geocan10 0 Report post Posted December 16, 2003 I have a purchase agreement to buy a condo apartment from a private seller, and am looking into flipping it to a new buyer. I got a very good price there. However, I would expect the new buyer to have a mortgage in order to buy this place. Yesterday, I met this experienced mortgage broker (namely Chris), and he warned me that it is very difficult for a buyer to obtain a mortgage from an assignment contract. Lenders would usually not consider funding an assignment deal. So, I also asked him whether double closing would solve the problem, and his answer was that a buyer would have problems obtaining a mortgage from double contracts. The reason is that when the lender verifies the title and other documents, my name won't be there as the owner. The lender would most likely refuse to initiate a mortgage then. He did say that he had helped fund many assignments deals with commercial RE though. He mentioned that commercial RE deals have totally different rules from residential ones. According to what I have read from this forum and many other ones, this came to be a shock to me. Are Chris' comments really true? Any solutions to Chris' suggested problems, ie. for me to actually find a qualifying buyer via an assignment or double closing? I am not sure if things could be different here in Canada from USA. This is my first flipping deal, and I am anxious to see all the kind responses to this post. Thanks a bunch! Share this post Link to post Share on other sites
Andrew Ikeda 0 Report post Posted December 26, 2003 Geocan10, Your broker friend Chris has some good and valid concerns. The reasons he spoke of are correct, however, if you shop around at some title companies, you should be able to find a title and escrow officer experienced at double closings. Perhaps they can give you a better idea of the whole process, the legality of it all, etc. Here in the US, there is some confusion going around as to the legalities of double closings so dont feel like your alone. What I would suggest doing is making your offer on this condo "Subject to financing and inspection". This way you have a way out without money out of your pocket if the deal goes bad and you dont need to look at the property right away (if you havent already done so). Another hint: also state in your purchase and sales agreement (PSA) to pay earnest money at closing. Dont pay it up front because in most cases it is non-refundable and then your out your cash. Be sure to write "your name AND/OR ASSIGNS" on the PSA. This gives you the right to sell it to another buyer. Also, give yourself at least 30 days for closing. Add another 10-20 days to find a buyer (40 to 60 days) on the PSA. Next, look for a buyer for your property. When you find a buyer, get the mortgage application and process going immediately. You will want to do this in order to keep everyone motivated and/or find out soon whether your tenant/buyer will be able to qualify for the purchase. If for some reason, the potential buyer doesnt buy it, keep his/her name in your files and start looking for a property to meet their needs/wants. When you find it, you have a better chance of doing a lease option faster and more efficiently with that client and you wont have to shop around for a tenant/buyer the next time around. This is how our office does things here in the NW US. Hope this helps. Keep in touch and let us know how things progress. I also have some friends moving from S. Africa to Vancouver, B.C. If you know of any Canadian mortgage brokers in that area...I would appreciate a referral. Thanks and best wishes, Andrew Ikeda (loan officer/mortgage specialist) US Funding Group, Inc. 1101 SE Tech Center Drive Bldg 14, Suite 180 Vancouver, WA 98683 888-889-1640 ext 220 360-433-6820 direct line 360-260-3272 fax Share this post Link to post Share on other sites
