Need Advice On First Flip!!
This is my first deal so I need a little guidance. I bought a new construction home which I'm closing on in mid January. My realtor found a buyer that is willing to pay $55K more than I paid for it. So, after paying 5% realtor fee I'll walk away with about $35K. However, the realty is pushing me toward a double close, where I would actually have to pay some closing costs on title, etc. Are they giving me bad advice? Is "assigning" the contract as simple as selling it to him for a fee? Are their any other costs involved? I want to make sure I have my facts straight before I talk with my attorney. I don't trust him either.
By the way, the contract does say I have the right to assign it.
Getting your buyer to write you a check for $55,000 woild be the hard part to do the assignment. If he knows he is paying you that much and has a fat checkbook then do the assignment. Usually assignments are done for a few grand or so. Doing a double close is not that much more. The title policy can be transfered from the builder to your buyer for next to nothing and the only real costs are the deed prep and escrow charges and recording fees. Probably less that $500 total. Check with your title agent and let them know what you want to do and they will work with you i bet.
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
I would say that having to pay some of the closing costs in a double closing is acceptable and will only cut your profit by a small amount. Another piont is how long have you held the property. If not long, then you are lucky you didnt have to put out extra cash to keep the property going. Not sure if this helps, but I would think 30k is better than nothing.
gaf0317, I wish you the best on this deal. Sounds like a great one.
But I would suggest that you find a new attorney, if you don't trust the one you have. Just my 2 cents!
[addsig]
double close.
if your buyer knows your pocketing 35K on the deal, they'll probably try to give you hell about it.
good luck with it.
Quote:
On 2003-12-12 11:52, gaf0317 wrote:
I want to make sure I have my facts straight before I talk with my attorney. I don't trust him either.
By the way, the contract does say I have the right to assign it.
You are going to make a ton of money on this deal.
There is no reason to 'get your facts straight' unless there is something you aren't telling us.
Don't worry about spending a few extra hundred dollars to make sure everything goes smoothly.
GO TO THE ATTORNEY NOW!
Some thoughts:
If the contract is assignable you really have only the issue of being upfront with your buyer. You may have to roll this into the closing because of the margin you are making may make it impractical for the buyer to put $55,000 into escrow.
The buyer should have no problem with your profit. Make sure he knows about it and be up front with him.
The buyer needs to line up his financing, and make sure the bank knows about the flip/assignment. The title company also must know. You need to find a title company now that will handle the closing.
These type of deals, especially in new construction, are common, but "flipping" makes lenders and title companies nervous.. Some lenders will not loan 80% on the new purchase price. Some will.
In my area of the country this kind of deal you are talking about is common. I do it all the time. Builders and developers can get their projects off the ground sooner with investors like you. The local banks here understand this type of investment.
A good title company will save you money on the transaction and can structure the closing properly.
Gregg
[ Edited by GFous on Date 12/13/2003 ][ Edited by GFous on Date 12/13/2003 ]
In this case because your contract is assignable you could do either a double close or an assignment. Now I can't say that an assignment is allowed on your buyers side, nor can we determine if a double close is allowed.
Your buyer is going to be limited by what their lender will allow. Some lenders won't allow assignments and double closes.
The title company is probably recommending a double close simply because you are making quite a bit on this deal and the seller and buyer may both get upset and you would risk someone walking away from this deal.
If it were me, I'd probably eat the closing costs just to keep all parties separate and make sure my deal goes through.
[addsig]