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MJ Smook

SLO closing options

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I am considering three optional strategies to close my SLOs, and need some guidance choosing one and about whether I am even on the right track or not. The choices that I am considering are:

1) Double closing, with one standard purchase and sale agreement between me and my TB and another between me and my seller, and having the title company pay me the difference. I dont like this because it is going to cost extra taxes and I don't like having to go back to the seller for his cooperation. I would prefer to put his closing docs into escrow way back when we first signed our LO agreement. That way I dont need to see him again.

 

2) Write up a new, standard purchase and sale agreement between my TB and my seller and include a real estate commission equal to my profit in the deal so that the title company pays me at closing. Cleaner and cheaper, however, it requires going back to the seller for his cooperation.

 

3) Write up a standard purchase and sale agreement with my TB and assign it to my seller after he accepts an assignment fee agreement equal to my profit so that the title company can pay me at closing. Clean if lender will allow the "and assigns" ?. Also requires going back to the seller for his cooperation, which I don't like.

 

I want to choose the one that will work best when my TB uses an FHA purchase loan.

 

I would appreciate knowing how everyone prefers to do this, especially if licensed.

 

Thank you for your support.

 

MJS

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MJ, in all three approaches you are going to need to deal with the homeowner at some point in the transaction. It's sort of a "pick your poison". Personally, I'm not a fan of the tax man, so I'd probably opt for 2, (if I were a Realtor). Have you spoken with a title company or attorney to get their feedback?

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Thank you for your replies. However, I should not have muddied my question with with option 2.

 

So please let me rephrase my question: For non-licensed investors, which is the recommended /most efficient strategy / method to close a SLO deal?

 

Thanks

 

MJ

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Thanks Steve.

 

"This also allows the seller and tenant/buyer to modify the option agreement". I am not sure what you meant by this - my buyer's lender will need to see a proper purchase and sale agreement.

However, it sounds like I have to ask my attorney to draw up a purchase and sale agreement between my seller and my TB, reflecting the purchase price that my TB has agreed to buy the home from me for. My attorney will then show my profit in the HUD as a "release fee" and close the sale. At that point my TB and Seller both become aware of the extent of my profit and I have to hope for zero objections from either party.

How does the FHA underwriter react to the "release fee"?.

To answer your question Michael:

 

I am in the process of trying to locate a "investor friendly" title agent or lawyer in the Tampa Bay area. The one attorney that I did speak to said that he would not be able to do anything with me without reviewing my contracts first for which he wanted to charge me a very large up-front fee without any commitment as to whether he would be interested after that. No thank you!
I will find the right players, it just takes time, which is very frustrating because I am chomping at the bit to get started. However, that's just how it has to be for now as I don't believe in "ready fire aim".

 

MJ

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