Hello. How do Double Closings work? What contracts do i need?

Question

I am a new REI and i am still having some difficulties understanding how Double Close transactions work? The contracts needed and so on. Can anybody help me?

Stephen Akindona · Answer

Hey @Jorge L Duany! Typically a double close is utilized by someone executing a wholesale deal. This is when you find a property and want to quickly turn around and sell it to another buyer. Different states have different laws surround double closings, so call a local title company or escrow company and find out how they handle this!

Essentially all you need is 2 regular purchase and sell agreements. You would sign a contract with the seller of the property, and then sign a separate and different contract with a buyer you are selling the property to.

Then what happens is on the day of closing you are buying 123 Maple street and immediately selling 123 Maple street to your end buyer.

You will need transactional funding to do this (at least in Tennessee you do) or the cash to close on the property of the first transaction. It use to be that you could use the funds from the end buyer to "double close" the transaction but I know the rules have changed in a lot of different places and you have to use funds to close the first contract first while simultaneously closing the second contract.

It is much easier and cleaner to just do a traditional assignment of contract rather then double close, but I use this strategy when I am making above normal wholesale fees and do not want to disclose to the end buyer what I am making on the deal! Most end cash buyers are fine with wholesalers making money but if there is a huge spread I keep it confidential.

Jorge L Duany · Answer

Thank you very much. I am here in Florida. I just got my first lead, from a Direct Mailing letter i did myself and i am going to disclose how i did it for those getting started with $0 moneys. I went to Walmart, and bought a pack of 50 4/6 envelopes and color cardboard paper and a paper trimmer, $30. I made my own cards and mailed them! That was last week, today i received my first call.

The reason why i am asking is because the spread if my numbers are correct, is more than something i want my buyer to know. I don't mind, but they might! I cant thank you enough Mr Stephen Akindona for your answer, and help!

I think i did everything wrong on this first contact with the seller, i got nervous i didn't have my script ready.. but i am calling tomorrow again with data, hard numbers, an offer, setting an appointment to evaluate my offer and counter, and get that deal!!

Suggestion, ideas!