Buyer's lender and doule close - Posted by CANI

Posted by Ryan on October 06, 2003 at 16:19:08:

Randy wilkins is a private lender with some very good rates. I suggest give him a call. His number is 605-321-5090. He’s out of Utah.

Buyer’s lender and doule close - Posted by CANI

Posted by CANI on October 01, 2003 at 01:00:52:

Hi,

I need advice on the following regarding double close:

a. You put property under contract with seller for $X, then put contract to sell with buyer for $Y. Buyer tries to get a loan for $Y but his lender doesn’t give out loan based on a sale contract with a non-owner, they wonder who is this middle person? I know, move on to other lenders right? Well, other lenders doesn’t feel secure doing that also.

b. Even you managed to get a lender for buyer. At closing, how can you close with buyer first then the seller if you don’t even have the deed/title yet? But if you close with seller first then how would the seller trust that you’ll bring fund without knowing there is a buyer closing an hour after him?

c. After you sign contract with seller, who is still living in the property until it closes, how do you get his consent for you to put a FOR SALE sign in front of a property that’s technically still his, and also having all the buyers coming over without enduring the risk that them knowing each other’s price? I would have to get the house vacant in order to make double-closing work, wouldn’t I?

d. Could someone please recommend a title company that does double close in Northern Cal? I called 11 and none does. It’s getting frustrating, any help would be really appreciated.

Re: Buyer’s lender and doule close - Posted by Brent_IL

Posted by Brent_IL on October 01, 2003 at 03:10:15:

Here?s a partial answer.

Escrow officers, like anyone else, don?t want to dread going to work. They don?t want to get involved with transactions that will consume an inordinate amount of their time. When it sounds like you?re being quasi-evasive, or if you falter when they ask about your transaction, they would just as soon pass.

One way to assist your conversation is to use minor questions. If a prospect asks a car salesman if this model comes in blue, the salesman will ask if he prefers it in blue. If the potential buyer says ?Yes,? the salesman doesn?t have to ask him if he?ll buy the car. The car buyer answered the minor question and the major question was carried automatically.

On you next call, tell the title officer that you need to schedule two closings, one to buy and one to sell, and you will require separate documentation and fee billing on each. Immediately ask them if you need two title insurance policies, or if it?s possible to use a binder that can be transferred more inexpensively. If they say they don?t do double closes, act stupid, and reply that you don?t know want a double close is, that you require two closings, and you want to schedule them consecutively to fit into your schedule.

All of the monies are shuffled in escrow so the buyer and the seller will only receive the part that applies to them. Each will be unaware of the other.

Another alternative is to hire a real estate attorney to do the settlements. The real estate lawyer will not have a problem as long as you pay for both.

To put a ?For Sale? sign in the yard, you have to get permission to do so as part of the purchase offer. Correct language can be placed in the purchase offer or you can use an addendum. You need more than just the sign; you?ll need the right to advertise for sale, to show, to sell your interest, to sell, etc. Look at a local real estate board contract to see the way that they phrase their legal clause and then modify it for your purposes. While you?re at it, get the seller?s agreement to make the property available during certain daily hours to inspectors, appraisers, contractors, and others. The ?others? are your buyers. If you don?t give them a chance to speak together for too long, they can?t exchange too much information.

It is easier if the house is vacant, but most sellers live in the house up until a week, or so, before closing. Lock down everything you need from him before you start running people through his home.

Re: Buyer’s lender and doule close - Posted by Cani

Posted by Cani on October 01, 2003 at 13:31:21:

HI Gerald,

Thanks for the advice. Your suggestions on putting up signs are great.

That’s exactly what I did–play dumb and explained the transaction in plan English instead of calling it double escrow. But their concept of double escrow is I have to bring my own loan/fund when close with the seller, get the title and deed and close with buyer with buyer’s loan/fund. I understand about the fee part, but not the loan.

I went through Bill Bronchick’s course and this is my understanding of double close—at closing buyer’s lender wire money to title company, I close with seller and buyer back to back with no loan of my own, maybe closing fees. Title company write a check to seller and the difference to me. Yes they can use a binder to transfer, but all companies require that I bring my own loan and close with seller first, not using buyer’s loan to close both.

