited by DonBatzini on Date 10/24/2004 ]
you are confusing the two closings.. they should be separate....by the same closing agent... and the closing agent had better be well versed in double closes... as I stated earlier.. you had best be on the same page with the closing agent.
Transaction #1. You are buying the property. The Seller's atty or closing agent usually has to send the foreclosing lienholder a final HUD1 at least a couple of days before closing.
Trans #2. You are selling, and this transaction will generate it's own HUD1.
Don't screw up and send the foreclosing lienholder the wrong HUD1.
thanks SSP, this is exactly what i though. i guess everybody else confused me. i was wondering how the bank would prossibly find out how much i was making seeing it would be a totally separate transaction. okay this sounds good and i will continue to proceed., Ryan
i have one more question. will there be any problem with my buyers lawer finding out about this? he will prob. advise him not to do this beause of "risk." at this point would i have my lawyer call him and explain the situation?
Your buyer doesn't need to be concerned with what you are paying, how you are negotiating the buy, or anything of the like.
I think you may be confusing assignment with a double-closing.
With assignment, you sell your contract to buy the property for a small fee.
With a double closing, you actually buy the property--take title to it and everything--and then resell the property. Because this is all done with the same closing agent on the same day, you won't need funds to close. Your buyers funds will be used to pay you off, which in turn will be used to pay off your seller and any liens.
All you do is collect the check for the difference.
thanks, yeah we were confusing the double close with the assignment. we will keep you updated on what we do, and what happens. thanks to both MYFROGGER AND SSP.
Good deal. Go get um!!
how long before closing will he have to put his money into escrow? and he should put the full amount in escrow right?
These are questions you should have already posed to and are easily answered by your experienced closing agent....
I'm getting the sense that you aren't communiucating with him or her.
If your closing agent is not specifically versed in double closings... then you shouldn't have brought your business to this particular agency....and interviewed two or two dozen until you found someone who could accomodate your needs....
Your responsibility in this short sale was to have lain the appropriate foundation.. meaning, make sure your path is clear and all parties are on the same page.
There is nothing more fustrating than almost getting to the finish line only to trip and fall down due to an avoidable obstacle and watch your deal slip away.
[addsig]
ssp, i have not talked to my lawer yet becasue i am still getting things strait with my buyer. i know my lawyer knows how to do these things becasue he is the creativeinvesotr lawyer for this area and goes to all of our meetings. im sure he will be able to answer any of my questions when i talk to him. thanks, Ryan
Make sure your buyers are not going FHA or you will be sitting on the property for 90 days
No FHA, there CASH. obviously FHA probably wouldnt even loan on it since were not on title.
You will have NO trouble if use an experienced title company. Good luck, herbk FL
hi, to follow up on this post, we actually already closed it and also we do not have "title companies" we have lawyer., Ryan
Would a double closing interfere with a conventional loan with seasoning issues? I'm guessing it would, although the bank might not put 2 and 2 together until after closing?
Quote:
On 2004-11-27 17:52, ryand wrote:
hi, to follow up on this post, we actually already closed it and also we do not have "title companies" we have lawyer., Ryan
RyanD,
First of All, "Congradulations" on your deal. I guess I am replying because I am still king of "iffy" on short sales. Did you have to have the funds to finance the purchase before you did the second closing? Maybe I am confusing Assignments w/ Short Sales, too.
first we closed with the seller, she deeded us title to the property, then the we deeded the property to our buyer and his funds paid off the mortgage and the diffrence went to us. it all happened at the same table. definetly hook up with an attorney who knows what they are doing, maybe pay him to teach you about closings and title. we found our attorney through our local real estate meetings.
My question is how do you protect yourself if one of the two escrows fall out? What contingencies are in place to protect your liability from both the original seller and the new buyer?
Congrats by the way... nice deal.
Aaron H
Coeur d'Alene, Idaho
2 escrows? i guess you mean money or down in escrow for the bank payoff? we did not have to do this, the bank didnt stipulate it, and we have lawyers not title companies and fortunatly our lawyer has done this a trillion times.
you ask about protecting yourself from the seller and the new buyer. basically you tell the seller upfront and in writting that this deal is subject to the banks approval of the short and your financing it. and that your house could always go to foreclosure. but if its a good enough deal you will close on your part regardless. if your buyer falls through you better have hard money in place to fund it.
this closing was rather unconventional where our buyer was a local big shot investor who knew we were selling him the property at a discount just to get rid of it. we made our contract contingent on him closing in a week, because he was using cash. so if he fell through we were prepared to pay the hard money lenders there points. just made more sense for us to sell at a discount and go with the cash buyer. but we were not on title and we didnt know what lawyer we were going to use so we didnt get the money in escrow since closing was in a week. In most cases it will be extremly hard to find a buyer who can close in 30days so be prepared to delay it and always have that hard money lined up. we were in at 50% L.T.V. point is we would have made it work. hope this helps. also dont
P.S. dont forget about the difficency judgment, have the seller sign off on the final hud that the lender will approve.
