Home Buying Cannabis Team
The Basic Process
It is a great day when you have put together a complete team to do anything you need. This is particularly true when you are putting together a team to buy a home. Especially, if you need a home buying Cannabis team.
A buyer and seller can select whomever they want to represent them in a real estate transaction. This usually starts with their REALTOR and then secondly with their mortgage lender or broker.
Once you get pre-qualified you work with the REALTOR to find a home. Then the other ancillary people come into play. This would be your title company, inspectors, and insurance provider.
People who work in the Cannabis industry have many hurdles that they have to jump when wanting to purchase a home.
At the time of this writing, there are 10 states who have legalized recreational marijuana. Those include Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington. And medical marijuana is legal in 33 states plus D.C.
The problem that Cannabis employees face is that they are in a predominantly cash business and that their business that they work for is still illegal on the federal level.
Thus, if an employee tries to open or maintain a bank account, which is federally insured, they can be seen as money laundering. Due to this, a bank will close the account.
This makes buying a home an even more arduous task because if a bank won’t give them a checking account then which bank would give them a full-blown mortgage?
Discovering a Unique Problem
Sometimes there are problems you or other people may have that you may never have even known there is a problem in the first place.
In November 2018 I had a unique experience. I had a client who wanted to buy a home. I showed him a couple and sent him to one of my preferred lenders to get a pre-qualification letter. Low and behold, we find out that he can’t get a loan due to his current method of employment. After several attempts to get financed, we were diverted to having a family member to buy the home on his behalf.
Getting Pre-qualified with a Lender
When qualifying the family member my preferred lender switched to another mortgage company where they had a loan program for people who were W-2 employees in the Cannabis industry. These were the same FHA, VA, USDA, Freddie Mac, and Fannie Mae loans at the same interest rates anyone else would receive. Thus, we had the lending problem solved.
The Next Steps
Even though we found a lender, for our Cannabis team, who could do a loan for him we still had other obstacles ahead of us. We still needed banking, title, and insurance people who would be able to help. This was no easy task to get past.
After doing some research I was able to find a title company who would be able to work with us. Title companies cannot accept cash in order to open escrow. The earnest money deposit has to come from a reliable source, which means a wire transfer from a bank. This gave us another problem as to every bank and credit union I spoke with would not give them an account.
When talking with an insurance company I found one who would not only provide insurance on the home that they are purchasing they could also serve as their bank, too. But, only if they were W-2 employees of a Cannabis company and not have any ownership in that company.
Thus, the final piece of the puzzle was complete. I had the entire team in place.
Having the entire team in place means that I can now help someone fulfill all of the pieces together in purchasing a home.
A buyer has the right to pick whomever they want when doing a real estate transaction. However, having a proven team goes a long way in ensuring a deal will close and close efficiently.
You will need your REALTOR, banker, and lender to get you into a contract. Then your title representative will help you with the escrow side of things. Then your insurance agent to finalize one of the last pieces of the transaction. You now have all that you need to buy a home.
This team can help anyone who is in the Cannabis industry to realize the American dream of homeownership. This is why you need a Cannabis team.