Re: New Construction double close - Posted by Gerald-DC

Posted by Gerald-DC on October 01, 2003 at 09:48:25:

Brent and others,

Have you ever did a double close on a new construction property? Did you trouble with the buyer’s lender? My settlement company will do the double close no problem, but one of the attornys mentioned that I might have problems finding a lender for the buyer who will finance the deal with me in the middle and not on title or even if I do actually close, the lenders will have problems with seasoning. (I really do not want to obtain financing to buy this and then turn around and sale it).

I know folks are flipping new construction deals all the time but I am a little concerned in light of what my attorney said to me.

Assinging the contract is not an option (anti-assingment clause in contract).

Re: Buyer’s lender and doule close - Posted by Brent_IL

Posted by Brent_IL on October 01, 2003 at 16:26:39:

If I were having this much trouble with the title companies, I?d use a real estate attorney to close. The lawyer can prepare the documents and order title insurance for you. If you retain the same attorney to review your purchase documents, the closing costs for both settlements may not be too bad.

Re: New Construction double close - Posted by cani

Posted by cani on October 01, 2003 at 13:38:01:

"but one of the attornys mentioned that I might have problems finding a lender for the buyer who will finance the deal with me in the middle and not on title or even if I do actually close, the lenders will have problems with seasoning. (I really do not want to obtain financing to buy this and then turn around and sale it). "

It’s not even issue of title seasoning. In double close me as the middle person won’t even have the title till closing. A lender needs to be found BEFORE closing day, during which the lender is lending against a non-owner who merely have a contract, not even title. Title season count from the day you actually HAVE the title.

Re: New Construction double close - Posted by Brent_IL

Posted by Brent_IL on October 01, 2003 at 11:04:05:

I can?t help. I?ve never done a double close on a new construction property.

Seasoning is an issue with many lenders. A few days ago there was a thread where lenders who have minimal problems with seasoning were discussed. I think Greenpoint was mentioned.

Re: Buyer’s lender and doule close - Posted by Ryan McFarland

Posted by Ryan McFarland on October 02, 2003 at 18:04:51:

Many Title companies and attorneys will not allow using the proceeds from the second sale to fund the first sale. Try to get a flat rate from a hard money lender. ($1000 or so) Their money will only be used for an hour or so. What about assignment of contract? Why can’t you use that in this scenario?
Best wishes

Re: Buyer’s lender and doule close - Posted by cani

Posted by cani on October 02, 2003 at 17:54:32:

Hi,

I tried that, too. Lawyers I called never done double closing, I had to explained to them what it is. Also in my area they charged $370 plus an hour, the escrow agreement by itself they said will be at least 3 to 4 hours. Just imagine when title work and everything is done. Someone on the post said I should ask lawyers for recommendation of title companies, well the ones I called don’t do that.

I think the rate difference on escrow work is due to that in many states lawyers, not escrow companies, do the RE closing. Where I am in Northern Cal, lawyers do the “stuff-happens” case.

Re: New Construction double close - Posted by Gerald-DC

Posted by Gerald-DC on October 01, 2003 at 13:49:13:

Not sure if you are confusing assingments with double closing.

Seasoning is an issue because I as the middle person will be on title, albeit briefly, before the end user buys the property.

As such, any lender that has seasoning requirements will want me to be on title for a specified amount of time before I can sell it to another party.

It goes without saying that a lender will have to be found before closing.

Re: Buyer’s lender and doule close - Posted by cani

Posted by cani on October 03, 2003 at 15:42:55:

Hi Ryan,

Good point. Only problem is all the houses in my area cost 450K plus, and assuming HML with no prepay penalty and at least 2 points up-front, it will cost around $8000 minimum. Since buyer will know the purchase price, profit for assignment is very low.

Also does anyone have ideas on title seasoning if I want to find a lender for my buyer? My understanding of title seasoning is how long has my name been on the DEED. When I have merely the contract, my name is not on the deed. Does anybody else run into the same issue?

Gerald, in response to your post… - Posted by cani

Posted by cani on October 03, 2003 at 15:52:32:

Hi Gerald,

“Not sure if you are confusing assingments with double closing.Seasoning is an issue because I as the middle person will be on title, albeit briefly, before the end user buys the property”

When you have the contract as a middle person, in double closing, you DO NOT have the TITLE yet. Hence, lender is lending to buyers BEFORE closing based on this fact. That was my question. Has nothing to do with assignment, in which case your profit is significantly less since you don’t deal with above issues.