There has been a difference, a material difference for those flipping short sale properties in the state of Colorado.  Effective, January 1, 2011 new mandated disclosure rules where implemented for Colorado investors who are purchasing and selling short sale properties. These new rules where passed by the Colorado Legislature’s House Bill 10-1133, known as the Foreclosure Act, which was signed by Governor Ritter in June of last year and effective January 1, 2011. You can click HERE to access the full 10-1133 Bill, but below are the highlights pertaining to investors looking to flip Short Sales within 14 days (Note; A= Seller, B= Investor, C= Ultimate Buyer):

-     A to B  Disclosure*: Investors must disclose any knowledge of a near term sale of the Property to the Lender accepting the short sale (“Seller”) and the homeowner within one business day of such knowledge. In addition, Investor must also disclose the subsequent sale price and profit margin of the property to the Seller.

-       B to C Disclosure*:  Investor must disclose his or her purchase price for the property and his or her profit margin to the buyer C (“Ultimate Buyer”) and Ultimate Buyer’s lender.

So, to keep it simple, if an investor is going to buy a short sale property and flip it within 14 days, then the investor, not the title company, is legally obligated to disclose his or her profit to the Seller, the Ultimate Buyer and the Ultimate Buyer’s lender. Concerned that this may impact the ability for you to close your short sale flips?  Don’t be. Transactional Funding, LLC has an “Extended Term” Transactional loan product specifically designed to assist you with this new Legislation as well as other “seasoning” requirements (i.e: Bank of America, FHA, and so on). The new loan product is for transactions where a borrower is contracted to acquire real property (short sale, REO, etc.) AND is pre-contracted to sell the property to another buyer for a profit and closing is to occur within a 60 day period. This new Extended Term has no appraisal requirements, no credit checks, requires as little as 3% down and is significantly cheaper than traditional hard money. As investors ourselves, we know the challenges and have closed over 200 transactions nationwide.  Call or email us to learn more about this program.

On a side note, this Legislation Bill is not all bad news. The good news is that the Bill seems to encourage financial insulations to sell a mortgage short of its principal value as opposed to going through the foreclosure process. This should translate to additional short sale opportunities for those investors who understand the process.

So, what is going on with the banks’ reaction to investors in the market. Investors have cash or financing in place to actually close and are willing to spend the 3-12 months negotiating the short sales and rehabbing the property so that it is actually salable. So, why do banks continue to put policies in place to make it harder for investors to buy? Do they believe it is unreasonable for there to be a profit if an investor spends months cleaning up the debt and the property so that someone would actually buy it?  But, maybe I am missing something.  With an investor; you have a buyer that is not only ready, willing and able to buy, but then they will also spend the time and money fixing the property, so that it is at least on par with the other homes in the area.  All while baring the risk exposure.

So, you end up with a property that is improved and occupied not vacant and/or neglected.    Isn’t that better for the neighborhood?  Better for properties values?  And at the end of the day, won’t this actually help protect against further price deterioration for the other assets the banks have in that area?  Oh, and the government is incentivizing banks…to help them protect the value of their assets.  So, banks get the toxic asset off their books, while protecting the value of their other assets, and get paid to do it.  But they put policies in place to make it harder for this to happen?  Like I said, maybe I am missing something.

Our philosophy is simple – we aim to provide our clients with the experience we would expect as investors.

We know how much work it takes to get a deal closed. So, with Transactional Funding, you will find more than a trusted funding source that is competitively priced. You will find a consistent, well-defined, and efficient process that will get you approved more quickly on more transactions. And most importantly, you will never be unpleasantly surprised by last minute changes in terms or being left at the closing table without funds.

We stand behind our word with the only Funding Guarantee. It’s simple. If you’re approved, you get funded.

As real estate investors with more than 40-years experience and 500 transactions closed, we’ve built Transactional Funding around that foundation of knowledge to provide our clients with the most powerful, consistent and reliable funding source in the market.

Our advisors have seen every stage in the real estate transaction process and have been intimately involved in aspects of the industry. We not only help facilitate getting you funding for transactions, we can also consult in how to be successful every time.

Paul Barrow, Taylor Swallow, Chris Phillips

We cater exclusively to professional real estate investors and those who are looking to become serious investors. We provide our investors the tools, knowledge and security to close their flip transactions with confidence.

Formerly known as Short Funding, we’ve officially launched our new company and brand as Transactional Funding.

With a refreshed look and feel, new website and a focused emphasis on providing short-term financing for real estate transactions, we aim to provide investors with capital and foster a cooperative environment among REO & Short Sale Asset Managers, Title Company Officers, Realtors, and Real Estate Investors.

Be sure to visit our Membership Levels page to learn more about the opportunities we provide those interested in Transactional Funding. Whether it be basic information, tools and resources for the active investor, Proof of Funds for multiple transactions, or a more comprehensive level of consulting to close deals, we’re able to provide the level of service that is a best fit for your involvement in the industry.

Rarely do you hear a good or accurate answer.

Most often and at best, the response will be some vague reference to the title or escrow company’s concern about closing a transaction with knowledge of the subsequent sale and/or profit to the investor. While this may play into the fear that has dried up this practice; many title and escrow companies don’t event know why they don’t actually do dry closings anymore.

So, here is the real answer:

Legally, you are completing two separate transactions. And as you can’t technically close the second transaction before you close the first, you can’t legally use the funds from the second transactions before you close the first. If you did, this would technically be co-mingling of funds.

Transactional Funding is the keystone to a clean, legal transaction.