Investing in real estate can be as easy as acting as an intermediate in transactions. It’s like finding a treasure and getting paid for it when you bring together individuals who want to purchase and those who want to sell. Your job becomes facilitating the connection. Also, since you won’t occupy the property for very long, there’s less risk for you.
Keeping the original seller and buyer satisfied is a difficult aspect of this type of real estate transaction. Using a wholesale real estate double closing is one technique to deal with this. You do two distinct transactions to guarantee that everyone’s needs are satisfied.
How Does a Wholesaling Double Closing Work?
This process involves two main parts. First, there’s the A to B transaction, where you buy the property from the seller. Then, there’s the B to C transaction, where you sell the property to your end buyer.
Usually, as a wholesaler, you use the funds from the B to C transaction to pay for the A to B transaction (your original purchase). Your end buyer brings all the money to the closing for both transactions.
There are two separate closings, each with its own HUD-1 statement. The first closing statement shows the transaction between you and the seller, indicating the amount you paid for the property. The second closing statement shows the transaction between you and the end buyer, reflecting the amount you sold the property for.
Double Closing Vs. Wholesale Real Estate Contracting
Not every wholesale deal involves double closing. Some are carried out through the sale of a wholesale real estate contract. Let’s take a quick look at the distinctions between a wholesale real estate contract and a double closing.
| Wholesale Real Estate Contracting | Double Closing | |
| Investor Funding | The end buyer supplies the funding. | An intermediary helps with the buying and selling of the property. |
| Markup Transparency | The seller knows what the buyer is paying for the property. | The seller isn’t informed about the final sale price to the end buyer. |
| Time Period | Contracting often occurs on the same day. | The closing must be done within specific time constraints and involves two separate transactions. |
| Financing Contingencies | Financing contingencies are often omitted since the ultimate buyer pays the final sale price. | Financing contingencies are frequently added to safeguard the intermediary between transactions. |
When to Double Close in Real Estate
Knowing when to double close in real estate is essential once you understand the difference between real estate wholesale contracts and double closing. So, when should you do a double close?
- If your profit seems very high to the seller or your end buyer, it’s better to opt for a double close.
- If you’re wholesaling without being a licensed real estate agent, doing a double close might be necessary.
- If you can handle the closing costs or if you’re able to make a direct purchase from the seller initially, there’s no downside to doing a double close.
Get Easy Funding
If you plan to double close transactions, you must be ready for any scenario. Sometimes, title companies or closing attorneys might not allow you to use the end buyer’s funds for both transactions. That’s where transactional funding double close comes in handy to make the process smoother. However, finding the right funding company can be tricky and might even cost you a deal. Don’t worry; we’re here to help.
At Doubleclose.com, we understand your needs. We’ve assisted many real estate wholesalers with simple funding solutions. Contact us now and explore the benefits of transactional funding.
Author Bio:
The author serves as a transactional lender for real estate wholesalers nationwide, assisting in closing deals ranging from below $1 million to higher amounts. Get 100% transactional funding for your next deal without any upfront costs. Find more details at https://www.doubleclose.com/.
