$10,500 Check for a Retail Short Sale Deal!
It’s quite likely that many of you out there only think you can make a good sum of money on wholesale short sales. But we recently closed a retail short sale in which we made $10,500, and had the bank pay us! It was a two-family house down in southern Connecticut with an offer of $400,000 to start. We started the process by submitting a wholesale offer, with the hopes that we could resell this to an end buyer. After working on the short sale for a couple of months, our wholesale offer was approved, however upon further investigating the buyer’s lender and the type of loan they were getting…and the fact that they were using a mortgage broker only, and not a direct lender/mortgage broke, we realized that the chances of executing a double close was slim to none.
And so we decided to roll the deal into a retail short sale and realized that we could have the buyer pay us a fee equal to the one we’d make if we completed the wholesale short sale! (In Connecticut part of the reason that this can occur is because when doing wholesale short sales we have to perform two separate closings and added costs). This is how we did it…
In looking over the contract, we noticed that the buyer did not require any concessions/closing costs, and so we spoke with the buyer and his agent and told them that we could work out a way to have the lender pay our fee. We then spoke to the buyer’s attorney and informed him that not only would we be able to accomplish this, but that we’d be able to represent everything on the HUD1 to satisfy title issues. And so what we did was negotiate 3% seller’s concessions for the buyer, which they in turn agreed to pay us at closing. The beauty of this was that the buyer wasn’t faced with having to pay us that amount out of pocket, and so they gladly agreed to pay the concessions, especially since we negotiated them and got them approved to begin with.
As I said, the initial offer was $400,000. The first time the buyer set out to get a clear to close, their appraisal came in at $350,000, and so we had to go back to the lender and get them to approve $350,000, which we were able to do shortly thereafter. For more articles and videos with real-time updates on changes in the pre-foreclosure industry visit www.RealEstateBusinessMentors.com and if you would like to ask me a question visit www.AskBobLachance.com.
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Just received your CD’s and SS Flagship book and it is great! I am about to finalize a deal that looks like I’ll have to do a SS flip closing. Is there anyway possible to get a copy (to use as an example) of the agreement you use that spells out the procedure of buyer placing money in escrow to be released to me upon a successful purchase?
A great blog post makes you think and you’ve certainly given me a few tid bits to consider.