First, please forgive me for such a lengthy post, but I wanted to capture each and every word my RE agent wrote to me in my email:
"Also, I have some information that I wanted to go over with you that I just today found out about. I was talking to my escrow person at First American Title, and we were discussing what I had going on and I brought up that we should have some deals for her soon with your offers. We were discussing the reassigns/simultaneous closings, and she gave me some information that was very alarming as I want to ensure that you are completely taken care of and nothing can come back on you with these processes.
She mentioned that the banks are really starting to look into these types of transactions where there is a reassign or simultantous close. The reason being, the banks are finding this to be fraud as they feel that they sold the property to you, as the investor for much less and then the end buyer pays much more, which in turn creates an excessive profit to the investor. The banks are actually beginning to put clauses in their escrow instructions that include verbage such as watching the title for 60 days, or an addendum must be in place as to what all the parties are purchasing the property for so the bank is aware of what you are selling the property for to the end buyer. My escrow officer also informed me that the title companies are not willing to close these anymore as this has become a very serious problem with the banks and all cases are looked into as fraud, due to the excessive amount of profit the investor makes on the deal. Basically, this problem initiated as the banks fell the buyer could have come directly to the bank to purchase the property, so the banks are loosing out on more money. Even though there is disagreement, as the buyer would not have been there if it was not for the investor, the banks are pursuuing this fight and winning. The idea that rather then a large profit, the investor sets it up as a finders fee amount vs a large profit amt. The finders fee is something like $5,000. The issue with this is, that there are strict guidelines as to that border lining the need to have a real estate license.
After I had this talk with her, I have spent all day researching with several title companies and my principal broker and I am not able to find any title company that is willing to close these deals due to the potential for fraud allegations. This was not the news that I wanted to pass to you, but you are very important to me and I want to make sure you are protected and I am as well from these allegations.
So, please let me know if there are any title companies that you know of that are willing to close these and I can do some more research on that. Also, I strongly suggest consulting an attorney to see what they would suggest on this. The regular flipping of properties is completely fine still. The only thing would be to keep any receipts of repairs done to the property, so that we can show this is the reason the value is much higher when we sell it.
Some possibilities may be to purchase the property under a regular loan with your name, do a lease option for just 3months and sell it to them at that time. If you have any other ideas that may help this, just let me know. I am still kicking around some ideas with my broker as well to try to get a solution that will make sure you are covered.
For now, I think we need to address this and see what we should do. Please let me know your thoughts, I know this isn't what you were hoping to hear, but please remember that as your Realtor, I would not be doing you any help to not relay this information to you. I care too much to have something come back and bite you after a transaction. Let me know what you think and we will figure this out. Thanks again!"
Can anyone help me with how do I come back with an answer to address the likes of my RE agent and her escrow agent???? Thanks!