I'm struggling with understanding the specific mechanics involved at the closing meeting where I am the buyer of a newly constructed Ski Condo and concurrently sell the Condo to another buyer.  The closing agent or title company handles the transaction and title is conveyed from the builder to me, and then from me to the new buyer. 

In this scenario, do I need to come to closing with all funds (from personal and lender source) to cover the purchase price, or does the new buyer satisfy the purpose of having "good funds" by virtue of their concurrent purchase of the Condo?

Hi Todd,

It will depend to a great extent on the laws and regulations for your specific geographic area and the policies and procedures of the title insurance company that you are working with. 

The issue is usually this.  The title insurance company would be technically closing "short" on the first closing if they are relying on the second closing to close and then simultaneously fund the first closing and pay your seller.  The title insurance company would most likely get "written up" by their regulatory body when audited for technically closing short, so most title insurance companies will not allow this and will require that you come to the table with funds in order to close on your first closing and then you would be immediately reimbursed from the closing of the second transaction.

I would come to the table with funds if at all possible and not even ask the title insurance closer to do this for you.  You really want to build a good relationship with your real estate closer and not put them in an awkward position if you ask them for this favor.  In fact, I would save the "favors" for more critical issues when you really need them.  However, if cash flow is an issue, then this might be a critical issue now and you might want to ask the title insurance company if they would do this for you.

Thanks for your excellent feedback!

My sense is the title insurance company will not not extend this favor to me due to the recent publicity on subprime lending practices and related activity.  Outside of conventional financing to ensure good funds at closing, are you aware of any lenders who may offer a type of "bridge" loan to cover the shortfall for that one-day period?

We might be able to refer you to some lenders.  Hard money lenders or private lenders are always willing to handle bridge loans, but are very expensive.  I will check our data base later today and see what lenders that I can refer you to.  What geographic area are you and/or the property located in?

I'm very interested.  I live near Denver, and the 2-bdrm condo to be constructed is in Breckenridge.  The $1.2M purchase price to cover at closing is approx. $950k.

This is commonly called "gap financing." It can get expensive, as gap loans carry higher fees and rates (as much as 250 basis points higher than a conventional mortgage, one one or more points).

If you have a primary residence with sufficient equity, I'd consider taking out a home equity line of credit.

If not, any major bank (e.g. Wells Fargo) can put together a loan for you.

Tim DeWan
Vineyard Bank
1260 Corona Pointe Court
Corona, CA. 92879
Office (951) 271-4283
Office Fax (858) 675-3671
Mobile (858) 967-2261

I appreciate your referral, and I will touch base with them.

You are most welcome.  I'll post more as I can.

Mr. Bontrager,

If you are still seeking financing options, I have a few sources that will lend on that type of property.  On source wanted to know some additonal information before they could consider it.  If you have time to call me, and can give me a few more details, I will see if either of these sources can assist you.

Baxter Scruggs

San Diego Mortgage Network

760-497-7705

Mr. Bontrager,

If you are still looking for options, I have two investors who will go up to 65% to 70% loan to value, depending upon various factors.  If you would like basic details, please send me an e-mail to bscruggs@sdmn.net.

Baxter Scruggs

SD Mortgage Network

Exeter Group Radio Show contributor

760-497-7705

Hi Todd,

I just wanted to touch base to see how your transaction was coming.  Was the title insurance company cooperative?  Did the lenders work out?  I know that Baxter Scruggs had a couple of options for you.  Post back and let us know if you still need help.

Thanks for your inquiry.  I will need to obtain financing around Sept 2008, and I'm doing some longer-range planning for now.  I will keep your references for future purposes.  Thanks again for all your assistance.  This is a superb message board for the consumer such as myself.