Different Ways to Close on a Deal

There are many ways to close a deal. I am going to share some with you and in the order of the easiest to the most difficult. You will probably not use all of these but it is good to know the ways so you will simply have more tools in your tool box and not miss a deal when it comes along.

1. Assignment of Contract: The first and easiest way is to do an assignment. I have enclosed an assignment form in this course for you to use. You will not be able to do an assignment on every deal. Some sellers, especially banks or lenders and most realtors, will not allow you to put an assignment clause in the contract. A lot of wholesalers use this method so they do not have to pay two sets of closing costs or come up with financing for the property. An assignment is where you do not buy and sell the property but you simply assign your existing contract to another person who is stepping into your shoes and completes the contract. So whatever terms you negotiated with the seller then the person you assign to has to abide by those terms as well.

2. Assignment of Beneficial Interest: This is a way to assign a non assignable contract. If your realtor or seller will not let you assign the contract and you know this in advance, you can simply create a trust with you being the beneficiary and then you assign the beneficial interest in the trust. The name stays the same on the contract and doesn‟t change but you have to list the buyer in the contract as the trust. This course is not a course on trust or asset protection. However, you can learn a lot about them by going to www.BrainPickaPro.com and listen to a teleconference with author Pat Tarr on trusts.

3. Subject To: This is where you buy a property with the existing financing in place and basically continue making payments on the seller’s mortgage. I am not a big fan of this method and rarely use it. The reason I am not a big fan is that anyone can get a property “subject to” by simply talking the seller into deeding the property to you and then you will continue to make payments. I have seen many new investors who focused on getting the deed and then either couldn’t sell the property or couldn’t find a tenant and had to go back to the seller and give them their property back. Many states have enacted laws to protect consumers against investors who buy a property “subject to”. Make sure to check your states local laws regarding this or any other type of transaction. If I ever use it, I only use it as a short term solution to the closing and to help the seller. Here is an example of a “subject to” deal I did. The last subject to deal I did was where I purchased a house from a single mom who was months behind in her mortgage. She wanted to sell it but also wanted to be able to buy another house in the future. I purchased her house “subject to”, caught up the back payments, continued making her payments on time for six months and then paid it off. Now what do you think that did to her credit score from where it was when I met her? Yes, it went up dramatically. There are many more things you can learn about doing a subject to deal and in fact you can listen to author Don Derosa and I talk about them at www.BrainPickaPro.com.

4. Options: Options are another way to close a transaction. In an option you really do not have a contract on the property but an option to buy the property at a certain price and for a certain length of time. The money you give the seller as option money is non refundable as it is the price you are paying for the option itself. You can then decide if you want to exercise the option or not. That is up to you. The good news is if you do not have your option sold to a buyer who will actually close on buying the property then you can simply let the option expire. In this type of transaction you also will not need any more cash than the price of the option, but remember the option money is non refundable so you can’t get it back either way.

You will be limited to the amount of sellers you can use an option with. Most realtors do not want to submit options as they want an actual contract on the property and do not want to have to take the property off of the market during the option period. The best types of properties or sellers to use an option with are for sale by owners. I have included an option agreement for you below and on the forms disc.

5. Simultaneous Closing: This is like having two closings back to back but your buyer will fund your purchase. You are closing in your name but you do not have to bring any funds to the closing. Not every attorney or title company will allow you to do a simultaneous closing. You will just have to ask your attorney or title company if they do these types of transactions. They will know what you are talking about. You can also ask fellow investors at your investors club meeting, or the leaders of the club as well. Many problems that arise in a closing come from this type of transaction. The reason is that if you do not have your own funds to close and something happens to your buyer then you can’t close and your seller will be upset, maybe to the point of suing you for specific performance. That’s why you need clause number three in my contracts section. Just be careful if you use this method.

6. Physically Closing: This last way is where you actually buy and fund the property either with cash or financing. This is the most expensive as you are also paying two sets of closing cost just like in a simultaneous closing. With this method you need to have your funding lined up in advance so you can close regardless of what happens to your buyer. Remember that even though you are closing and buying the property you don’t have to use your money as you will see next.

I hope you have enjoyed this article taken from my course called the Ultimate Buying and Selling Machine! which teaches how we buy and sell 5-10 properties a month, have them sold in less than 2 hours and never leave the office or look at them. For many more articles and a 10 part ecourse on how to create your own Ultimate Buying and Selling Machine! as well as over 50 training audio recordings you can listen to online, download and collect, simply go to www.LarryGoinsFreeOffer.com where you will gain instant access to all of this and 51 Exclusive Editable real estate investing Forms and Documents all FREE! You will also get two FREE real estate investing eBooks, A free Personal Coaching Profile to help you jump start your real estate Investing, FREE Nationwide Wholesale Property Listing Notification, FREE Weekly Training Teleconferences with Different Topic Each Week, FREE subscription to Larry Goins “Almost” Weekly Investing Newsletter, FREE Admission for Two to Investor Palooza 3 Day Training Event, FREE Admission for Two to Larry Goins 3 Day Boot Camp, Plus over 31 Exclusive Articles on real estate Investing and Much More! Just go to www.LarryGoinsFreeOffer.com. Thanks and I look forward to working with you, Larry Goins