Three Party Closings In Real Estate

Three Party Closings In Real Estate

Three Party Closings In Real Estate
One of​ the​ ways to​ make money in​ real estate is​ to​ move property as​ quickly as​ possible .​
Jumping from one home to​ another often leads to​ a​ double closing situation .​
Three Party Closings In Real Estate
Traditional home sales involve two parties, a​ buyer and​ seller .​
You may, however, run into a​ situation where there are actually three parties involved .​
This can occur when you are dealing with a​ real estate investor .​
The situation essentially involves a​ flip of​ the​ home by your investor .​
Here is​ a​ closer look .​
Assume you list your home for​ a​ certain price and​ accept an​ offer from a​ real estate investor .​
The investor is​ not really interested in​ owning your property .​
Instead, they are looking to​ make a​ profit as​ quickly as​ possible .​
The are also looking to​ move it​ as​ soon as​ possible to​ free up cash so they can invest in​ other properties .​
If they are particularly good at​ their job, they will often find another party to​ buy the​ home from them while they are still in​ escrow with you! This is​ where we get the​ three party closing .​
The specifics of​ how three party closings occur are highly dependent upon the​ situation .​
Regardless of​ how it​ is​ done, the​ third party purchasing the​ property from your buyer will often submit the​ funds for​ payment of​ your contract .​
This essentially turns the​ investor into a​ middleman who is​ collecting a​ fee and​ profit for​ doing practically nothing .​
That being said, you will actually do two separate escrows with two completely separate sets of​ documents .​
As the​ seller, you will only have to​ deal with your transaction.
There are definite downsides to​ three party closings .​
Obviously, the​ more parties involved, the​ more chance there is​ something will go wrong .​
Three party closings can also make lenders nervous .​
That being said, there is​ often a​ bigger problem .​
As a​ seller, you want to​ get the​ top price for​ your home .​
In a​ three party closing, you are confronted with the​ fact that you did not get the​ best price .​
Moreover, you agreed to​ such a​ low price that the​ investor was able to​ flip the​ house immediately for​ a​ profit .​
This situation leads to​ serious seller’s remorse .​
If you try to​ pull out of​ the​ deal, you can get into litigation and​ so on.
As a​ seller, there is​ not much you can do about a​ three party closing .​
Just try not to​ get to​ disillusioned about the​ situation.

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