Is This Legal???

Bueller...Bueller

Have you asked the buyer to pay you out side of the closing.

I have not but, is this legal/ethical?

If you bring a buyer to a seller you should be paid a bird dog fee. If it is 2k one of them should be able to pay you out side of closing.

Did you ask the title company what you would have to do to get paid.

The seller can sell to the buyer at the title company. So the deal can be closed you just need one of them to pay you.

The title company told me I would have to be a licensed RE agent to get paid on the transaction. If not, it's considered equity-stripping and they will not let the transaction go through. This is why I am trying to find someone who is doing this to find out how they do it.

Do you have this property under contract and it is an assignable contract?

Michael Mangham
MD Home Acquisitions LLC

Yes, it is under contract...the buyer needs a bank loan and several title companies have told me they would not pay because it's equity stripping

Ask them if they can show you the law, the number of the law and where to find it if they can't physically provide it; that this is illegal. Some may be saying its illegal because the BANKS don't want to do it; that doesn't mean its illegal. I personally do not know, but this is how I would handle it.

Is the contract assignable? If it is have your buyer sign your assignment contract that states you paid $97,500 the price the seller agreed to sell it to you for knowing full well that you are in business to make a profit. Then the contract will show your assignment fee of $2,500 for a total sales price to your buyer of $100,000. Take these two contracts with your buyers $2500 to $5000 earnest money check to the title company and ask for a closing date. That is if assignments are legal in your state. I bet they are! Once again your contract from the seller MUST be assignable.

Hope that helps,
Michael Mangham
MD Home Acquisitions LLC

I guess I'm not following. The title agents, not the bank giving my buyer the loan, have told me that they will not close this transaction because it would be equity stripping. The contract is assignable, the title companies have just said that they cannot pay me or my company any money. I was under the impression that I could not "assign" a contract if the buyer needs a bank loan. So, I was doing the IEE strategy Dean has in his book. This has me lock up the property with the seller on a basic purchase contract. Then, have them sign the disclosure stating I am an investor and will sell the equity I found to a third party. Then, sign the document that states the purchase contract is null and void, because I found a buyer, and that acts as an invoice for the title company to pay me. This is where the title companies will not pay.

mentioned earlier. It SHOULD be legal, but there are several title companies that won't do it, or are not comfortable doing it because they don't know anything about it. That is why you need to screen your title companies when you choose one.

I have never assigned a contract to some one using conventional financing, only cash of hard money. I can't see a problem however, but I don't know the law where you are. Like Tammy said ask for the law, the number of the law and make them prove it!
Is your buyer pre approved for his loan? If so things should move fast. If not require that before you go any further. Call your local REI club and ask who they use to close their assignment deals and the contracts they use. Call a RE attorney.

Let us know what YOU find out!
Michael Mangham
MD home Acquisitions LLC

The buyer is pre approved but, I am looking in to what they mean by equity stripping. As I said, I have talked with several agents and all of them have told me the same thing.

You might try this. Transactional funding for a back to back closing. This is from their web site. Coastal Funding.com

A” - Seller
“B”- Investor
“C” - End Buyer

We Have Two Stand Alone Transactions.
“A" sells to “B” and “B" sells to “C”

We Are Funding The "A” to “B” Transaction. This Is An Independent, Stand Alone Transaction That Must
Close With The Same Title Company As The “B” to “C” Transaction.

Coastal Funding provides Flash Funding™ for the “A” to “B” transaction at a fixed rate of return (2%). By using the Back-to-Back closing method, along with Flash Funding™ it allows investors to buy and sell properties at the same time safely and legally. As you know, most title companies are no longer allowing you to use the end buyer’s money to close both transactions.

Flash Funding™, along with the Back-to-Back Closing method, you can safely and legally close your Real Estate Deals with no worries. With the new guidelines and title companies no longer willing to close short sales using land trusts (we know some still are and we will fund them with your title company) we recommend using the option contract.

James I have not used this but I will use them when I need them to close a deal. Others on this site have used them.

Remember there is more than one way to skin a cat. (catfish)

Have you talked to a RE Attorney? I'm in Illinois and my RE Attorney said it's perfectly legal to assign contracts. However, I've never attempted an IEE, for the same reason you mentioned. However, if I was going to do it, I would take all my IEE documents to my attorney, explain the process, and then work with them to get it done. They know the law, not all title companies do, especially if they've never done an IEE transaction.

I have only closed one deal in Ill. It was a home for my Mom and Dad to live in. In Vermilion County the Title company person was an Attorney. I don't know about other parts of the state.

I would like to do more deals in Ill. Let us know what the out come of this issue is.

Good Luck.

I think what they are trying to imply by that term is that the amount of your fee would have to come out of the equity of the house because he's financing. Because the buyer is borrowing, this would add money to the amount of the loan and take it away from the equity. What's ironic are all the broker's fees, commissions, junk fees, processing fees, prep fees, etc junk fees that will be added to the cost of loan or put into the loan altogether.

I don't think its illegal; I believe what it is is unfamiliar. RE agent and title companies are not lawyers and if they don't understand things could be taken as being illegal. Dig in deep to get the answers!

why not just turn it into an assignment deal? i use Lawyers Title and i believe they can close deals in any state. i am in Indiana and can give you the information i have if you are interested. just PM me and i will get it to you.

Have you found out anything on this deal. Keep us informed on the out come.