With a Straight Option my title company wants me to first close with seller, then sell to new buyer.
I mentioned a simultaneous close and they indicated they could not insure such a transaction.
I want the new buyer to be able to accomplish this with his own funds rather than me with mine. I of course do not want the seller to know what the buyer is paying or the buyer to know what my specific terms are with the seller…help anyone?
Thank you,
Paul
What is it that you wish the title company to insure?
An option is not an insurable position in real estate.
If you are seeking to hide something from the buyer, then maybe you should re-think the situation.
Why not be upfront and honest and simply say, “I have an option for this amount and am seeking to make a profit on my purchase. Your purchase at this price is fair and has value.”…or words to that effect.
Every buyer knows the value of something to them…if your price meets that criteria the deal will work…if not it will not work.
If the buyer feels you are hiding something…the deal is dead.
Remember you are seeking to sell something you do not yet own…lots of things can go wrong in this scenario.
Simultaneous closing…
Sounds like simultaneous closing is what you are after. Easier and cheaper to just do sale from your seller to your buyer, and your option pays you in the middle, but if you are really concerned buyer/seller will get cold feet if they see your profit, and you don’t want to close the purchase yourself first, then sell, you need simultaneous close.
Once upon a time, these were very common and normal. However, too many investors got greedy, too many people got hurt, etc., and these have largely went away. I am assuming your issue is the title company won’t do this transaction and provide title insurance for your end buyer? I suggest you call several title companies, explain what you want to accomplish, and see what they come up with. There might still be some title companies with title insurers doing them? Also, ask experienced investors in your area what title company to go to for transactions like this (if applicable).
Best wishes,
Chris in FL
Paul
You don’t give numbers but ever consider just doing what the title company wants. Just write up your deal with the seller correctly, which could be sub2, 100% seller finance or whatever for 5 minutes so your officially on title for the 5 minutes, and then sell and pass title to your end buyer moments later. Your purchase is all paper and the buyer pays it off in the b to c. You don’t have to come up with any great sums of money. The seller doesn’t see your deal with the buyer. The title company sees it as two separate transactions because each deal is independent of the other. I don’t care about the due on sale clause being in place, that loan is going to be paid off in the b to c and the payoff amount is needed for escrow anyway.
But I do agree with the other poster if your making so much you don’t want the seller to know about it, then maybe you should consider sharing some of it with the seller. In my past I have hit a unexpected grand slam home run and shared it with the seller who had hit bad times, didn’t have to legally, but we could sit down later and have a beer and a laugh and still like each other, and I didn’t feel like Jessie James. Actually felt more like Santa Claus.