I believe what you are describing is simulatinous closing. As i have not done that myself, i cannot comment on if the seller knows, but from my understanding, they won’t know.
There are other ways to buy without your own money, hard money lending is one option, or the banks the other. usually, banks will lend you a % of the market value. So, if they will lend you 85%, and you find a property at less than 85% of market value, then you will not have to put any money down and may even walk away with some.
Hi, husband and I are trying to educate ourselves by this great website. Question is: When flipping a property and not wanting to use your own money, do you use a ‘contract to purchase’? And then sell this to another buyer/investor at closing all at once? Do you keep any of the dollar amount confidential or is selling the contract an amount that is decided upon ahead of time? So in other words the ‘seller’ knows I will be making a profit because we have agreed on the contract before flipping…???
Re: Flipping…understanding processs? - Posted by Brent_IL
Posted by Brent_IL on October 28, 2003 at 17:20:41:
Simultaneous closing is the term that describes what you’re doing. The alternative is to double close whereby you take title and re-sell within a short time. Two settlements = two sets of fees.
What you are flipping is an interest in the property. Options, contracts for deed, and purchase contracts can all be used. Options offer the least risk with the least control. Sales contracts are more controlling, but have commensurate risk.
If you assign your contract with the seller, he or she will know of your profit unless the assignment fee is paid out of escrow.
I use purchase contracts with contingencies because I want everything written in stone before I get a new buyer. I do double close?s to hide the terms of purchase and to limit the contractual rights of a subsequent buyer.