Flip This Wholesaler

Hi guys and gals!

I’ve got another Reader Mail video for ya- this one came from Laura, who posted the following question on my Facebook fan page:

Here’s your answer, Laura….

Have a great weekend y’all!

Later Alligators.

P.S.
Got more questions about wholesaling REOs?  Pick up my Flip This REO! eBook and get all the answers!

P.P.S.
Thanks, YouTube, for another lovely freeze frame.

Hi Guys/Gals,

Hope you all are having a delightful weekend..

I’ve got a new Reader Mail video for ya about simultaneous closings.  I’ve had quite a few people asking questions about them these last few weeks, so hopefully this will fill in the blanks.

I was planning on posting this last night, but Windows Movie Maker is a PIECE OF CRAP and kept making my computer crash.  I decided to call it quits at 4am,  as I was starting to have fantasies of taking a bat to my computer.  Wouldn’t be the first time.

Anywho….here it is.

I’m still working on the whole editing videos thing, so just pretend like you don’t notice.  :)

If you have questions after watching, feel free to leave them in the comments section.

Later Alligators!

P.S.
If you like my videos and want to subscribe to my YouTube channel, you can go here to do so!

6/29/09

So, I got a call over the weekend from a wholesaler in Tampa who is just getting started wholesaling REOs. He saw one of the ten million signs I have plastered all over the place, and called me to see if I could help him out. Basically, he just went out and started making offers on REOs without really knowing what he’s doing- kind of a “ready, fire, aim” approach. Well, he ended up getting a property under contract at a REALLY GREAT price, and after finding out that he couldn’t assign the contract, he was ready to just back out of the deal because he didn’t have the funds to close on it himself. So, he was calling me to tell me about the deal, and to see if he could just get a bird dog fee from me if I ended up contracting it and selling it.

My first question to him was- “Why don’t you just do a simultaneous closing?” And his answer was- “There are no title companies in Tampa who will do them. I was told they are illegal.”

He told me he called every title company he could find, and that not a single one of them would do a simultaneous closing.

As you guys know, I do all of my closings using a simultaneous close, and I know of four title companies in Tampa who will do them. Actually, make that five. I just thought of another one.

I know I’ve written about this before, but I just wanted to once again emphasize that the best way to find an investor friendly title company in your area is to ask the active wholesalers who they are using. If you whip out the Yellow Pages and start going down the list (that’s what he did), you are most likely setting yourself up for a healthy dose of rejection!

Now, I know you are probably thinking to yourself, “That makes sense, Steph, but how in the hell do I find wholesalers in my area? I’m a newbie and I don’t have any connections yet!”

My first suggestion would be to head on over to RealEstateInvestor.com, sign up for an account (it’s free), and start NETWORKING! You can even do a search for wholesalers in your city. I just did a search for wholesalers in Tampa, and this is what I came up with. Do you think that one of those 37 people might be able to help you out if you sent them a message asking for a title company referral? It doesn’t get much easier than that!

If you don’t find what you are looking for on REI.com, you can also search Facebook for real estate groups in your area. I just did a search for “Tampa Real Estate” on Facebook, and got 500 different results…

You get the picture, I think…

OK, gotta run. Literally.

Happy Monday, Blogosphere!

P.S.
You can also search those sites for BUYERS!

6/5/2009

Of all the questions I get from readers about the mechanics of structuring and completing an REO wholesale deal, the one I get asked most frequently is how to handle the closings. I thought I would post a few of the most frequently asked questions, in hopes that it would clarify the process for you…..

Here we go…

* Can you assign an REO?

99% of the time- NO. Most banks will have a clause in their addenda that prohibits you from assigning your contract. Every bank contract that I have ever signed has been non-assignable.

* My realtor told me that simultaneous closings are illegal, is this true?

I have been told that simultaneous closings (back to back closings where the funds from the second transaction are also used to fund the first transaction) are illegal, too, but I have yet to have anyone show me the law or statute that supports this as being true. I have consulted with two real estate attorneys in Tampa, and both have told me the same thing- no, simultaneous closings are NOT illegal. Many title companies will not perform simultaneous closings, as their underwriters will not insure the transactions, but this does not make them illegal.

It may be different in other locales, but in Tampa, simultaneous closings are alive and kicking.

If you have questions or concerns about the legalities of simultaneous closings, check with a real estate attorney in your area. It’s best not to take legal advice from realtors, mortgage brokers, neighbors, Aunts, Uncles, etc (or me, for that matter). Always do your own due diligence.

*How do I find an investor friendly title company in my area who will close an REO wholesale deal?

The best way to find a good title company is to ask for a referral from someone who is actively doing REO wholesale deals in your market. That is how I found mine- I sought out the wholesalers who were doing the most volume and I asked them who they were using. Peer Title was the recommendation that I was given, and I have been with them ever since.

If you grab the Yellow Pages and start cold calling random title companies and asking them if they perform simultaneous closings- be prepared for a mountain of REJECTION. Most title companies do not do them, and many do not even know what they are. Save yourself the headache, and just ask someone who is active in your market for a referral.

* I thought that the banks make you use their title company on REO deals- how are you getting around this?

OK, here is where there seems to be A LOT of confusion..

Yes, it is true that most of the banks force you to use their title companies (and most of their title companies SUCK, btw). There is no way around this that I am aware of.

The bank’s title company is in charge of doing all of the title work and preparing all of the closing documents. Once all of this is ready, and the deal is ready to close, I let the bank’s title company (or the listing agent if I am not in contact with the title company) know that I will be signing all of the documents at my attorney’s office/title company. I then request for them to email the closing documents and wiring instructions to my title company. I tell them that my title company will do a “courtesy closing” for them, which means that they will get all of the closing documents signed and collect the funds for the purchase. Once everything is signed and funded, my title company FedExes the documents back to the bank’s title company and wires them the funds from the sale.

I do not ever try and explain to the agent or the bank’s title company that I am flipping the house on the same day via simultaneous close. This will only cause confusion. All they care about is that the deal gets closed on time, and I make sure that it does.

I have closed all but 3 of my deals in this manner and have never run into a problem doing it this way.

The key here is to have an investor friendly title company on your side who is familiar with this kind of transaction. You need to line this up BEFORE you put something under contract. If you wait until after you have a deal signed to try and coordinate all of this, you are asking for trouble. Have your exit strategy lined up FIRST!

*I’ve searched and searched, and I can not find a title company in my area who will perform a simultaneous closing. Now what?

If you are unsuccessful in finding a title company who will do a simultaneous closing, you can do a double closing instead (where you will have to bring cash to the table). You can accomplish this by using transactional funding aka “flash cash” or “flash funding” to fund the transaction between you and the bank. There will be fees associated with borrowing the money, so make sure to factor that into your numbers when you are structuring your offers.

If you are looking for a transactional funding source for your REO or short sale deals, I recommend FundThisWholesaler.net.    If you need a proof of funds letter to submit with your REO or short sale offers, you can get one @ FundThisWholesaler as well.   Click here to get a free proof of funds letter.

I hope this answers some of your questions about the mechanics of closing an REO wholesale deal. If you have further questions, or would like me to clarify anything in this post, feel free to ask.

Have a great weekend!