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The Problem with Using a Simultaneous Closing! |
Its part of the dream, the possibility of being able to make thousands of dollars with out using any of your own cash as an initial investment. Well, it has been done and can still be done with a variety of real estate sale practices. One of these popular sales in real estate investment is the Simultaneous Closing, which basically involves you purchasing the property with your investors money and then selling that property to your investor all in a matter of moments. Its legal and requires paying close attention to the numbers on all sides of the deal.
One Minor Drawback with this Real Estate Sale
There is a small problem with using the simultaneous close in order to make a property sale. A lot of title companies are hesitant to insure the title thats been sold using this method. In recent years there have been many problems with mortgage fraud and predatory lending. Many of those fraud deals have involved a simultaneous close on a property title. Plus, the business of foreclosure investing and real estate investing has a bad reputation.
So, to try and cut back on the incidents of mortgage fraud and predatory lending title companies have made a blanket rule stating that they just wont insure a title in simultaneous close.
This doesnt sound like a big problem in wholesaling, but it basically means that the title company wont perform a simultaneous close. Hence, you cant buy the property! This is a bad deal for all the good real estate investors out there who are putting in their time and effort on wholesale deals, but who dont have the money to invest on their own terms.
Not all title companies have this rule, but its something to keep an eye out for. This practice has just taken effect in certain areas. So, its to your benefit to see if the title companies you will be working with are still performing simultaneous closings. Youll want to do this research before you make an offer on that next big real estate investment. Dont cast aside the notion of a Simultaneous close entirely because this is still an excellent method for wholesaling property.
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Source: ArticleTrader.com
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