P.P.S. i use jeff kallers disclosure form for the sellers.
[ Edited by ZinOrganization on Date 12/04/2004 ]
[ Edited by ZinOrganization on Date 12/05/2004 ][ Edited by ZinOrganization on Date 12/05/2004 ]
you should definetly talk to a real estate attorney who has done double closings and shorts before. i have heard they are really strict about title in the manhatten area if thats why your asking this. what im getting from your post seems to be an assignment of contract?
when you do a double closing the bank doesnt see the part of the transaction where you are re selling and funding it with your new buyers money, or they would kill the deal. they only see that we are buying from the seller in default and paying off there loan. the seller deeds us the property, we then deed the property to our buyer whos funds pay off the bank.
when you do an assignment you have a contract with the original seller, your short is accepted.(since you dont want to be on title) you then assigne the contract to your new buyer for a flat fee, your buyer then closes with the original seller and you have nothing to do with title. there are many problems that can arise from chosing this method. they have been explained a number of times. try searching for "double close" or "assignment of shotsale"
Toronto:
I would think that could be construed as acting as a real estate agent, since at that point you are "orchastrating" a real estate transaction, or bringing together a buyer and seller, which in my mind would be against most licensing laws.
My question is not hiding it from the sellers bank, it is on the buyers side. I am coming to a point where I could easily close 2-3 SS deals via double closings and make a bit more money as opposed to just my 3.5-8% commission. I am afraid to try it because of the whole seasoning issue coming up at closing. I also run into extra "rules" being a real estate agent, since I am technically the one selling the property, it would have to be disclosed I am the seller and I am a licensed agent. My partner is also an agent. Also, on the second HUD to the new buyer, it will have to show my net, which will make it clear, assuming they have an idea of whats going on, what my profit is. After seeing the potential of short sales, I am starting to love them. It makes nearly every deal a potential deal. We currently have 6 listings right now that are short sales, negotiating on four currently.
hello all,
Is it possible to doubleclose as a llc or corp.
Thanks
Double close as an LLC? I'm not really sure exaclty what you mean by that but when I double closed I used my LLC as the "Buyer" and the "Seller" of the prop. So i guess the answer to your your question would be yes you can. ~Ryan
I would not suggest going this direction for one simple reason! You have not done a property inspection.
Without an inspection of the property what may have looked like a deal on paper turned out to be a major loss.
In answer to your question yes you can.
To know a deal is a deal you will need to know:
Property market value
Equity
You will need to research title and lien history
Repair cost
And the list goes on.
[addsig]
You are going to have a problem with getting them to trust you, as you say. I am very social, but i am young, therefore I know I will get turned down quite a bit. So I have found a partner that I do the real estate agent side with that goes with me to meetings. I am the guy with all the knowledge, but he is very good at "fronting". Perhaps it would be best for you to make the calls, find some motivated sellers, tell them what you're doing over the phone, THEN getting the appointment. Therefore you'll nearly eliminate the possibility of rejection. That is usually the worst part. Once you do a deal or two and you have a seller crying thanking you for your help, it will make it easier.
JohnMichael
Would I have to be present to have an inspector check the house?
telebroker
No you do not have to be present when using a home inspector.
[addsig]
Ruman
About your partner, where did you meet him or her? And you say this person is a real estate agent / realtor ?
When you need to visit with the homeowner, does this person go alone for you OR with you?
There are parts of the real estate business you could do without much face time. Anything dealing with homeowners is not on that list.
What are some examples where I would not have to deal with a homeowner in person?
Quote:
On 2004-11-14 15:22, commercialking wrote:
There are parts of the real estate business you could do without much face time. Anything dealing with homeowners is not on that list.
I have known him for a little while personally as he was good friends with my older sibling. We go together to the meetings, as I'm the one with most of the knowledge. Once the homeowner has the first meeting with us, I usually have no problems afterwards meeting them alone to discuss things, as I have gained their trust and I have proven my expertise. Yes, he is a real estate agent, as am I. I have found it is helpful sometimes. Especially with short sales, as the property has to be listed in order to SS in many cases. My age is my only problem. I do not like confrontation, though, like you. Just get your list of foreclosures, get their phone #'s, call them all and set up appointments with the ones that are interested. I've found that most people are willing to listen over the phone, and a good portion of them will meet. We took a list of 30 or so foreclosures, called them all and set 7 appts. and got 3 listings. Hopefully one more as we have a meeting at 7 PM tomorrow that should be a listing. We met with them two weeks ago and they just called back. Not bad at all. People are just looking for someone to talk to about their situation, once they know that you know, they open up pretty easily.
Also make up some sort of presentation to show them. People like things on paper so they can SEE it. I made up a small 7 page booklet explaining different ways I can help, SS's, listing the property(usually involves SS as well), sub-2, etc. and then point to the one i say is best for them.
Quote:
On 2004-11-14 14:58, telebroker wrote:
Ruman
About your partner, where did you meet him or her? And you say this person is a real estate agent / realtor ?
