DOUBLE CLOSING or ...? HOW - Posted by ROB

Posted by BIGDADDY(MD) on July 05, 2002 at 11:19:24:

If your doing an assignment thats one thing but if your talking about doing a true flip (i.e. Double Closing, Dual Closing, Double Escrow, or any other name that it’s called,or you could use the more politically correct term I have coined a RAPID RETAIL), and your name doesn’t appear on Title for at least a brief moment in history, don’t be surprised if some day MEN IN BLACK (SUITS) and MEN IN BLACK (CARS) pay you a visit. So, when doing a true Flip, and they can be done, just make sure you CYA. In the old days investor’s could get away with that but I have always made sure that I went on title. Then there can never be a question as to how I sold a property that according to the Land records I never owned.Once, again an assignment can be a different story, your just assigning your interest in the property. Best of Luck, Do it right and sleep well at night.
BIGDADDY(MD)

DOUBLE CLOSING or …? HOW - Posted by ROB

Posted by ROB on July 05, 2002 at 08:07:25:

what to do ? I am in contract for $227k and I have an assignment clause. I have the end buyer (already qualified) who will buy from me at $270k. This includes a $30k profit for me and $13k towards closing costs. I know a bank who will allow a flip (It will cost me. Maybe 2 pts.on top of pts. for the mortgage broker. I think.) if i choose to flip instead of assigning. PROBLEM : I don’t have the money to pay cash and my end buyer is coming in with $11k total for down pymt. How do I do a double closing ? Is this my only option ?? How do I maximiize my net gain ???
What do I do ?

Ask some questions - Posted by John Merchant,JD

Posted by John Merchant,JD on July 05, 2002 at 10:21:02:

Two suggestions, in arranging for double closing.

First, go into title/escrow company and meet one of the escrow people and build a relationship, so you get to know each other. Then tell that person what you’re wanting to do and get all info about your costs, time, anything special they want you to do, etc. Those folks are usually very generous with their time and wanting to help you, a future, prospective customer.

Next, contact a local RE attorney and get the identical info from him/her. A knowledgeable RE handling attorney can do the same thing as a title/escrow company, and the atty’s cost might be quite competitive. And take it from me-most attorneys are very willing to discuss handling your business, and give you their prices, up front, with no obligation whatsoever…and if that atty. wants to charge you for this info, say no thanks and move to another one.

An attorney closing is preferred, in my experience, in any really complicated situation, because the attorney can recognize and deal with any problems as, maybe sometimes even before they develop; whereas the LPO (limited practice officer) in the title/escrow company might not know or recognize the problem area, and will have to seek further advice from his company attorney before proceeding.

And I’ve had title/escrow situations that the area title company office wouldn’t handle, because it was outside their normal parameters and they found liability issues that worried them-and these deals ended up in an attorney’s office because the attorney was willing to handle the unusual “custom” job.

Re: DOUBLE CLOSING or …? HOW - Posted by Mike Stott

Posted by Mike Stott on July 05, 2002 at 09:46:18:

Rob,

It sounds like assigning is your best option for maximizing your net gain and minimizing your need for cash out of pocket. The only worry is the egos of the buyer and seller. As for a double closing without cash, I’ve done this several times. It all depends on the laws of your state (me: FL) and how much your title company likes you. The title company I close at will first close on the sale to my buyer. Then I will close on the purchase from my seller. The funds for the purchase come from the net proceeds from the sale. To protect the title company, the check is made payable to them and me, to which I endorse back to the title company. All of this occurs on the same day, in back-to-back closings. The end result is a net check cut to me. I guess you could call it a reverse double closing.

Good luck.

Mike Stott
www.sreia.com

Re: Ask some questions - Posted by rob

Posted by rob on July 05, 2002 at 10:39:46:

thanks, i’ll do that.

Re: DOUBLE CLOSING or …? HOW - Posted by Rob

Posted by Rob on July 05, 2002 at 10:33:26:

thanks, I am in NYC–BUT, if i do an assignment to the end buyer where does the new final price show, how do i change the original contract ? Where does my profit show and how do i protect my interest ? How will the endbuyer know what i get the property for ? I guess this means i am not sure of the logistics of assignment of contract either.
By the way, On A Flip-if only the title co. need to close to the endbuyer first should i have to pay the bank any pts to allow the flip. If the title co. agrees will the bank find out ? I do understand that my name doesn’t show anywhere on title.
Thank You

Re: DOUBLE CLOSING or …? HOW - Posted by jeff

Posted by jeff on July 05, 2002 at 13:05:41:

when you do an assignemnt the final price on your original contract does not change. what actually happens is that instead of yuo buying the property for the final price, your end buyer buys it aty that price from your seller. the original contract does not change at all. that is probably already recorded and does not change at all. you simply do a seperate contract assignment document that allows your assignee to fulfill yuor obligations to your seller instead of you.

yuor profit comes from the assignment fee that you collect from the end buyer for your signature on the assignment contracts.

once you do an assignment, you have no interest to protect. you collect your assigbnment fee and go on to the next deal. your done, just make sure to get a release signed from your assigee and yuor seller to allow you to leave with no liability.

the end buyer will know what you are getting the contract price for becasue they will now own the contract instead of you. they can read it right there on the sheet of paper.

assignemnts are easier, faster, and require very little money if any (earnest money to make the offer occasionally). they are a great way to make a smaller profit quicker, but for the big cash, youll need the double closing probably. most banks dont like these either, be prepared to have your end buyer look for a bank without these issues to address.