Funding for Short Sales

[TeenaW]

Hi all.  I'm new to this site and have been reading some very good comments about "Short Sales".  I have decided to become a real estate investor.

I have no funding so I decided to start with "Assigning Contracts" to other investors.  Can I do this with "Short Sales".  Will the banks expect payment right away or will I have some time to find an investor to Buy the Contract ?  Also if the Banks will close in 45 to 60 days can I specify in the contract if I can't find funding  in that time allowed can I be free and clear of any obligations.   Thanks for any comments.   Teena

[rgchamb]

Do a simultaneous, i.e., double close.  You can do short sales this way with virtually no funding.  You can listen to some of the free teleseminars on this site regarding short sales & they mention something about it.  

You close on the date indicated in the contract, or more realistically the date the bank agrees to after they have approved the short sale.   There is a lot to learn about short sales & the education never stops!

[harball]

Does the bank that you have just done a successful short sale with
allow you to asign the contract to another investor.  Or, do they
want you to buy it first and do with it what you want afterwards?

[rgchamb]

Banks usually clearly stipulate that the contract is non-assignable.  With a double close, your end buyer pays the bank via pass-thru.  As far as the bank is concerned, you bought the house, never mind that you owned it for 5 minutes or whatever.  Just find a Title Company that does double closings - they will disburse the funds to the appropriate parties in both transactions including your check!

[yrush2000]

BUt remember in a double close, you still need to be prepared to close on the house yourself. If the person your technically assigning to can not close on the house then your scrwed

[rgchamb]

If the person you are double closing to cannot close on your house, all is not lost.  If your Buyer's list was big, there are probably others who wanted the house but weren't 1st in line.  Sell it to them.  Get the bank to extend the closing date - some banks charge a $/day penalty for extending the closing.  You can use the Earnest $ from the person who backed out to pay the penalty.  

Hope this helps.

[freshstartholdings]

You close on the date indicated in the contract, or more realistically the date the bank agrees to after they have approved the short sale.
Never let them know that you dont have funding in place sometimes you have to team up with another investor who has the buyer and you split the profits

[gccre]

Once the bank confirms to you they are willing to accept a short-sale they will give you a list of what they want or give you their short-sale package to fill out. One of the stipulations is showing them proof of funds BEFORE they even waste anymore time with you to show them you are serious. They won't haggle with you for weeks if you can't provide proof of funds, its a complete waste of their time and they have files piled up on their desk with deadlines so it's best you have your ducks in a row or you won't even get past the second phone call.

And most of them will not let you assign the short-sale contract for the exact reason if your money-man bails at the last minute and the deal falls through. They've learned this lesson from experience in the past so they want to make sure YOU are the person buying the property and YOU have the funds so no last minute financial meltdown surprises and all the time and work they put into the short-sale paperwork, BPO and approvals is all for nothing.

[wealthrx]

Personally I have completed dozens of SS and have never been asked for proof of
funds. Although I have completed many double closings I have found that some title
companies require you to pay the fees associated with the 1st purchase before they
will allow the 2nd to take place. However they will allow you to payoff the Mortgage
subject to, with the proceeds from the 2nd close.

[rgchamb]

You can get a proof of funds (PoF)letter from a hard money lender and submit it with the Short Sale package.  Many won't even check your credit.  

Just my opinion, but the PoF lends some credibility with the lender when making an offer. Plus that's 1 less thing the lender would need to ask for when reviewing the SS package.

[baldyguy]

When you guys do a double close, do you usually pay off the 2nd and take the 1st subject to?

If you take the 1st subject to, do you put your name or your company name on title, then close on the 2nd with the new buyer?

[wealthrx]

"Posted by: baldyguy Posted on: Today at 10:08:29am
When you guys do a double close, do you usually pay off the 2nd and take the 1st subject to? If you take the 1st subject to, do you put your name or your company name on title, then close on the 2nd with the new buyer?"

Generally when I double close on a SS I try to avoid paying off any of the mortgages at all!!!
You are allowed to take title "subject to" even though neither mortgages are paid off(1st/2nd).
The reason I do this is because you never want to spend more cash than you have to out of
pocket, use the cash/loan from your new buyer to cover as much of the burden as possible.
Good luck.

[baldyguy]

Even though I'm allowed to do a subject2 on the property, is it possible for it to pass through me and not be on title?

Isn't it more work if you do subject to on the 1st and the 2nd?

Do you think that it will be a cleaner transaction to buy out the 2nd (new discounted amount) and take the sub2 on the 1st?

"Posted by: baldyguy Posted on: Today at 10:08:29am
When you guys do a double close, do you usually pay off the 2nd and take the 1st subject to? If you take the 1st subject to, do you put your name or your company name on title, then close on the 2nd with the new buyer?"

Generally when I double close on a SS I try to avoid paying off any of the mortgages at all!!!
You are allowed to take title "subject to" even though neither mortgages are paid off(1st/2nd).
The reason I do this is because you never want to spend more cash than you have to out of
pocket, use the cash/loan from your new buyer to cover as much of the burden as possible.
Good luck.

[R.E. Wiseguy]

If you're looking to do a Double Closing, make sure that you are working with a Title Company that still allows you to do that. I do a heck of a lot of short sales in Michigan, and I know that due to the recent Mortgage Fraud Boom, there are only a select few title companies that even allow them anymore.

[wealthrx]

Baldyguy_

Don't follow on your 1st question, please elaborate. As far as it being a cleaner transaction
by paying off the 2nd that's fine.My point was that you do not have to do it. Personally I do
not believe that it would be any cleaner unless the 1st does not want the 2nd to get any cash.
If the 1st does'nt care then why do you?
Also there are still many title companies that cater to investor related transaction, it should'nt be
a problem finding them.