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.

Posted by Philomena Paul-Davis on January 14, 2009 at 10:40 AM

About Philomena Paul-Davis
As the Davis Team, we recently transferred our real estate licenses to Crye-Leike, REALTORS from another company in Cleveland. We felt like Crye-Leike, REALTORS was the company best suited for what we want to accomplish. It seems everyone knows the Crye-Leike name and the wonderful staff and superb technology available make this a great fit for us. Jim is a licensed Realtor in Tennessee and Philomena is licensed in both Tennessee and Georgia. We assist buyers and sellers throughout Bradley, Hamilton, McMinn, Polk and Meigs counties, specializing in all types of residential and commercial real estate sales. We do put a focus on residential properties, investment properties, water front & mountain view properties, relocation, first time homebuyers, new home construction and land. We like to work one on one with our customers and clients. We like to treat people as we want to be treated and our passion is making people happy when they find their home. We find a way to help them move in without any problems and we treat all our clients as our own parents, brothers, sisters and even our own children if they are young and first time home buyers. Jim and Philomena are both Accredited Buyer Representatives (ABR). Additionally, Jim is a Realtor Internet Professional e-PRO and Philomena is a Graduate, REALTOR, Institute (GRI) and a Certified Residential Specialist (CRS). Collectively they maintain memberships with the Chattanooga Association of Realtors (CAR), River Counties In real estate we cover a broad range of services to a large number of clients. “We know we face many challenges ahead both with the present situation of the economy and the bright future that the Volkswagen plant and its suppliers will bring in the next few years. We feel we can manage these colliding business and economic forces to the benefit of everyone we have the opportunity to assist. Prior to embarking on her career in real estate Philomena worked for 20 years as a Medical Office Manager. She is fluent in Tamil, a language spoken in Southeast India. Jim and Philomena are Rotarians and members of the Bradley Sunrise Rotary Club. She serves as the Chair of the International Committee and Jim is President Elect for 2009. Jim is also a board Member with Keep America Beautiful. “Most of our clients end up referring their own friends and family to us,” said Philomena. “Our business is built on referrals and by reading the testimonials on our website you can see we work very hard to satisfy our customers and we strive to be outstanding business partners and community leaders available to assist everyone.” We live in Cleveland and have four children; Kalai Selvi Diaz (34) of Germantown, Maryland, Arasi Adkins (32) of Burlington, North Carolina, Jaya Sundari Moore (30) of Philadelphia, Pennsylvania and John Paul Swamickannu (26) of Cleveland, Tennessee. Jim grew up in Cleveland and Philomena came to the area from India by way of Philadelphia. She has been in Cleveland since 1995. When we’re not busy with client’s Philomena enjoys music, going to symphony concerts and the Opera. She also enjoys hiking, traveling, cooking and entertaining friends, family and clients. Jim finds personal pleasure in photography, hiking and travel as well. They are active members in St. Luke’s Episcopal Church, the India Association and both the Cleveland and Bradley Chambers of Commerce. For all your real estate needs and personal referrals, please contact Jim and Philomena Davis “The Davis Team” by calling Jim at 423-504-5863, Philomena Davis at 423-596-1618.




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