Double closing in Illinois?

Question

Hey guys, I had a few questions I wanted to ask and the first one is if anyone has had problems in IL using double closing/back-to-back closing/simultaneous closing (whatever you want to call it) where there are two separate transactions are taking place A-B then B-C ?

The second question is apart from the extra closing costs, what other disadvantages does it have? I've heard you might have a problem with taxes? could someone explain that to me please?

The third question is how do I market the contract? I obviously can't market the property so would calling/posting that I have a property under contract for sale or assignment of contract for sale (with the property features like beds,baths,etc) work? If that's not it either could you tell me what works?

Thank you for taking the time to read and reply.

Jesse LeBlanc · Answer

@Mir Mubashir Mahmood Investors are different, they know you're wholesaling. Again, you don't need to be licensed, so that won't matter. You can tell them that you work differently than most wholesalers. You want to find out their exact criteria, or the best criteria they can give you. Maybe give you an example of the last 3 deals they've bought. Then you'll start targeting those areas for what they are looking for, bringing them deals specifically catered to them. Then you'll allow them first dibs on it if they will give you their REALISTIC (not low ball price), so you can then go back to the seller and do your negotiations with them.

You'll want to vet the investor out, make sure they are legit, and build a good relationship with them.

Once you know a market more, then later you'll be able to get deals locked up without knowing your buyers price first because you already have a good idea of what your buyers would pay.

As for my transactional lending, google Wholesalers Transactional Funding That is also the website, but I believe I put it in here it will block it. But you can see my logo in my signature as well. www wholesalers transactional funding . com then click on "I don't have a deal right now" and we'll send you back some info so you have it for the future. :)

Jesse LeBlanc · Answer

If you have your buyer first, then you don't have to do any marketing.  Your buyer can even tell you the price they would pay, then all you have to do is get the seller below that price.  That becomes your spread.  You don't have to know the market, you don't have to know rehab costs, you don't have to know anything except how to talk to people and solve their problem by asking questions about why they want to sell, what's their motivation.  Unfortunately, the majority of wholesalers out there are just getting anything locked up for any price, then market the "deal" on social media or via a buyers list, overpriced and no one will pay the crazy price, then the wholesaler pisses off the seller because the wholesaler had to back out.  That would then be marketing the property.  Some will say they're marketing the contract for sale, not the property...But you can have a backup investor buyer, and likely a great idea.  But if you are very transparent with your seller on the fact that you and a business partner or another investor you know will be the one ultimately buying the property, your job is to build the relationship, figure out why they want to sell the property and at what price, then you'll work with your partner or investor friend to see if that number works.  If so, you'll come back and get it under contract. binding means "signature on a contract" so the contract is valid or "binding" agreement between you and the seller.

Jesse LeBlanc · Answer

All one needs to do is double close.  They cannot and will not ever be able to stop that.  NO PROBLEM.  But also, by having your buyer first, you're not marketing anything.  You can also allow the buyer/seller to be direct then be line item on one of the sides.  Too many ways to continue business as usual for those doing it the right way.

Peter Walther · Answer

Sec. 20-10.

Unlicensed practice; civil penalty.

(a) Any person who practices, offers to practice, attempts to practice, or holds oneself out to practice as a managing broker, broker, or residential leasing agent without being licensed under this Act shall, in addition to any other penalty provided by law, pay a civil penalty to the Department in an amount not to exceed $25,000 for each offense as determined by the Department. The civil penalty shall be assessed by the Department after a hearing is held in accordance with the provisions set forth in this Act regarding the provision of a hearing for the discipline of a license.

Peter Walther · Answer

You don't need to convince me, talk to the IL legislature and the Governor who signed the Bill.  The law, which went into effect in 2020, not years ago, seems to be pretty clear:

"Broker" means an individual, entity, corporation, foreign or domestic partnership, limited liability company, registered limited liability partnership, or other business entity other than a residential leasing agent who, whether in person or through any media or technology, for another and for compensation, or with the intention or expectation of receiving compensation, either directly or indirectly:        (1) Sells, exchanges, purchases, rents, or leases

"Broker" means an individual, entity, corporation, foreign or domestic partnership, limited liability company, registered limited liability partnership, or other business entity other than a residential leasing agent who, whether in person or through any media or technology, for another and for compensation, or with the intention or expectation of receiving compensation, either directly or indirectly:

(1) Sells, exchanges, purchases, rents, or leases

real estate.

(2) Offers to sell, exchange, purchase, rent, or

lease real estate.

(3) Negotiates, offers, attempts, or agrees to

negotiate the sale, exchange, purchase, rental, or leasing of real estate.

