What is a SIMO?
A “Simultaneous Close” or SIMO is when you “buy” a property on paper, and sell it to a buyer on the same day.
Here is a step by step on how to set it up.
1. Find a property, and get it under contract. Some important things to include in the terms are the following:
- Make sure you leave yourself some time to find a buyer, make your conditions period at least 2 weeks long, with a closing of at least 4 weeks.
- Under terms, explain that you need access to the property within 24 hours notice for showing to other investors, inspection, etc.
- Give a small deposit, and make sure that you write in that your deposit is refundable.
- Indicate that you have the option to market the property.
2. Once you have the property under contract, have your REALTOR® and lawyer review the documents. It is highly recommended you use a real estate specific lawyer for this type of deal. If you are unsure, start making calls. Ask them if they are familiar with a double close or simultaneous close. If they say no, find another lawyer.
3. Once you find a buyer, do up the purchase contract. It should look similar to your purchase contract with the seller. A few important tips are this:
- Get a larger deposit than what you gave in your purchase contract.
- Put the new buyers conditions removal date earlier than yours, in case anything were to happen, you could always re-sell to someone else.
- The Closing date MUST BE THE SAME as the closing date on your purchase contract with the seller.
4. After both purchase contracts are signed, you will have a purchase contract with the seller, and a buyer will have a purchase contract with you for the same property.
5. Keep in touch with your REALTOR® and lawyer, and make sure things are all going smoothly. All 3 parties will need a different lawyer for this transaction, the original seller, yourself, and the buyer.
6. On the closing date, the property will transfer through your name, the lawyers will put your buyer’s money in trust, and use it to pay the seller, and you collect the difference minus lawyer’s fees.
- Neither the buyer nor seller know how much you will make.
- You can do this with little or no money down.
- Typically you can do these with end buyers, and make a much larger profit.
- You control both the buying and selling contract.
- You will need to utilize and pay a lawyer.
- The title transfers through your name.
If you have any questions feel free to let us know...