[Anonymous]

Anonymous

Mark,

In the “old days” ( just a year ago) you could do that deal with no problems. But with the new, tighter restrictions on lending, it will be very difficult to get it done. This is another reason short sales are very hard to accomplish these days.

Here’s how you can get it done:

Plan A:

1. Record your option. If it is not notarized, you can’t record it. If that’s the case, record a memorandum or affidavit that is notarized with the option as an addendum. (this will act as a lien against the property – although a deed of trust/mortgage to secure the option would be better)

2. Get the seller to sign and notarize an agreement to pay you $17,000 to RELEASE your option on the property.

3. Get the seller to sign a contract to sell to your buyer for $85,000 or just change the name of the seller from you to the owner.

4. Deliver the new contract AND THE NOTARIZED RELEASE OF OPTION PAPERWORK to the title company

5. Send the new contract to the buyer’s lender/mortgage broker.

6. Your fee will show up on the HUD-1 as payment to release a lien.

( now since the seller is gong to be finding out what you are making on the deal, they may not be happy that you’re making $17k so you may need to give up some of the profit to them to get it closed.

If you’re going to do deals like this, it is better to deal with WHOLESALE buyers who are getting financing through a hard money lender who won’t care about seasoning.

Any transactions that will involve an institutional lender are going to get harder and harder to close when you’re acting as a middle man.

Jackie Lange

[Mark Wimmer]

Mark Wimmer

I’m working on an Optin deal. My option price is 68,000. I have a buyer lined up to purchase at 85,000. Appraised for 115,000.
My buyers lender got wind that their would be a double close and started to raise the seasoning issue. I intend to call the lender on Monday to find out if this loan is going to go through for my buyer.
Does anyone have advice on how to handle this with my buyers lender?

Mark

[Mark Wimmer]

Mark Wimmer

Jackie,

Thanks for the advice. Unfortunately I don’t think this is going to work in this situation. We got this lead from an agent who was looking for a cash buyer for her client. We couldn’t pay cash at this price so we offered the option.Her client has another house under contract to buy and move to. She was skeptical but agreed anyway. She has been resistant throughout the whole process. If she wasn’t involved it would be no problem. Asking them to sign another contract at this point, with the agent involved, will kill the deal.

We still have 3 weeks till close. I think I’m going to talk to the lender or have my buyer talk to the lender and demand a loan commitment letter, which is required in my contract, from them as soon as possible. If they won’t provide one. I may just have my buyer use a mortgage broker I know who may be able to get this done.

If you have any other suggestions or see any flaws in my backup plan, please advise.

Thanks

Mark

[Anonymous]

Anonymous

Mark,

Ah… that’s one of the reasons I don’t buy using a realtor.

Good luck with the lender but I doubt they will finance your buyer if your name is on the contract.

Here’s what you can do:

1. YOU call the mortgage broker and explain the situation and ask what you need to do to make it work. They know what their underwriters will and will not do better than anyone. Be warned that most of them consider “flipping” illegal and it could kill the deal. That’s why it is so important to have a really good mortgage broker in YOUR corner who knows how to get things done.

2. You could close with private lender financing, take title in a trust with the name of your seller so it appears to have continunity ( seasoning)
then your buyer could get financing after you change the contract to the new name. But the lender might want to wait for 3 – 6 months for seasoning in the new name. ( you could get stuck with the house for several months if your buyer bails out on you)

3. Your buyer – if they are an investor – could get financing now using a private lender then refinance immediately after they take title. The seasoning does not seem to be an issue for refinances. If they are an owner occupant there are few private lenders who would finance them.

4. Talk to a note buyer like Bayview Financial for advice on structuring a note they would buy at closing. You could sell the house to your buyer with seller financing then sell the note at closing. The buyer gets the house, you get paid, note buyer gets a good note. and the seller gets their house sold. Everyone wins.

Anyone else have some ideas?

Jackie

Jackie

[Mark Wimmer]

Mark Wimmer

Jackie,

These are all great ideas. I am in talking with the lender now to see if they plan to proceed. I will let you know how this all turns out in a few weeks.

Thanks for your help.

Mark

[Anonymous]

Anonymous

Good luck Mark,

I’m on a road trip in Arkansas but I’ll be checking messages daily. Let me know if you need any other help

Jackie

[Mark Wimmer]

Mark Wimmer

Jackie,

I just wanted to let you know our buyers lender came through at the last minute and we did close this deal last week. They were aware of the double close and approved the loan anyway. A $15,500 profit I wasn’t expecting to see a few weeks ago.

Thanks

Mark

[Anonymous]

Anonymous

HIGH FIVE!!!!

CONGRATULATIONS MARK!!!

$15,500 — WAY TO GO!