(4) Lists, offers, attempts, or agrees to list real

estate for sale, rent, lease, or exchange.

(5) Whether for another or themselves, engages in a

pattern of business of buying, selling, offering to buy or sell, marketing for sale, exchanging, or otherwise dealing in contracts, including assignable contracts for the purchase or sale of, or options on real estate or improvements thereon. For purposes of this definition, an individual or entity will be found to have engaged in a pattern of business if the individual or entity by itself or with any combination of other individuals or entities, whether as partners or common owners in another entity, has engaged in one or more of these practices on 2 or more occasions in any 12-month period.

(6) Supervises the collection, offer, attempt, or

agreement to collect rent for the use of real estate.

(7) Advertises or represents himself or herself as

being engaged in the business of buying, selling, exchanging, renting, or leasing real estate.

(8) Assists or directs in procuring or referring of

leads or prospects, intended to result in the sale, exchange, lease, or rental of real estate.

(9) Assists or directs in the negotiation of any

transaction intended to result in the sale, exchange, lease, or rental of real estate.

(10) Opens real estate to the public for marketing

purposes.

(11) Sells, rents, leases, or offers for sale or

lease real estate at auction.

(12) Prepares or provides a broker price opinion or

comparative market analysis as those terms are defined in this Act, pursuant to the provisions of Section 10-45 of this Act.

Jesse LeBlanc · Answer

@Peter Walther ANYONE can still buy a property, then turn around and sell a property.  What If I bought a property I was going to keep as a rental.  While doing so, one of my friends informed me that they wanted the property more than I did and would pay more?  So I decide to then the next day sell it to my friend.   You can't control that. :)  It's just a typical sale.  2 different wires, 2 different closings.  These aren't new laws, look at the code.  They've been in place for years, not sure why ppl are freaking out now.

Peter Walther · Answer

The last post in this thread was posted on BP after the law was changed:

Wholesaling in Illinois (biggerpockets.com)

Peter Walther · Answer

What are you relying on for your opinion when according to an IL attorney:

Public Act 101-0357 prohibits wholesaling without a license when a person or entity has participated in two or more occasions in any 12-month period.  Thus, a completed sale is not necessary because the new Wholesaling Law requires a broker’s license when one has “participated in two or more occasions”.  Simply put, the term “participating” and the term “occasions” are broad terms. One could be involved in wholesaling by receiving mentorship as part of a team.   This new law applies to buyers and sellers. Technically, if you in any way where a part of such transaction, this new law is applicable to you. Wholesaling in any 12-month period is illegal, which means that the business of wholesaling refers to any 12-month period.  The goal of the new law is to protect consumers. The new law is comprehensive and is well-defined and does not leave any ambiguity.  A real estate broker’s license is required to contract to sale real estate (or many related terms). The new Wholesaling Law is aimed at protecting consumers and has a desire to regulate the real estate broker profession.  Upon until recently, the wholesaling real estate business was unregulated by the State of Illinois.

Penalties for Unlicensed Activities in Illinois

Under 225 ILCS 454/20-10 (as amended), levels a $25,000 civil penalty for each offense in violation of acting without a license.  The unlicensed person is entitled to due process and a hearing. The Department has authority and power to investigate any and all unlicensed activity.  225 ILCS 454/20-10 (as amended).  Under 225 ILCS 454/20-15 states that the commission of a single act prohibited by this Act constitutes a violation of the new Wholesaling Law.  The State may also discipline and refuse to grant a real estate broker license to an unlicensed individual found to have violated this Act.  225 ILCS 454/20-20 (as amended).

Jesse LeBlanc · Answer

@Mir Mubashir Mahmood when you have something, shoot it over to us.  Below is all I need for Michelle and I to get started :)

-AB Contract
-BC Contract
-Operating Agreement (if buying in LLC)
-Copy of Driver’s License
-EIN for LLC (if buying in LLC) or SSN if you’re buying in your personal name (for tax purposes)
-Any Amendments on the contracts
-Closing company’s contact information (Name of closing company, your contacts Name, Phone & Email)

And that’s it!

Jesse LeBlanc · Answer

@Mir Mubashir Mahmood I CLEARLY prefer the sooner the better, basically the same time you're sending over contracts to the closing attorney so we aren't upsetting the closing company last second.  However, I have funded many deals same day, but it usually comes with a rush, stress, and possibly not funding in time same day but always happened the following day.  So again, the sooner the better but Transactional Funding isn't the same as hard money loans where there are credit checks, appraisals etc etc that require more time.

Double closing in Illinois?

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