When you need to visit with the homeowner, does this person go alone for you OR with you?
Ruman
On a different subject, regarding your presentation booklet- do you have an explanation about the possibility of a deficiency judgement as a result of the short sale option?
Join a Toastmasters club that does not have too many members, volunteer to give a speech at ever opportunity. You can finish the first 10 speeches in probably 5 months. I promis you that it will be the best investment you will ever make. It will help you personally and professionally in ways that you can not even imagine.
Brenda
I read you were worried about age, i am 20 and have completed 2 deals in the past 3 months. i started when i was 19. fact is, is that people dont care how old you are as long of you can help them..and a little bit of bending the facts helps.
Brenda thanks for the advice, but I would sooner be able to bunjee jump out of a helicopter over a volcanic pit of hot lava- I'm one of those people you hear about that has a fear of public speaking more than a fear of dying.. I just can't do it, mentally or physically (I flush, my throat gets choked up, and I tremble uncontrollably like a cold wet puppy dog). I'm otherwise a rather "normal" and moderately successful person in most other areas, it's just this one hang up in my life thats held me back for certain things -- like of course REAL ESTATE investing..
Quote:
On 2004-11-21 16:41, bgrossnickle wrote:
Join a Toastmasters club that does not have too many members, volunteer to give a speech at ever opportunity. You can finish the first 10 speeches in probably 5 months. I promis you that it will be the best investment you will ever make. It will help you personally and professionally in ways that you can not even imagine.
Brenda
It is your fear of public speaking that is stopping you from being successful. Once you over come that fear, you will feel like you can bungee jump into a pit of molten hot lava. Over coming that fear will probably be the most satisfying accomplishment of your life.
If you have access to a doctor, ask for a prescription for beta blockers. It is medicene that high blood pressure people get. It is an inside secret to take a beta blocker before an important performance or presentation. You are completely calm, but not drowsy like a valium. If i have a really important presentation, I take a 5mg about 40 minutes before. You have the sensation of talking to a group of your best friends in your living room. I learned about it by reading an article on concert musicians. They take them before important performances so that they are still really sharp, but not dry mouth, shaking, or have any other signs of nerves.
The beta blockers could maybe get you past your first couple of speeches or meetings with the home owners so that you can build some confidence.
Brenda
Hey Brenda, I've been out traveling so I'm just now seeing your reply... Thanks for the advice.. However I have tried a beta blocker called "Inderal" a few times- it did nothing for me. Perhaps I didnt take a high enough dosage before the particular event(s).
I probably need something stronger -- I have a pretty severe case. Maybe a sedative or tranquilizer will work, but then again I dont want to fall asleep! I guess I'm just not your average social phobe with a minor case of public speaking fear ..
Dont think of taking medicines which cannot be accomplished by the good old old fashioned way of,just doing it,to overcome the fear of doing it,so to speak!!!!
Slowly you will come out of the shell. Believe me,it will be when your partner or friend makes a mistake and you have the inner urge to jump up and tell the seller what you think of.
We are not born orators,we are MADE(by design or otherwise!!) orators!!!
You may think how qualified Iam to say this,believe me ,we all go through the fear of public speaking at some point in our life. My tryst with the fear of public speaking was overcome when I joined into my MBA and had to address my class on a presentation! After that there was no looking back.
If you have a partner take them along with you. If you have a friend or sibling then take them with you. I mean there should be someone with you whom you trust enough to accompany you for your meetings. Just sit there smiling and look wise if you have to
Good Luck!
Tele,
I can really relate to your issue, because I go throug it every day, in every thing I do. Because I stutter.
I still make my calls, meet homeowners, bankers, contractors and the like. I have to do it, being investors we get enough self-doubt and negative input from others. Don't add to the list.
You know what you can do, and you know that you can do this.
If a stutter black man with fair looks in jeans and a t-shirt can approach a banker and ask for a crazy discount on a piece of property, stuttering all the way I add, I know you can.
I normally force myself to do it on my own, but when I first started I took someone I was comfortable with along to ease my nerves. I had them prompt while I spoke. They acted like a verbal outline. I introduced them as my silent partner, corney but it helped.
Let me know.
Khan
Hey Khan, thanks for sharing your story- that helps me tremendously!! It sounds like you've done many deals, how inspiring! Your partner idea is exactly what I'm trying to do as well... Its been a challenge to find someone in my area thus far, but I'm going to keep looking.. I imagine sooner or later I'll find someone. Thanks again!
Telebroker,
Where are you located? May I suggest a hypnotist? Not some fly by night hypnotist but a (MD); a psychologist that specializes in hypnosis. I treated my stage fright with hypnosis and it worked wonderfully. Not only did it work for my stage fright, but the shyness I once possessed is now gone. Most charge about 200.00 and good doctor guarantees his services. Hypnotist can treat a wide range of impediments such as stage fright, social probes, chronic smokers, etc. You should give it a try, you have nothing to loose and every thing to gain. Good luck!
Shephia