If you’re a preforeclosure investor, with the
tightening credit markets, you have no doubt
noticed how much more difficult it is these
days to close short sale deals.
In the past, plenty of hard money options,
along with double closings and simultaneous
closings made closing short sales a breeze.
However, with the credit crunch, mortgage fraud,
and tighter restrictions with lenders and title
companies, closing short sales isn’t as easy as
it used to be.
However, there is still one very simple and easy
way to close your short sale transactions without
using double closings, hard money, simultaneous
closings, or even the over complex land trusts.
That method is using back-to-back closings to get
all of your short sale deals closed and funded
on time. Back to back closings take a short sale
deal and turn it into two separate and distinct
transactions. The first transaction is the
homeowner facing foreclosure selling to the
preforeclosure investor. The second transaction
is the real estate investor then selling the
property to the end retail buyer.
The easy, legal way for the real estate investor
to do this type of transaction is through the use
of an option contract. The option contract gives
the real estate investor a vested legal interest
in the property through an Option Agreement.
The option is subject to the approval of the
short sale.
Once the short sale is approved, then
preforeclosure investor must complete the
second transaction. That transaction involves
the investor selling the property to an end
retail buyer. The preforeclosure investor can
legally sell the property, because he has executed
an Option Agreement. This Option Agreement, which
should be recorded at the local county courthouse
for where the subject property is located, gives
the investor the legal right to sell and market
the property.
Before attempting to use a back to back closing,
the preforeclosure investor should make sure that
they have all of the necessary forms and documentation
to remain in compliance. Without the correct forms,
addendums, and notarized signatures, the preforeclosure
investor risks the transaction not closing on time,
or even worse, not at all.
Short sales do not have to be a complex transaction
if the investor arms himself with the proper tools
and techniques. Back to back closings are the simplest
and easiest way to close short sale deals in today’s
ever changing and volatile real estate market.
They are widely accepted by lenders, title companies,
and title insurance companies throughout the United States.