OfflineDG Fam,
I wanted to go into how to do a double close a little more because I am thinking my first deal will be off the MLS through my agent. Ok, let's just say I get an offer accepted on the MLS through my agent. Alright, the contract is signed and mostly likely I'm unable to put and/or assignee on the contract since I understand it's tough for MLS listings. Ok, now I have to do a double close. The question is: When I find a cash buyer for the prop, do I use a contract I created with a real estate attorney for the cash buyer or go to my agent and explain the situation and let the agent handle that contract too? I hope I wasn't confusing...
Bernard
Douglasville, GA
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You do not want the listing agent or even your agent involved with your end buyer. What you do with the property 10 seconds after you own it is totally up to you. Many real estate agents take offense to a double close and it is better to leave them out.
When writing an offer, take the form that you used to submit your first offer. Remove the parts that imply that this contract is from a real estate agent, firm or association. Prepare a contract that contains the same legal wording and essentially the same formatting. You can prepare this and submit it for approval to your end buyer.
The key to success is the make sure that you find a title company before hand that will handle a double close because not all of them will.
On MLS properties, if it is an REO or a SS you cannot do Assignments. If it is a Standard Sale (meaning owned by an individual) you CAN put and/or assigns in your contract.
You can ask your realtor to only send you Standard Sales if you prefer.
Karen
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However, some agents are quite hip to wholesaling/flipping/double close methods. In fact, when you initially speak with some agents/brokers, they may ask you if your exit strategy is to wholesale listed properties. I'm asked this frequently when I network with new agents. If they are fine with this RE method, you can disclose that you'll be double closing. Only do this if they introduce this technique to you or if you're really good acquaintances with them. In regards to the contract used, just have your buyer sign a standard AOS (Purchase Contract) reflecting you as the seller and your end buyer as the buyer. It will be just like the one you signed with the original seller, but with different terms (whatever terms are discussed between you and the end buyer in regards to purchase price, deposit amount, settlement date, etc.). Here in PA, you can use the state approved AOS with your end buyer or draft your own contract. The state approved RE purchase contracts are like novel lengths, lol (a whole bunch of pages), so I have a simple 1 page AOS contract that can be used with end buyers. Another creative strategy is to add your buyer to the AOS with you, and once the property is purchased, have your name removed from the deed. The closing agent who oversees the settlement can do the quit claim transaction for you.
I think we must have been responding at the same time, as I'm just seeing your response.
Karen's right - just about all REOs prohibit you from assigning your contract. With some of your small-time, local banks, it could possibly still work as you get closer to the proposed settlement date.
You will use a separate purchase and sale contract with your buyer from the one you will use with your agent. Then you will bring both contracts to your attorney/title company and start the double close process. I will not tell the agent what exactly your doing because at this point its none of their business but if you built a relationship with your agent and closed many properties with him/she then you may tell them your investment strategy.
Reynold Orozco