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Problems with the Simultaneous Close? Instead, try the Assignment of Contract |
Many new real estate investors can run into problems when they attempt a simultaneous close on a property they are interested in. The simultaneous close basically involves you purchasing a property with an investors money and immediately selling that property to the investor for your profits. Its a nifty little deal that works well, when you pay close attention to the percentage of returns on each sale. However, many title companies have initiated a blanket policy that prevents these kinds of simultaneous closings.
If youve tried a simultaneous close of your own and run into a problem with the title company, there is a way around it through an Assignment of Contract. This is simply another kind of property deal where you sell your spot in the contract to purchase the home to your investor.
How does the Assignment of Contract Work Again?
When you approach a homeowner to buy their property you always have them sing the intent to sell contract locking the homeowner in with you as the purchaser. In an Assignment of Contract you would have your homeowner sign that contract as usual, saying that they are going to sell the house to you for $70,000. Then, you work out a deal with your buyer saying that you are selling the house to him for $90,000.
You have him cut you a check for $20,000 and you step aside. Your buyer now fills your place and pays the homeowner you were working with, $70,000 for his or her property. Basically, instead of buying the house from you, hes buying a contract from you and still pays his agreed price of $90,000.
Problems with the Bank
You can still run into problems with this kind of real estate investment deal. The banks often wont let you do an Assignment of Contract on a property sale. You may find that the bank you submit this kind of contract to for say, a short sale, will often kick the deal back out when you try to turn it in. When this happens the bank may tell you that they will only put the name of the person on the original property agreement on the new deed, which would be you.
This is in an attempt to cut down on shady or illegal deals that can take place in property investment. Both homeowners and banks have been duped by property scams. They can be naturally reticent to allow a sale to go through on a property with a different investor than is originally named on the intent to sell contract.
Dont turn your back on this type of real estate investment deal. Its still a good way to work around a simultaneous close that falls through, especially if you are working with a bank or company that spends a lot of time working with foreclosure investors.
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Source: ArticleTrader.com
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