Agreement for Sale vs Long Closing

[roizes]

Hi,

A friend of ours got into the Real Estate market based on our advice. She did really well with a condo in Edmonton, the property has increased in value beyond belief and cash flows really well. The only problem is that she cannot handle the stress attached to it. At all.

Now she wants out and has asked us to take it out of her hands. All she wants is to hold a substantial deposit in her bank account, we would then take over all management aspects and up to us to come up with the cash to close at a later date. She is very flexible as long as she doesn`t have to deal with the property anymore.

For our business model this makes sense only as a cash influx in the short term so we would sell relatively quickly and give her the rest of her money when we close on the sale to a third party. We have no interest in actually owning the place outright.

My first idea was maybe to enter into a purchase contract with a long closing, find a buyer and then have a double closing. Now I`ve heard some people also refer to that type of scenario as an "agreement for sale" although I am not sure what it means. Any idea? Or maybe somebody would have a different approach all together. I am all ears.

Cheers,
Simon

 

[MicFromMirus]

Simon,
What you are describing is simply an offer to purchase with a long possession date (in hopes of doing a simultaneous close).
In an agreement for sale, the seller would agree to hold financing for you, as if she were the bank. She would therefore still be ahead of you on title and ultimately, still be responsible for mortgage payments.
You could sell the property as you please.
The advantage of this scenario is that you would not have to apply for a new mortgage and jump through all the hoops, the seller would qualify you.
There are potentially many possibilities and creative techniques to work this deal. You need to think about which one works best for both of you. Good luck!

 

[roizes]

Thanks for the feedback. Much appreciated.
Just going a bit too fast for me. If I understand correctly you are saying that under an agreement for sale we would basicaly act as a mangement layer between our friend and the tenant until closing with a third party. She would then still be held responsible for all legal/financial obligations until closing. Am I right? Also is there any form for an agreement for sale. Reading some paperwork would help me tremendously.
Thanks again for the reply.

QUOTE (MicFromMirus @ Jan 15 2008, 08:25 PM) Simon,
What you are describing is simply an offer to purchase with a long possession date (in hopes of doing a simultaneous close).
In an agreement for sale, the seller would agree to hold financing for you, as if she were the bank. She would therefore still be ahead of you on title and ultimately, still be responsible for mortgage payments.
You could sell the property as you please.
The advantage of this scenario is that you would not have to apply for a new mortgage and jump through all the hoops, the seller would qualify you.
There are potentially many possibilities and creative techniques to work this deal. You need to think about which one works best for both of you. Good luck!