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Short sales and double closings - the good, the bad, and the ugly - Part 1
Short sales and double closings - a controversial subject to sale the least. Many Realtors have never even heard of this type of transaction while many real estate investors have done dozens of these transactions successfully. There are even some very highly respected real estate "gurus" out there teaching how to do these. Just do a quick Google search and you will find several people selling courses and trainings on how to make giant profits by doing these type of transactions.
Basically the short sale double closing concept comes in 2 forms. Both transactions involve a homeowner being upside down with negative equity in their home and the homeowner no longer being able to afford the payments. During the many months that it takes to negotiate a short sale with the owner's lender, the investor finds a buyer willing to pay more for the house than the investor is paying. Then the investor collects the spread at closing.
(1) The first form of this transaction involves a double closing (a/k/a simultaneous closing a/k/a back to back closing). Homeowner "A" owes $200,000 on their house. Investor "B" signs a contract to purchase the house for $130,000. Prior to the short sale being approved and the ... more
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