Double Closing

[NJ Valuator]

How can the investor(wholesaler) flip and sell a property that they do not yet own?

 

[gregb]

How can the investor(wholesaler) flip and sell a property that they do not yet own?

See "contract assignment"

Double Closing Real Estate Wholesale Deals | FortuneBuilders

As a real estate wholesaler, understanding the double closing will be vital to your success. Understand the basics by reading FortuneBuilder's beginner's guide.

www.fortunebuilders.com

 

[Tom D]

on the 1st agreement contract it say nj valuator and/or his assigns. they are actually selling the agreement of sale.

 

[NJ Valuator]

on the 1st agreement contract it say nj valuator and/or his assigns. they are actually selling the agreement of sale.

so when the form asks if the seller is owner of public records, I have not check no.

 

[Tom D]

that is correct. especially with FHA, they are concerned about flipping. within 1 year they want a 2nd appraisal. just explain the agreement, that's a lender issue.

 

[NJ Valuator]

See "contract assignment"

Double Closing Real Estate Wholesale Deals | FortuneBuilders

As a real estate wholesaler, understanding the double closing will be vital to your success. Understand the basics by reading FortuneBuilder's beginner's guide.

www.fortunebuilders.com

Let me see if I am comprehending this correctly.

There are 3 entities involved in the transaction, the owner(seller), the wholesaler(investor), and the
"end" buyer(borrower). The wholesaler(investor) is obtaining the right to buy the property from the owner(seller) and then in turn transferring its rights to purchase it to the "end" buyer(borrower). The owner(seller) thinks the wholesaler is the sole and final buyer; he has no clue that there is an "end" buyer(borrower).

There is no real estate agent involved and the subject was not listed in the MLS or marketed anywhere so I need to obtain information regarding asking price, contract negotiation, etc. for the appraisal from the owner(seller), but the owner(seller) is providing me the the contract data between him and the wholesaler(investor) not between him and the "end" buyer(borrower). The owner(seller) is not aware that there is an "end" buyer(borrower) that is paying a sale price which is MUCH different than the amount the owner(seller) is getting from the wholesaler(investor).

So I guess I actually have to analyze two different negotiations within the appraisal. The one between owner(seller) and the wholesaler(investor) and the one between the wholesaler(investor) and the "end" buyer(borrower), is that correct?

It is still difficult to comprehend how this scenario can even be possible.

Why doesn't the "end" buyer(borrower) just purchase the subject directly from the owner(seller)? What is the point of having a middle person i.e. wholesaler(investor)?

 

[Tom D]

you got it all right. we all wish we could find properties like this. the normal buyer never finds it this way, MLS is the way. anyway it happens, and you only concern is how to describe it. the whole seller makes the seller an offer. the whole seller then figures out a selling price. such is that business, do not overthink it. mostly they seller to fixer uppers cause the home typically isn't in great shape.
just describe it.
but this is why the lender may order a 2nd appraisal, to make sure your not part of a flipping scheme.

 

[Tim Hicks (Texas)]

It happens with builders and lots all the time.

 

[Zsmithz]

Let me see if I am comprehending this correctly.

There are 3 entities involved in the transaction, the owner(seller), the wholesaler(investor), and the
"end" buyer(borrower). The wholesaler(investor) is obtaining the right to buy the property from the owner(seller) and then in turn transferring its rights to purchase it to the "end" buyer(borrower). The owner(seller) thinks the wholesaler is the sole and final buyer; he has no clue that there is an "end" buyer(borrower).

There is no real estate agent involved and the subject was not listed in the MLS or marketed anywhere so I need to obtain information regarding asking price, contract negotiation, etc. for the appraisal from the owner(seller), but the owner(seller) is providing me the the contract data between him and the wholesaler(investor) not between him and the "end" buyer(borrower). The owner(seller) is not aware that there is an "end" buyer(borrower) that is paying a sale price which is MUCH different than the amount the owner(seller) is getting from the wholesaler(investor).

So I guess I actually have to analyze two different negotiations within the appraisal. The one between owner(seller) and the wholesaler(investor) and the one between the wholesaler(investor) and the "end" buyer(borrower), is that correct?

It is still difficult to comprehend how this scenario can even be possible.

Why doesn't the "end" buyer(borrower) just purchase the subject directly from the owner(seller)? What is the point of having a middle person i.e. wholesaler(investor)?

I have actually done this personally on both ends. Usually the seller has defects and deferred maintenance that makes it hard/impossible to sell on the open market, has an emergency and just needs it gone, doesn't want to do any work on the property, or for some other reason needs a quick cash sale. Investors are looking for these properties but don't have the time to find them, thus a wholesaler comes in. The seller is happy to not have to work on anything and gets a check, the wholesaler never touches it and gets paid for their research efforts and gets a check and the investor gets to flip it and make the biggest check. If done ethically it is the biggest win/win/win possible.

 

[NJ Valuator]

Thanks everyone for the enlightening me on this. 26 years in the business and I can still learn something new. The whole scenario just seems dirty, but I am not the judge.

Should I divulge in the appraisal how much the owner(seller) is receiving from wholesaler which as I stated earlier is MUCH different than the amount that the wholesaler is charging the "end" user(borrower)?