There is a pretty simple way to do the same thing with only one seller, one buyer, one sale, and one appraisal. There is no double contracting, no simultaneous closing, no assigning your contract, no acquiring or selling of an option, no private or hard money, no loan fraud, and your down payment and improvement costs, if any, comes back to you at closing! It?s safe, ethical and legal in all 50 States, and creates no problem with almost all lenders.
By using a simple trust (works like a lawyer?s escrow) you can hold the property by a third-party trustee (who is bonded, carries E & O insurance and has a legal fiduciary responsibility to look out for all the parties interests). The property is placed in a trust and each beneficiary gets his contribution to the trust in cash at closing from the title company. It?s pretty simple for any attorney that knows what he is doing. Mine can draw one up for about $300 (in less than 24 hours). I?ve done several of these and have had no problem with any lenders. It is the only legal way I know to get ?cash back? at closing.
A double closing or simultaneous closing is where 2 transactions are taking place.
Example: You tie up a property to buy at $80,000. You then find a buyer for $100,000. You turn in both contracts to the escrow agent & the agent cuts a check to you for $20,000 difference. Double closings are very popular when notes are being created & sold for a discount.
lenders are not taking these simos too likely any longer. the problem will lie when the lender for the buyer who is buying for $100k (in your example) questions the legality of the purchase contract. the seller (who really is the buyer on the $80k) cannot sell, or convey, a property he does not own. he cannot get into contract and “pretend” he is selling the property when in fact he doesn’t “own it”. therefore, the buyer for $100k will have trouble finding any type of (Wall Street) lender to close his deal. i’m not talking about assignment of contracts here, but rather true simo closings as the poster suggested.
i know many of you will come out and say it’s done all the time, but not with conventional lenders. there are “other” private type lenders that will offer loans for these scenarios, but not conventional (low rate) lenders.
however, that being said, when it comes to pre-construction, i have found a few lenders that will allow an assignment, or double closing. but i have yet to come across a “real” lender for simos for existing home sales.