Contract assignment or double close?

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As a purchaser of wholesales I prefer a contract assignment for two reasons. Number one: with underwriting restrictions these days, when I go to resell the property I don't want to muddy the chain of title with a history of "flipping" due to a double close. May or may not be an issue, but I'd prefer to keep the chain of title clean so I don't have to find out the hard way. Number two: if my wholesaler is double closing that means there are additional fees that are to be paid, whether they eat the additional costs or I do, it's less profitable for one or both of us. The more money that myself and my wholesaler make the more likely we are to do business again in the future.

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Hi Marc, The amount of the spread is certainly one reason to want to "hide the fee" with a double close instead of an assignment. Another reason is if you are buying from an institution you need to use the double close or simultaneous close because most banks won't allow assignment fees in their deals. You can use a transactional funding company and pay a fee to use their money for a day. Hope this helps...

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Hi Marc, The decision to assign or double close is not left up to the buyer. The buyer is buying because he or she got a deal they're happy with. It works out the same for them either way: they show up at closing with money and leave with keys. You, as the wholesaler decide whether you want to assign for simplicity, or double close to "hide" your fee. As someone who wholesales, I can tell you it's easier to assign. As someone who has bought from a wholesaler, I can tell you that I was just happy to have the deal I wanted

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That is only true if you are in a disclosure state. A non-disclosure state, like Texas, does not have any public record of sales prices. You can't find any public data on how much I paid for any of the houses that I've double closed on (except the ones I bought via the MLS).

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Marc, You have gotten some VERY good advice here. The only things I would mention is that in regards to the "hiding of your spread/profit". I don't think "hiding it" is in your long term interests. As Will said, it is only hidden temporarily. The buyer will find out. As a wholesaler, you want your buyers to be frequent buyers from you. If you are secretive and try to take too much out of the deal or hide it, they may not be coming back. I think it is better to be open and professional. You deserve a reasonable fee/profit for your work. The buyer knows that. Just tell them and build some trust. Second, while a buyer may not care what style of closing or what entity you use to purchase, etc., if your buyer is getting financing, it is very possible his lender will care. You must be aware of that. Good Luck and let me know if I can be of help.

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Of course this is only a temporary "hide" of spread. After they close, they can look up title and see what you paid for it and then what they paid for it. Exactly right. Banks do not allow "assignemnts of contracts" without written consent on REO or short sale properties so a double close is necessary in most cases. There are several other methods to wholesale without double closing and without "assignments". I believe there is a thread on that very topic. One method is to make offer in a new entity you form and then sell the entity to yoru buyer. The other is to add an additional buyer to contract and then quitclaim your portion after close for your fee. The third is to form a trust and sell your beneficial interest in teh trust, much like selling teh entity.

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And there's another beautiful thing. Once I have the buyer lined up, I simply drop off the signed contract and the assignment to the title company. They arrange the closing on the date agreed upon. Once I've dropped off paper work, I'm done. The escrow officer usually calls me a few days prior to remind me to come get my check. Neither myself or my buyers arrange closing, we just agree on a date and the title company does their thing. There is a large benefit derived from a good relationship with your title company.

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You are certainly entitled to your opinion, however, it is only that, an opinion. In several of my wholesale cases, the deal was good enough to attract multiple cash buyers so if the first buyer took any issue with my fee, they would walk only at their own loss of a great deal as I would have several others hoping for such a scenario. That is the difference between a good wholesaler and a mediocre or poor one. The deal is the power, and the spread you are able to initially negotiate will determine the value of your fee.

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Thanks Eric. I have no intentions of hiding anything. I plan on using wholesaling only as an additional stream of income, and will do my best not to make anyone feel cheated by my take. I also appreciate the insight as to the closing. I assume that an assignment is way cheaper than a double close, but are there any of Will's methods that strike you as being even better?

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Thanks Bill. I've only ever done one double closing, and as I mentioned, my Realtor put that all together. My original intention with this post was to determine if, while setting up my buyers list, it would be helpful to mention that we do one method over the other. Or, which would sound better when explained to a buyer unfamilure with the process.