What is SIMULTANEOUS DOUBLE CLOSE?

[John S]

Hi,

I've heard of double close, simultaneous close, but what is simultaneous double close?? (it's suppose to be used for reos)

Thanks in advance!

[J Scott]

Many people use the terms "simultaneous close" and "double close" interchangeably, though here is the most common differentiation I hear:

- Simultaneous close is when you use your end-buyer's funds to fund your purchase, thereby eliminating the need for you to bring any funds to the table;

- Double close is when you bring your own funds (or borrow funds) to close the first transaction (where you buy) and then after that transaction is closed (minutes, hours or days later) you resell to the end-buyer.

I've never heard of "simultaneous double close" but my guess is that someone is just mixing up the terms above and actually means one of those two things...

[Gary O'Neill]

Used with REO's and short sales most successfully. The only glitch with REO's is that the banks sometimes require a "seasoning" which means a time period between closings. They are under pressure to relax those rules. All you have to do, usually, is disclose that the "investor/purchaser" in the A to B transaction is selling for a profit.

[Jimmy C.]

Gary, are you saying that you have to disclose to the bank that you are flipping the property the same day? That has not been my experience. Although I have never used the end buyers money to double close.

[John S]

Thank you all! I heard the term from Jeff Adams when he was trying to sell his products. Anyone tried it yet? If so, how was it? Also, in my experience with REOs, I don't disclosing to the bank that I'm flipping the same is going to help my case. Short sale we can disclose.

[Will Barnard]

John S. there is no such term and if anyone used it, they just made it up. As Jason stated, simultaneous close and double close are often mixed up or interchanged as many do not know or understand the difference, however, the proper definitions for each are as follows:
Double Close = Two spereate and stand alone transactions in which a property transfers title from seller to buyer in the A-B transaction, and then follows a second stand alone transaction from new owner to new buyer (B-C). Both transactions must stand on their own merit and must be funded with what is called "wet funds" meaning that the buyer brings their own money or borrowed money to the table.

Simultaneous close = Two escrow transactions, most commonly with the same escrow company/closer where the funds from the end buyer (C party) are used to fund the A-B transaction "dry funds", then those same funds are used to close the B-C transaction.

Wet funds = Use of your own funds or that of borrowed money
Dry Funds = Use of end buyers funds to close your transaction first, then same funds to close the second transaction.

[Brian P.]

John

Just to add to Wills post. Many Escrow/Title companies will just use the term back to back closings to cover both ways and that is something they understand when you inquire.

So wet or dry is the real question. Most won't do dry, even though they are legal. It's just their policy. And I don't get it, these same companies do dry closings in their 1031 transactions every day.

[Account Closed]

Originally posted by Gary O'Neill:

Used with REO's and short sales most successfully. The only glitch with REO's is that the banks sometimes require a "seasoning" which means a time period between closings. They are under pressure to relax those rules. All you have to do, usually, is disclose that the "investor/purchaser" in the A to B transaction is selling for a profit.

It is about time they are putting pressure on that ridiculous rule.

[Account Closed]

I have heard of both simultaneous and double closing also back to back or ABC transaction but not combined as you are saying. Also I was informed at meeting last night here in DC Metro Area not to do dry double closings. Where the money from transaction C pays off Transaction A and B. Without B actually every first paying A. I hear you can receive jail time for that so don't do it even if your title company says it is ok. Check your local laws first and to be safe just don't do it. Use transactional funding if need be or find a different format of closing.

[Jimmy C.]

Bruce, that may be the case in DC. But it is certainly not the case here in FL.

Dry double closings were probably invented here though.

[Ann Bellamy]

The title insurers are requiring wet funds for simultaneous closings. I would bet that in the case of dry closings, the title company is not disclosing to the insurer that it is a dry closing.