As a real estate investor, I am involved in many
short sale flips.  I negotiate the debt, buy and then
resell the property for a cash profit in a double
close. 

Double closings have been taking a lot of heat
lately from title companies and real estate
brokers.

All over the internet you can find blogs about how these
types of foreclosure transactoins are illegal and unethical. 

So what is the deal with this?

Just to be clear, here's how our short sale process works.

1.  As the investor, I sign a contract to buy a house from a seller
who is behind on payments.  All aspects of our transaction are
disclosed at this time.  We are creating  equity with the lender
and the lender will not allow the seller to walk away with any
of it.  I've never run into a homeowner with a problem about
my making a profit.  We are stopping the foreclosure and
they are happy with that.

2.  I contact the seller's lender to negotiate a reduced payment
short sale.

3.  I get the lender to approve the reduced payment short sale
AND discuss the deficiency judgement that may ensue.

4.  I line up an end buyer.  Someone to buy the house from me.
This buyer either comes from a real estate agent or from my
buyer list.

5.  I close with the seller, pay off the lender, and resell to the
end buyer in a double close.  This is how I make a profit.

Other than that I do not pay off the seller's lender in full, this process
is no different than a regular wholesale flip.

Many realtors and title companies believe lenders are being defrauded, if
during a short sale they do not receive full disclosure that the house
is being sold for a profit.

How is this different than if I bought the property and had super monthly
income from rents?  Or if I rehabbed the house and sold it months later
for a substantial profit.

It's the quick flip that gets people's blood boiling.  Why is that?

Of course, just for the record, the contract sent to the bank fully states "Buyer
(me) intends to promptly resell the property for a profit".  ke