Simultaneous - Double Closing Help? - Posted by Cassie

Posted by Brent_IL on August 21, 2003 at 18:18:34:

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Simultaneous - Double Closing Help? - Posted by Cassie

Posted by Cassie on August 20, 2003 at 22:58:09:

Hello again,

I’ve been investing for some years now, but it has always been in multi-family rental units. I’m ready to add another addition to my investing portfolio. Flipping SFH! I understand the concept of how to write the contract and all those little details, but closing is where I get stuck! Ok, all you pros out there give me the secret to the ooze! :slight_smile: What is the difference between a simultaneous and a double closing and how do you set it up?

Thanks again,

Cassie

Re: Simultaneous - Double Closing Help? - Posted by IB (NJ)

Posted by IB (NJ) on August 26, 2003 at 01:15:38:

I just attended a seminar hosted by Sharon Resrepo (of the famous Dwan and Sharon duo). She put me onto somethin I didn’t realize with double closings.

You really need title insurance in your name (as the investor) and in the buyer’s name (trhe buyer will take care of his own TI). The reason is due to the fact that your name will be on the title, albeit briefly. If there was a problem with say a fraudulent seller who didn’t really own the property when he sold it to you (apparenty, a big problem in FL), your buyer’s title company will sue YOU since you were the one on the title who conveyed the property to the defrauded buyer. So don’t forget to get title insurance in your name although you will only hold title for a few minutes.

Re: Simultaneous - Double Closing Help? - Posted by Randy

Posted by Randy on August 21, 2003 at 10:42:09:

The difference between a ?Simultaneous Close? and a ?Double Close? when flipping property is in a ?Simultaneous Close? the ?Investor? never goes on title. The transaction is something like this: Seller agrees to sell to ?Investor? for $100k, signs a purchase agreement to close on or before X date. Investor draws up a separate purchase agreement to end buyer for $125k to close on or before same date. The difficult part is finding a lender that will allow it.

A ?Double Close? is just what the name implies; the investor buy?s and closes on the property goes on title as the owner then resells it to the end buyer. Similar problems finding an agreeable lender, FHA requires the investor to be on title for six months. So your end buyer has to have a source for a mortgage other than FHA. There are sources that will do this, email me if you need help.

Re: Simultaneous - Double Closing Help? - Posted by Kristine-CA

Posted by Kristine-CA on August 20, 2003 at 23:24:57:

Where I am there is really isn’t such a thing as as simul close. More like double close because there are two escrows that close at the same time, using my buyer’s money to close my escrow with my seller–and the escrow company will them for me this way.

A lot will depend on where you are who the closing agent is. Laywer? Title company?

It is also possible to get an assignment fee, either up front or at closing from your buyer. This gets tricky because not many buyers will give you cash. And retail buyers usually can’t because they need lender funds. However, it is possible to put the assignment fee into the contract/escrow instructions so you can get paid at closing. Thereby doing just one escrow. However, this can be tricky too, because some lenders will not allow their borrower to pay such fees with their funds.

Lots of reading in the archives: flipping, double close, simul close.

Sincerely, Kristine

In a true simultaneous close… - Posted by Jay

Posted by Jay on August 21, 2003 at 11:34:22:

the investor never goes on title and gets paid in the form of a purchase contract cancellation fee charged to the seller paid out of closing or as a performance lien against the property.

The cancellation fee is paid similar to the way real estate agents get paid so it can be paid at closing. I have not had problems getting paid at closing but you can also get paid with a record performance lien.

This is by far the most bullet proof way to beat the title seasoning problem.

You can read more about this type of stuff at NODISCOUNT.COM/DISCUSSION

Regards, Jay

Re: Simultaneous - Double Closing Help? - Posted by Kristine-CA

Posted by Kristine-CA on August 21, 2003 at 10:50:04:

Randy: my understanding of the recent FHA rulings is that it is a minimum 90 day seasoning for FHA loans–at which time they will also look at larger price increases with supporting documentation. Where did you get 6 months?

Sincerely, Kristine

Re: Simultaneous - Double Closing Help? - Posted by Brent_IL

Posted by Brent_IL on August 21, 2003 at 05:27:40:

Chicagoland is pretty much like Kristine?s area. I think simultaneous closes are in name only. If you have one set of documents, it?s basically an assignment. Two sets for a double close. Title companies do two closes for two fees. They give you less grief if you don?t even use the term ?double close.? A private attorney might do it for you for only one fee. I?ve done a very few in the broker?s office with no fees, but that was when the only changes I had on the documentation was the numbers for the sale.

Re: In a true simultaneous close… - Posted by houserookie

Posted by houserookie on August 22, 2003 at 02:59:32:

Jay,

We have discussed simultaneous closing
as a title seasoning avoidance strategy at least a few dozen times here. For some odd reason people seem to default to the double closing, vendee/vendor assignment, and title seasoning path as the preferred methods of closing.

It doesn’t pay to use creative real estate techniques from ten years ago.

Cheerz,

Re: Simultaneous - Double Closing Help? - Posted by Randy

Posted by Randy on August 21, 2003 at 15:58:14:

Kristine go to this web site for the full story.
http://www.epa.gov/fedrgstr/EPA-IMPACT/2003/May/Day-01/i10778.htm

In addition to requiring documentation for re-sales within the 91 to 180 day period, the final rule authorizes HUD to impose additional
protections against ``flipping’’ for re-sales up to 12 months following acquisition by the seller. To address specific circumstances or
locations where HUD identifies property flipping as a problem, the final rule authorizes that HUD may require the lender, for re-sales occurring between 91 days and 12 months, to obtain additional documentation to support the re-sale value if the re-sale price is 5 percent or greater than the lowest sales price of the property during
the preceding 12 months (as evidenced by the contract of sale). Should HUD exercise this authority, it would supersede the higher threshold
established for the 91 day to 180 day period. At HUD’s discretion, this
documentation must include, but is not limited to, an appraisal from another appraiser.
HUD will announce its determination to require additional value
documentation for re-sales up to 12 months following acquisition by the seller through Federal Register
notice. The requirement for additional value documentation may be established either on a nationwide or regional basis.