Posted by John Corey on June 20, 2007 at 04:42:05:
Tim,
Two things.
There has been a lot of problem deals out there with flips and other
such things. More so in OH than in many other states. Hence many
companies are backing off anything that could be used in fraud. Not
that what you are doing is fraud. Just that the fraud folks do similar
things. The fee on the $17K closing is not enough to cover the liability
insurance risks.
Second, there is a slight issue with the chain. When doing a simo the
details get a bit out of order. In a strict sense you need the second
deal to close to free the funds to close the first. Hence simo deals
implies that the agency is taking a bit of a risk in that they are using
money from the second deal to fund the first deal when the funds from
the second deal should not be released until the title is free from the
first deal.
Can you get a lender to loan you the funds for the morning? That
would make it simpler.
You could sell your position to the end buyer for a fee that is paid out
at closing. It shows your hand. You could go to a hard money lender
but they do not like lending such small amounts. The fees would likely
keep a good part of your profits.
At some level you need to restructure the deal or find financing. You
might get a lawyer to handle the transaction without an escrow at the
title company. Or the lawyer can arrange the deal at the title company
so they are only following the lawyers instructions (liability shifts to the
lawyer).
If you need more ideas email me. I might have a private investor who
will fund the deal long enough to get it closed. A bit of a long shot
depending on the title company. We would need them to hold funds
and agree that they can not be released without instructions.
Two years ago I did a simultaneous/double closing with a title company here in the town where I’m residing. There’s currently a short sale that I recently negotiated with the lender, and they’re willing to accept a net of 17k on a short sale payoff. I already have an investor who has verbally agreed to purchase this property from me for 34k. I’ve called three popular, and reputable title companies (including the one that I did business with two years ago), and all three of them have told me that they can not do transactions like that, and that I have to bring proof of certified funds for the proceeds on the first transaction, and then I can turn around & do the second transaction. I specifically told each of these title companies that I’m willing to pay double closing costs since I’ll be involved in two transactions, but that the proceeds from my buyer would go toward paying for the first transaction & then I would get the difference minus the title fees. Each of them said no can do. Have there been new regulations that have gone into effect recently which has now made doing simultaneous/double closings a thing of the past. I’m trying to close this next week, and now I’m trying to scurry around for answers. I called a real estate attorney, and he was unable to provide clarity as well. Thank you for weighing in with your thoughts, and comments.
Tim
In my experience I have found it best to tell all parties what I’m making UPFRONT. There’s just no other way unless you’re willing to borrow money to close your end.
When the settlement co. won’t close the deal, you have to get paid outside of closing. Many times I would take a note for my profit, payable in 6 months or less.
If your buyer does not want to do the deal with you making $17k, its too bad. Either find a new buyer or negotiate a lower profit for yourself.
Show your hand to your buyer, it makes things much easier.
We have the Seller deed the property to a Land Trust before every Short Sale we do with no problem at all. That way we can negotiate a price with the bank and sell it to an End Buyer without seasoning issues and without having to use our own Credit or Cash and get paid at the closing.
If your Title Companies won’t do a Simultainous Close, then get a new Title Co., they are out there.
Re: Help please on simultaneous close question… - Posted by michaela-CA
Posted by michaela-CA on June 19, 2007 at 15:20:55:
Tim,
does your buyer know what you’re making? If so and if he doesn’t mind and if he has cash, maybe you can propose this:
The end buyer gives you a mortgage for the 17K and then you do the first closing and immediately do the 2nd closing, where you pay off the loan and keep the difference. I don’t know if that works where you are, but that’s what some of the attorneys did in Atlanta in order ot facilitate a double closing.