Back-to-back closing

Another site member had come across this, too. A is the seller, B is you, C is the end buyer. It is my understanding that if you already have an end buyer, the financer will fund YOU as the middleman to close on the deal with the seller, then you will close with the end buyer. One advantage is I think this would eliminate the ASSIGNMENT process, and also your buyer would not know how much YOU are buying the property for (Although, if assignments are an option, then I don't see why you would NEED a middleman). Now, how easy it is to actually do one of these, and just how much the financer is charging you to use their money for a matter of hours, I would like to know.

I'm guessing a back-to-back closing is the same as a double-closing. If anyone knows more about this or has actually closed on one, please jump in with more info.

Thank you, swoodhouse, for asking the question. It's a very interesting subject.

Rina

Thank you for the information, that helped me understand it a little bit more.
I'll try to do a little more research, it looks like this company will be a great help for me. I just saw it today when I was searching in google. Thanks again for the info, I appreciate it.

Sharon

The first transaction is where the seller is transferring the property to the investor or trustee. That would be you. We refer to the seller as the A party. We refer to the investor and the trustee as the B party. The investor and the trustee are the same people. If you’re the trustee it’s the same as investor.

If you have a trustee then we consider it the same party. In the second transaction the investor, trustee/you are transferring the property to your end buyer. That is the C party. The first transaction the seller is transferring it to you and the second transaction you are transferring it to the end buyer. On the day of closing this is what happens: You bring the money to pay off the first transaction.

Example: If you get a short sale approved for $100,000 and you have the house sold for $200,000 you have to bring $100,000 to closing. You have to bring that. Then when the second transaction closes you will get that money back plus the spread. That is how you stay compliant in today’s market with closing deals through the title company.

Mr. X will bring the $100,000 for the first closing.

That will close the first transaction then we be able to close the second transaction. The end buyer, your buyer that you found and sold the house to will be bringing the total proceeds of the sale price to the table. Mr. X will get his money back plus his small fee and then you will get the difference. The trustee needs to bring the funds to the closing to fund the A, B transaction. This is paying off the short sale transaction so Mr. X is paying off the short sale lender. This transaction stands on its own.

It says right in the purchase and sale agreement the new purchase and sale agreement that has the new disclosure in it. It says in the contract that we are disclosing to the lender that we are selling the property to a third party. That we are immediately marketing, listing and selling the property to a third party. They can never come back at us and say that we defrauded them or anything like that.

This is complete disclosure.

Also a corporation or LLC is not allowed to be a trustee in all states. I don’t know the laws on every single state. Check to see what's allowed in your state.

So what you're saying is that an individual can do this type of closing, but not in the name of an LLC?

And are there two sets of closing costs, or just one?

Do you know how much of a fee is typically charged by a lender in this case, where you are only using their money for a brief time?

And what about the title work. Is the same title insurance policy transferred from A to B to C? Or does it have to be issued twice, and how fast and when can this be done?

lol. Sorry for so many questions. Thanks for listening.

Rina

Yes, you use a trust or land trust, you're the trustee of that trust. You close with the seller first and then with the end buyer, so it's too closings. I don't know if there's a fee charged by the lender, why would there be? Yes, I would imaginge everything's tranferred to the next guy... LOL! I haven't done it yet, but if I can't do assignments I want to know how to get around that... LOL!
Love you,

taking over the whole assignment process? this is the first time i heard of that, like you, getting the money loaned to you, for a couple of hours? So, this is really happening? SULLY

These are the fees that I got from their website.

Amount: Fee: Processing fee:
$0-125K $2,500. flat fee $595.00
$125K-1 million 2 points $595.00
1 Mil to 10 Million 2-6 points $595.00 (case by case)
10 Mil to 50 Million To be determined TBD

The good thing about them is that even if you have a bad credit they will lend you the money as long as you have an end buyer. They will not charge you if the deal didn't close and they can provide you with a title company. I still don't know what 2pts mean though. I left a message in their voice mailbox so I can get more info. But what do you think?

Sharon

Thanks for that info.
2 points means 2 percentage points. i/e that would be $4,000 on a loan of $200K. Plus the $595 processing fee.
So if you only needed $50K from them, you'd be paying the $2500 flat fee + $595 processing fee. $3095 is over 6% for just a day or so. That's like 2200% APR.
I knew they must be making some pretty serious $ from the deal.

Anyway, it's nice to know this option is available when there may not be another. (And maybe a good idea to use for MAKING money)

Again, thank you for sharing your research with us, Sharon. I love being able to learn from each other!

God bless,

Rina

I just found the company you are speaking of by doing a Google search also. This has been my main speedbump in going in the short sale direction on my own. I am going to look into this company a little further to make sure they're legit and all, but I can see this info being a HUGE help to me (at least to get started).

Thanks again,
Jeff

That proof of funds letter would open doors to using realtors listings and REOs. Let us know what you find out about them. We'd all like to know if they're legit! Thanks for all the great info guys!!

with having that proof of funds letter, you can now make offers on ALL bank owned properties(they require it where i live)REO's, VA, HUD, FANNIE MAE, FREDDIE MAC,etc....i was thinking of that a couple days ago, nice work actually posting it, MY HERO, ELENA-SULLY.

I have sent two email requests for info. Both have been responded to quickly. I was told to check REI forums on different websites for feedback on their performance and legitimacy. The concept is great and I don't mind that they're making a good profit on the deals, that's what we are all trying to do right? Besides it's using OPM which is something I've heard over and over again is key. Those are my thoughts.

Dgadmin, If anything here is inappropriate please edit as needed. Not trying to advertise.

I have meant to mention that I smile every time I see a scripture in the closings of your posts. Keep it up!

Sully,
You're making my stomach hurt I've been laughing so much! Me? Your hero? No way!! But I appreciate the sentiment... You can also use that letter to go to auctions too!! My friend Al turned me on to another hard lender that funds in 24 hours!! But only in 5 or 6 states in the SW. Sorry, about that. But the point I want to make is that they're out there if you know where to look. Ask your realtor if they know of any.
Jeff,
I'm glad to know that the scriptures make you smile too. They're the most important thing to pass on to others, well, next to the rei information.
Continued blessings to everyone!

Hi All
I have found a bank owned property I want for my primary residence, can I,
or would I want to use transactional funding?

Most transactional funding companies only lend you the money for 24-72hrs. These companies main purpose is to fund a quick flip like a REO or short sale.

Thanks, still confused, seeing great deals, lots of different options,
and just not sure how to approach the deal. Thank You for your response.