Closing & Funding Short Sale Deals With Transactional Funding
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By :
Mike McCoy
Submitted
2008-10-10 21:34:32 |
If you're a preforeclosure investor, with the tightening credit markets, you have no doubt noticed how much more difficult it is these days to close short sale deals.
In the past, plenty of hard money options, along with double closings and simultaneous closings made closing short sales a breeze. However, with the credit crunch, mortgage fraud, and tighter restrictions with lenders and title companies, closing short sales isn't as easy as it used to be.
However, there is still one very simple and easy way to close your short sale transactions without using double closings, hard money, simultaneous closings, or even the over complex land trusts.
That method is using back-to-back closings to get all of your short sale deals closed and funded on time. Back to back closings take a short sale deal and turn it into two separate and distinct transactions. The first transaction is the homeowner facing foreclosure selling to the preforeclosure investor. The second transaction is the real estate investor then selling the property to the end retail buyer.
However, even if you are using a back to back closing, and your end retails buyer has secured their funds, what makes this work is that you need to secure your own funding, as the real estate investor.
So where do you get this funding of your deals? This is often called transactional funding, and today, there are many lenders making these types of loans. Lenders love transactional funding, because they are only lending for a period of a few hours.
With the end buyer's loan already approved and in place, two separate and distinct transactions take place on the closing day. The first is the investor purchasing the short sale deal from the distressed homeowner. This is funded by the transactional funding company. Immediately after this transaction has closed, the investor is then turning around and immediately selling the property to the end buyer.
The end buyer is using funds obtained by him through a traditional loan, or cash. Most conventional lenders today won't have any issue funding these loans. The only such exception are FHA loans, which at the time of writing this article, have a 90 day seasoning requirement. However, as the real estate market changes, and the housing market remains volatile, it is very possible that the FHA might change its guidelines.
Transactional funding is the perfect way for preforeclosure investors to fund their short sale deals in today's foreclosure ridden market. There are plenty of choices for funding companies, all willing to fund these simple, easy short sale transactions. |
Author Resource:-
The Short Sale Formula provides a step-by-stop formula to show real estate investors how to put together a short sale packet, outsource short sale files, conduct back-to-back closings and finance short sales once they are complete. The Short Sale Formula is owned and operated by SaveMeFromForeclosure.com, LLC.
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