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  In the previous FAQ about transactional funding, I was asked how to do deals with no EMD. The answer to this question, how can your transactional funder fund an EMD, elaborates on the various answers of doing deals with no EMD. The easiest way, if you are dealing directly with a seller, is to add a clause to your contract stipulating that you will provide the EMD on the day of closing. The most common way this is handled is your transactional funder simply adds in the EMD to the amount he is wiring to the closing [...]

  Not long ago I was called by a couple of lenders asking if I would promote their website for lending Earnest Money Deposits (“EMDs”), and I asked, “What are you thinking and how many times have you done this?” Their answer was interesting, “Haven’t done any yet but we have a plan.” The issue for me was that about 35% to 45%, of all wholesale deals, do not close, and if they loaned these EMDs, they would lose their money! They had no experience but felt that they had the legal aspects covered by a lengthy Agreement [...]

This nomenclature of letter designations for the participants in a real estate closing is important. Parties or Legs in Transactional Funding Letter designations are used for the parties to the purchase and sale as follows: ”A” is the letter designation for the original seller and normally the property owner except where a power of attorney or court order is involved with a different party as the seller. “B” is the letter designation for the investor buyer who may be holding or reselling the property, in which case he is both a buyer and a seller of the [...]

The short answer is “Yes,” but there are a few caveats. Commercial, Multi-Family, and Raw Land with Transactional Funding With commercial, multi-family, and raw land properties, the requirements for closing that must be in place are: The first one is that both “legs” of the closings must occur on the same day and at the same closing agent. Many commercial transactions include “seller financing” which doesn’t matter to the transactional funder as this is less money he needs, but the seller’s loan may not be transferable to the end buyer. In this case, the end buyer must [...]

The words “Pass-through Funding” describe a technique rather than a specific type of closing.   For a better understanding of who the players are in this arena, let’s use the traditional letter designations for each party. “A” is the original seller and property owner. “B” is the investor who first purchases the property and later resells it. “C” is the end-buyer or the party who is purchasing the property for rehabbing, holding as a rental, or wholesaling it to another buyer. The most common type of investor closing is a simple purchase by an investor (“B”) who [...]

The short answer to using transactional funding to buy probates is “if you work it correctly.”   The best prospects for probate wholesale deals are the ones where there is not yet a probate attorney working on the probate filing with the probate court. When the case is filed the probate attorney takes control of who will do the closing when the property is sold, and usually, it is the same probate attorney wearing another hat (closing agent). In some cases, the probate attorney is also a listing agent, so he can receive a commission on the [...]

The short answer to using transactional funding to buy Short Sales is “most of the time.”   The short sale of a property requires the lender to agree to a reduced payoff from an outstanding Promissory Note to stop the property from going into foreclosure. Typically, when a lender has a property owner go without paying on his note for 90 days, the lender does an appraisal to determine if there is equity in the property. If there is no equity, the lender will usually try to get the owner to sign a deed in lieu of [...]

The short answer to using transactional funding to buy lender REOs (Real Estate Owned) properties is “sometimes.”   When a lender forecloses, he must have a local attorney do the legal work to get the final judgment and sale date from the court and then they get these recorded in the public record. Lenders are typically cheap because they don’t want to get properties back and pay maintenance costs, carrying charges, losing interest on their funds, and having repair issues. These lenders usually promise the foreclosing attorney he can do the closing for a buyer when the [...]