Is This A Good Time For A Short Sale? 10 Days Before...?
I live in California and from what I read from foreclosure sites about the process of a foreclosure, the owner has 60 days to cure the mortgage from the time they receive the Notice of Default. If they do not cure it within 60 days, a Notice of Trustee's Sales is published in the newspaper. If I understand the Short Sales process correctly, is the best time to do a short sale on a preforeclosure is within 10 days of the 60 day limit?
Reasons for it to be the best time:
- Only ten days for the owner to cure the mortgage
- If it was hard to cure it in 50 days, what are the chances for 10 days
- The lender does not get a house that is in foreclosure, which looks bad on them
- You probably can get a substantial reduced price from the lender because the house is only ten days from the trustee auction
- The owner gets to keep their current credit status to start over
Is this a good method? Or am I missing something on short sales that wouldn't make this situation work?
Also, is this the best situation for the seller or is other methods of CRE better for houses with little or no equity. Also, from what I have read about Short Sales from articles on this site, how likely is it to find a house that is in poor condition or located in an area that has depreciated that has little or no equity since these are the best for short sales? I would think that the newer houses would have little or no equity, but the lenders would not give it up because they can sell it themselves.
I want to do a short sale then quickly flip it so I will not have to pay any thing out-of-pocket.
Please reply. Thanks for all your help. 
"I want to do a short sale then quickly flip it so I will not have to pay any thing out-of-pocket."
After reading a few more post on assigning a short sale contract, I have read that most banks will not let you do a short sale deal with them if it has assignment option in it because they don't want you to make any profit if they could of got it themself. So, if no contract was accepted because of the assignment option, should you try to negotiate with the lender (say that there is a possibility of foreclosure on the property and that if it goes into foreclosure, it will look bad for them) or should you drop the whole thing and find a property where they will accept it, if any actually do. I am asking this because I don't want to do a double closing, because doesn't that mean I have to have the money first? I want to wholesale the property so I don't pay anything out-of-pocket. Am I understanding this correctly?
Update: I don't know too much about this, but in this thread HERE, did pbodys complete this deal with nothing out-of-pocket? He says he obtained all the original paperwork from the seller about their property on the original purchase, took those to his attorney and placed a lien on the property for services in the amount of $10,000. What I don't understand is how he puts a lien on the house? What does getting the original purchase paperwork do so you can put a lien on the property? It worked for him, so is this is a possible way of getting money with nothing out-of-pocket, since most lenders do not accept an assignment option in the contract? Its a win for everyone!
[ Edited by gtongox562 on Date 06/29/2003 ][ Edited by gtongox562 on Date 06/29/2003 ]
I am not in California, but if I were, I would start short sale negotiations with the lender as soon as possible and not wait until 10 days before the sale. Lenders are not quick and they frequently will not postpone the sale while they make up their mind.
On the double closing issue, you do not have to have the money. The money comes from the ultimate buyer. However, you will incur more closing cost since there are two closings.
Bob
Hi Bob,
Could you please explain, in detail, exactly how to perform a 'double closing' without bringing any of your own funds to closing?
Thanks
Roger
Roger, a double closing involves, first, a closing where you are the buyer, and a second closing where you are the seller. These are frequently done one immediately after the other with the title co. The title company, if investor friendly, is aware of this procedure. They simply allow the funds to come from the closing in which you are the seller. Since these usually occur within minutes of each other, it is not a problem. Usually, the original seller to you isn't aware of your immediate sale. Likewise, your ultimate buyer is not aware of the price you just bought the property for. This technique can serve two common purposes. First, it gets around a contract that is not assignable (for you to flip it to someone else), and, second, it avoids the other parties to the transaction knowing how much money you are making, which can be a problem for those with active greed glands! Hope this helps.
Bob
Bob,
What you've just told me, I can get from just about any guru book out there. Have you actually done a double closing this way yourself? If so, please give the details.
The reason I bring it up is because, from my experience, it doesn't quite work that way.
Please explain to me how you can A) legally use your end buyer's funds to cash out your closing and B)sell a property that you don't yet legally own. By using the method as described, you'll have to do one or the other, right?
If you've done it successfully (and legally) and can give details (especially an attorney/closing agent to speak with) then great. I'll gladly eat crow on it.
This is nothing personal against you, Bob. But I've done alot of research on this subject and it's sort of become a pet peeve of mine. I've yet to have the 'guru' double close explained to me in a way that has actually worked.
Roger
Hey, Roger, I hear crow tastes like chicken. You can let me know!. This is the detail on a deal done within the last month:
Appraised value 96,000
My negotiated purchase price
(based on short sale) 50,000
My selling price to the end
buyer on a double closing 76,000
Approx. closing costs 5,000
My net 21,000
I had no money in this deal. This was closed by a Title Co. I had a contract to purchase the property. When you have a contract or option to purchase, it is legal to write a contract to sell. If you want verification of this, I suggest you go to ****Must Reach Senior Investor status before posting URL's***, which is the local investment club website (I have no affiliation other than being a member). You can contact either value properties or any title co. in their vendor list and ask whether they do double closings. If you have any more detail questions, I would be pleased to try to answer them. As I said earlier, you do have more closing cost this way. It is less expensive just to assign the contract for an assignment fee if it is possible.
Bob
Bob, what type of financing did your buyer get? Was there any seasoning requirements? I think this is what Roger is referring to when it comes to double closings.
Thanks,
Tom
Tom, in this case, it was a private investment company with no title seasoning requirements. It is true that the lender would need to be one (nonFHA) that does not have seasoning requirements. They are getting harder to find.
Bob
I'll wait just a bit before I put the crow on a plate.
Yes, I'm aware that you can sign a sell agreement for any property that you have under contract. However, you can't actually sell that property until you've satisified your initial contract obligation (in short, you own it).
The problem I have with the double closing scenerio is the 'using the end buyer's funds to close 1st deal.' You can't do it. You have to have separate funds to close the first deal. Now, funds are not the same as cash/money/loans, etc.
By my research, using private funds (such as a private investment co.) or some form of 'owner financing' (personal favorite, no fees) will get you funding without any money out of your pocket. It also separates the 2 deals.
Now if you've found a way to do it differently, I've got my fork ready. I'll be waiting on your details via pm.
Roger
Roger, I do know of a title company, in Michigan, that states they do these types of closings for investors all of the time. I understand the seasoning issues in regards to these really make it hard to pull of now. Not sure what kind of proof you are looking for besides the seasoning issues. I doubt that these title companies are going to do anything illegal since there butts are on the line.
Tom
Tom,
The problem that I have with people suggesting using a double closing has nothing to do with the seasoning issue. The problem is telling people that they don't need funding, the money comes from the end buyer.
While this is technically true since the buyer will quickly reinburse you for your initial purchase, it leaves out the fact that you need some sort of legal funding yourself to close out the first deal. It has to be completely separate from the 2nd deal.
If you know of a title company, ask them the specifics on how the closing is performed. My guess would be that they ''loan'' you the money to close the first transaction.
I know of closing agents who will do double closings, too. This is what they do. Issue the investor a short term loan in order to close the first deal. Most investors don't even realize what's happened. But if something were to go wrong with that 2nd closing and the deal fell thru, you can bet that you'd know then.
Roger