HBS closings

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  • Jackie

    Prior to the Housing Bubble bust, an investor could close deals without the outlay of much cash by using the end buyers funds to close the deal. No need for A-B and B to C or back to back closings. Things have changed considerably since those days.

    When you have found and approved your buyer from the HBS, from what I understand you have been still able to use the end buyers money. How are you doing this and yet still remaining complaint with new title company regulations?

    When completing a HBS, how does the investor close or extract his/her profit from the closing without having to resort to using transactional funding or back to back closings?

    What are the restrictions? I would think you can still write up a contract with the seller for X dollars, then write a different contract with the buyer includeing your mark up. The important thing is to do your home work with the title company first. I have walked into title companies and developed good relationships. Call around and ask the if they can perform a “simultaneous close” aka double close. If they say yes without any problems then you can simply turn in both buy/sell contracts and they do all the work. The difference or spread within the deal would go to you. They cut you a check. In the contracts you would speficy who exactly is paying for closing cost. I’m in the process of doing just exactly this with eight homes and my local title company said to bring it on.

    I did a conference call about this last December and even provided a screen shot of a HUD-1 settlement statement from a deal I did that month to show how it works & how it shows up on the HUD-1

    The easiest way is to get paid to release your option. The seller and buyer have a contract together and you get paid to release the option you have on the property. YOU turn in a copy of the option contract between you and the seller, the option release, and the contract with the seller/buyer. Keep control of the deal. The release will show up as a line item to “clear title” on the HUD. It will look like any other lien on the property that is getting paid off at closing. The other benefit of doing it this way is that you NEVER are in the title chain.

    Don’t get confused by all that A-B B-C transactional funding JUNK that people are talking about. It’s just a scare tactic they use to try to get you to borrow money from them. It is NOT necessary!!!

    Instead, you can help the seller put the property in to a land trust for “asset protection” purposes. The beneficial interest can be sliced and diced any way you and the seller agree – like 100% or 50% of all profit over $X . Because it is in a trust with the sellers name on it, the banks will not consider it a seasoning issue and will fund the deal without any transactional funding needed.

    BEWARE of the high priced seminars and home study courses. BEWARE of the 30-something real estate “experts” who don’t have enough knowledge to know how to do things in a CREATIVE manner — or prefer to find ways to gouge you for high priced transactional funding.

    thanks..so use a contract release/termination agreement.

    jackie, do you have or share such a contract release agreement with the forum


    this release of contract/option, if the end buyer needs financing to buy the home, is our profit spread financed or paid by the buyers bank funds or is it issued separately outside of escrow from the end buyer’s own funds?

    You don’t want to do anything outside of closing. Keep it all “on the table” The release of option will show up as a line item on the settlement statemenet at closing. A check or wire of funds will be issued by the title company. It’s the Seller who is paying for you to release the option contract. It comes out of their proceeds at closing.

    you done the HBS and got a high acceptable offer on a house you got an option on. rather than going through the laborious routine of a 30-60 day mortgage underwriting process, could you simply assign your option to the end buyer for a fee which is paid out of escrow? then have the end buyer and seller go through escrow as usual. i think this would be a faster way to get paid if your highest and best offer is from a financed buyer.
    what are your thoughts?

    YOu don’t want to do anything outside of escrow. You can assign your contract but that assignment paperwork should be turned in to the title company and they will make sure you get paid and the deal closes.

    You can still do simultaneous closings or dry closings. There is no need for getting financing or these slick willy A B closing or loan shark transactional funding. These are just gimmicks to get your money.

    If you work with a title company who closes a lot of deals for investors, they will know how to do a simultaneous close ( you don’t need to bring money to the table before your buyer buys)

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