As a real estate investor, I had the pleasure to speak with Pat Precourt concerning the successes he’s had with his partner in preforeclosures and short sales. Pat has done what few people in the country have done previously in preforeclosure investing. He has over 400 completed short sale transactions under his belt as a full time investor over the last several years. In fact, Pat and his partner, in the course of just two weeks managed to earn $100,000 and complete four sales in the preforeclosure niche.

Pat Precourt is so good at what he does that he has students paying upward of $25,000 to $30,000 just to train with him. However, I’ll let you in on what he told me about the problems of Short Sales and Simultaneous Closings in today’s market for absolutely free.

What is a Double Closing?

A double closing can also be called a ‘simultaneous close’ or ‘dry closing’. It basically involves you finding a buyer to purchase the property from you at almost the same moment that you purchase the property from the homeowner.

Ironically most double closing processes involve the investor signing paperwork to buy the house in one room, and within the same 24-hour period, most often a few minutes, going into the next room to sign paperwork selling the property to your buyer.

As long as your buyer has already funded the escrow account with your title company for the amount he’s paying for the property, you don’t have to pay for the property. The title company will see that the two transactions are being carried out on the same property at the same time. So, they’ll simply deduct the original selling price of the property from the account and cut you, the middleman, a check for the difference. Viola! You have your profits.

Double closings are a fantastic way of doing business because they are fast, efficient (when done properly), and they cut down on costs. You’ll end up paying a lot less or nothing on title insurance and buying hazard policies in houses you’re only going to hold for a short time.

Nationwide Trend Away from Simultaneous Closings on Short Sales

Many real estate investment educators are well intentioned in teaching how to do a simultaneous close on a short sale, but they aren’t noticing the nationwide trends. Pat let me in on his views for the 2008 trend in short sales.

According to him, it’s getting harder all the time to find a title company willing to do simultaneous closes on short sales. Why, because of transparency.

At the end of the business day, title companies are the ones responsible for the sale of a title policy. They’re the ones getting sued for any mix-ups, especially right now with recent real estate scams coming to light in the news.

A title company can be sued by the discounting lender; the buyer involved the second transaction, and the homeowner who is actually selling the property over a botched simultaneous closing on a short sale. The discounting lender can claim they weren’t given all the details, the final buyer can claim he wasn’t given clean title; the homeowner can claim that he wasn’t told his house would be taken from him. It’s a mess and the title company is the one being sued on all sides.

Transparency also means that the government has gotten involved with investigations and the spotlight is on the foreclosure industry with the housing slump and the increase in foreclosures. This is causing the title companies to make changes.

The Title Company Says…

Pat has spent over six months speaking with different nationwide title companies to sort out the root of the problem. In reality title companies don’t really say that short sales and simultaneous closings are fraudulent. They can’t point to any major fraudulent point.

There are ways to do simultaneous closings in a fraudulent capacity, but most title companies said they have no problem with the individual processes. However, when you approach them with a trifecta of a short sale, simultaneous close, and dry closing to complete a property sale, they won’t accept the transactions.

They feel that there’s too much room for a misleading transaction. So title companies won’t object to any group of transactions, but it’s up to their discretion to turn down any single combination of transactions. By the way, they said, ‘if you do a dry closing and simultaneously tie it to a short sale, we’re not going to write a policy on it, period.’

Pat and I both agree that real estate investors are going to have a hard time finding a title company willing to do simultaneous closings on short sale properties in 2008. If you do find a company stick with them. They are worth their weight in real estate gold.

Call to Action: Pat Precourt is one of the members of the Realestateinvestor.com Power Team, focused on helping folks take their businesses to the next level. His business regularly brings in six figures and his using those skills to help others learn preforeclosures and short sale. To learn more about Pat Precourt and the REI Power Team head to this link to receive a free ebook and free short sale videos.