To get the most out of Short-Sale and Wholesale Properties, work with a Real Estate Lawyer who understands the careful planning and attention to detail required to achieve success.
Whether you are a first-time homebuyer or a seasoned real estate investor, you will no doubt want to find the best possible deal on the market. Fortunately, Short-Sale and Wholesale Properties often present excellent opportunities to acquire some of the choicest real estate for below-market prices.
Yet with every chance for success is a likelihood of failure, especially when it comes to the often-complex and time-sensitive transactions that govern most Short-Sales and Wholesales. Fortunately, your Real Estate Attorney from Jurado & Associates, P.A. is armed with the knowledge, experience, and dedication to help minimize your risks and maximize your rewards.
To better appreciate the importance of having an experienced attorney by your side, it helps to understand these unconventional transactions and their potential risks.
Short Sales: How Distressed Properties Can be Great Deals
A foreclosure is undoubtedly one of the most difficult situations anyone can face. It occurs when a borrower is unable to keep up with their mortgage or make payments towards a loan for which their property was collateral. In either case, the lender or creditor can take the property in lieu of the debt.
However, property owners are not the only ones seeking to avoid foreclosure: sometimes the lender is just as reluctant to pursue a foreclosure, because doing so is often expensive and time-consuming. A Short-Sale offers both sides something of a compromise: the owner sells it to a third party so the proceeds could be used to pay back the debt.
While the sales price is often lower than the amount owed to the lender—hence the sale is “short”—it is still often cheaper and faster than filing a foreclosure action in court. Hence, a buyer will likewise benefit from obtaining a potentially lucrative or desirable property for much cheaper than the market price.
A short-sale transaction carries all the usual risks of your any real estate transaction: problems with the physical condition of the property, title issues[RM1] , or disagreements about the terms and conditions of the contract, among other matters. The involvement of the lender adds another wrinkle: While most lenders will forgive the amount that may remain on the loan after the proceeds are collected, the seller will not always be released from personal liability. This means it is possible that the bank might be able to legally garnish a seller’s future wages, attach bank accounts or otherwise pursue the seller for that money. It’s called a deficiency judgment. The short sale approval letter may or may not contain verbiage that spells out the bank’s specific rights. Absence of such language is no guarantee the bank has released a seller.
Wholesale Properties: How Good Timing is the Key to Success
Like a short sale, a wholesale transaction often, but not always, involves a distressed property. It is also an effective way to generate considerable revenue within a relatively short timeframe—provided you can balance speed, profitability, and risk-mitigation all at once.
The most common form of wholesaling is through an “assignment” of the sales contract: You execute the contract to purchase a property and then “assign” your right to buy the property to someone else (the assignee) in exchange for an assignment fee. Essentially, you are being paid by the third-party buyer for providing a real estate opportunity, with the fee serving as your profit. Your only cost is the initial purchase of the property: the assignee covers the subsequent closing cost.
The downside of an assignment closing is the lack of privacy: all parties involved will see how much money you will make on the deal. The third-party buyer may think that you are making a lot of money without taking on the comparable risk, while the seller might wonder why they do not sell the property for an amount equal to your purchase plus the assignment fee.
With our experience handling this method of wholesaling, your Jurado & Associates Real Estate Attorney will work to smooth things over with all parties while moving as quickly as possible to close the deal in your favor—without compromising your interests.
Another form of wholesaling is the “double closing”, which is like an assignment closing except that rather than assign the purchase contract to someone else, you buy the property and resell it to them shortly thereafter. Unlike assignment closing, the original deal remains initially private.
However, as the name indicates, you will be responsible for handling two different transactions—including covering their respective costs. If, like many wholesalers, you are using a transactional loan, you will most likely be required to meet a tight deadline between the first and second closing—sometimes as quickly as 24 hours after the first closing.
Help Maximize Your Rewards and Minimize Your Risks with Jurado & Associates
The common denominator among all Short-Sale and Wholesale Properties is the ever-present possibility of financial loss or legal liability. Even non-distressed properties and conventional closings have their share of potential risks, making it imperative that you hire a legal team that is as familiar with these process as they are committed to your best interests.
Jurado & Associates, P.A. offers prudent and trustworthy counsel from experienced and knowledgeable Real Estate Attorneys. Our understanding of the law is matched only by our diligence in protecting you throughout the transaction. We have worked on numerous deals involving Short-Sale and Wholesale Properties, providing clients of all backgrounds with the utmost speed, efficiency, and liability protection needed to maximize their investment without jeopardizing their interests.
To learn more about our services for Short-Sale and Wholesale Properties, or to schedule a consultation, call me at (305) 921-0976 or email [email protected].