The terms “flash” and “instant” obviously infer the very quick funding of a loan by a transactional lender.
A “flash” of light takes a millisecond while “instant” implies it’s over and you didn’t even know it!
In the real world, in both cases, a transactional lender must take time to make sure he isn’t throwing his money away, so there are no “instant or flash” loans.
However, the advertising really draws in unsuspecting investor-borrowers and often to their detriment.
In transactional lending, the lender shouldn’t ask for a driver’s license, passport, extensive documentation about the investor, either the original seller or end-buyer, or even the property’s value.
Instead, the lender should only be concerned about the end-buyer’s funds being in place when the time comes to close.
Knowledgeable transactional lenders know that if a hard money lender is involved with the closing, its likelihood of closing is only about 50%.
The reason is that hard money lenders are notorious for changing the loan amount, requiring more funds from the end-buyer at closing, not allowing a double closing, or just deciding not to close.
From the investor side, these issues for closing delays or deal killer changes, are critical to his success and usually require him to personally speak to the end-buyer’s lender well before the closing.
While things can still go wrong at the last minute, it’s in the investor’s interest to keep marketing his wholesale deal and take backup contracts.
This strategy also helps build his buyers list for future deals.
I often suggest to investors that if a cash buyer offers less than a hard money borrower, he takes the cash offer and tries to work the cash buyer’s offer higher.
To make sure the potential buyer is telling the truth, ask for a POF with the buyer’s name and address on it – which should take a matter of minutes to do a screen capture of his bank account!
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If you have any additional questions, contact me directly at DaveDinkelQuestions@gmail.com.
If you need hard money instead of transactional funding, contact me for referrals to private hard money lenders.
Be sure to check out BestTransactionalFunding.com for all your same-day double closing needs, including a list of Investor-Friendly Closing Agents in various states.
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