Is There Any Way To Circumvent Simultaneous Closings With An Option Contract?
Is there any way to use an option contract profiting from a spread (between the seller and end buyer) without doing a simultaneous closing??
I read this article which I am quoting below, is this true? Is it applicable in a short sale?
“An Option to Purchase is a much simpler way to do these transactions(without a simultaneous closings). With an Option to Purchase you have a purchase and sales agreement with your seller, the buyers name and sales price are not filled out since you don’t know this information yet.
There is also an Option Agreement between you and the seller for the price you agree on.
Let me make this simple for you. You agree to buy a property for $250,000.00; you tie this up with the option agreement. You also have your seller sign a Purchase and Sales Agreement with the buyer’s name and purchase amount blank. I have had sellers question me on this, and I simply say I don’t have the buyer yet, when we do they will be in that slot
Now we find a buyer at $300,000.00. We have the buyer sign the Purchase and Sales Agreement for $300K and now the buyer and your seller are in business together. You submit the Option Agreement and the Purchase and Sales Agreement to your title company and then collect your $50,000.00.
You will be paid on the HUD-1 as a lien and not show up on the chain of title. A much simpler way to do business…...and this is ordinary income and not subject to short term capital gains tax,”
Cincy,
If the transfer from B-C is less than the amount owed by A, then I do not understand where the profit is to be made.
Please explain.
JS.
I was introduce to a investor group that will provide the close money.
I have to find out how to refer them and be in compliance w/ TCI rules.
As I am sure you are aware, a large title company issued a policy statement to their title attorneys and agents not too long ago that prohibits simo- closings where cash from the end buyer is used to fund the initial transaction. Mortgage lenders and banks are beginning to prohibit this practice as they are financing the end loan and it has resulted in them making claims of banking fraud.
We can alleviate this problem with a simo-close, quick-turn and even bridge closings because you can use our funds to acquire the property.
What does it cost you for us our help? 2.5% of the loan amount (TJG), 4% for our investment group, and about $595.00 for processing for deals under $500k. All fees are included so there are no out of pocket expenses.
The process is very easy and you never have to worry about not being able to close on a deal again because of a lack of funds to close.
What We Do:
What we do, we have a unique funding solution which allows you to locate deals such as foreclosures, REO’s, Bulk REO’s and distressed real estate to flip and or quick-turn to end-buyers using our investor’s funds.
6.5% +500 is rape
Why do you say that if it enables you to do the deal?[ Edited by cjmazur on Date 10/31/2008 ]
I guess your right. I have to eat to live so i guess I would pay $25 bucks for a loaf of bread if I had to.
Seek and you shall find lenders willing to do it for a much more reasonable cost.