September 2009 Newsletter
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Rubber ducky method of simultaneous closings
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Rubber ducky method of simultaneous closings

Getting your ducks in a row…..

The theory goes that if you get the ducks all lined up in a row, they are easier to shoot. Who the heck would shoot rubber duckies anyway?   Well, whatever. Let’s just go with it for the moment.
 

 

When you are trying to work a short sale, and you are trying to buy from the seller and resell to a new buyer on the same day, your transaction will be scrutinized carefully.
 

 

Sometimes the shorting lender (the lender who lent to the seller, and is accepting a short payment) will not allow you to resell the house immediately, and in fact will insert a clause in the P&S stating you must hold the property for at least 90 days.
 

 

Sometimes the end buyer’s lender will require that you hold the property for 7 days, or 30 days, or whatever, to provide “seller seasoning”.
 

 

But the biggest vortex in the bathtub (I’m going with it, remember?) is the title company writing title insurance for the end buyer’s lender. If they won’t insure title, the whole thing goes down the drain.
 

 

So here’s what you need to do:
Duck #1 – Disclose to the seller (and therefore the shorting lender) IN WRITING, IN THE OFFER TO PURCHASE that you are selling the property to a third party, expect to make a substantial profit, and expect to close both transactions simultaneously.
Duck #2 – Disclose to the end buyer that you are negotiating a short sale for the current seller’s benefit and expect to close both transactions simultaneously.
Duck #3– If possible, your end buyer should be using a lender who does not typically have seller seasoning requirements. (If they do have seller seasoning requirements, we can sometimes work through that.)
 

 

Whoa! Doesn’t all that kill my deal? Well, sometimes, it can. But you can’t close it simultaneously if you don’t have those disclosures. If you can finance it otherwise to hold it for the required time, then go for it. But if you can’t, and want to fund 100% of the purchase and closing costs, then this is how you do it.
 

 

If you a struggling with a short sale right now, we have a partner who can help you negotiate it. And if you are about to jump in the bathtub, or if your feet are already wet but you’re not sure the deal can close, call us and we’ll check it out.
 

 

I hope you didn’t mind the rubber duckie stuff, I had fun with it. Glug, glug.
 

Your partner in profitable investing,
Ann Bellamy
Buy Now, LLC