You Can't Sell Property You Don't Own -- Or CAN You?

We recently watched a woman in Atlanta, Georgia get arrested for trying to sell her home. Why? Because when running title, they found out it wasn't her home. She had rented from a hedge fund for years and a few years back decided to Quitclaim the house from the fund into her name. She created the document, signed on behalf of the fund and transferred to herself. She even started paying taxes on the property. The moral of this story: You can't sell a property you don't own - or CAN YOU?

It might sound impossible, but there are legal and creative ways to make it happen. Here are a few:

1. Assign a Contract

This may be the most common method and is referred to in the industry as "wholesaling." You find a motivated seller, negotiate a purchase contract, and then assign that contract to a buyer for a fee.

2. Lease Option Agreement

A lease option involves leasing a property with the option to purchase it later. You can lease the property from the owner and then offer a lease option to another buyer at a higher price. Read more about this here.

3. Double Closing

In a double closing, you buy and sell a property almost simultaneously. You first close on the purchase and then immediately close on the sale to another buyer. This requires careful coordination and often involves using transactional funding. Title companies are increasingly cautious about this practice, so check to be sure your closing provider will do it.

4. Option to Purchase Agreement

An option to purchase gives you the right, but not the obligation, to buy a property within a certain timeframe. You can sell this option to another buyer, allowing them to purchase the property.

5. Joint Venture with the Owner

Partner with the property owner in a joint venture. You handle the sale process, and profits are split according to your agreement. This approach can be beneficial if the owner lacks the time or expertise to sell.

Conclusion

While selling a property you don't own requires creativity and legal know-how, these methods can be effective. Always ensure compliance with local laws and regulations to avoid legal issues. This is an instance where forgiveness is NOT better than permission, because forgiveness is unlikely if you break laws.