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Updated almost 13 years ago on . Most recent reply

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Ace Williams
  • Bethesda, MD
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Movement of Cash

Ace Williams
  • Bethesda, MD
Posted

Hi all,
I am a newbie and I am trying to understand the movement of Cash in a Wholesale deal. Specifically, how everyone gets paid.
Wholeseller
Agent,
Seller,
And how, if using a HML

Most Popular Reply

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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
ModeratorReplied

A=seller
B=wholesaler
C=buyer
L=transactional lender
T=title company

Best of all worlds assignment:
B makes contract with A
B assigns contract to C
C pays B for assignment
B is done
A and C have to close the transaction.

Assignment fee paid at closing
B makes contract with A
B assigns contract to C
Contract and assignment contract go to T
C brings cash to T
(This is contract sales price plus buyer costs for contract #2 plus assignment fee)
T gives A a check for the sale price, less costs
T gives B a check for the assignment fee
T gives C a deed

Old fashioned double close
B makes contract#1 to purchase from A
B makes contract#2 to sell to C
both contracts go to T
C brings cash for contract #2 to T
(This is contract #2 sales price plus buyer costs for contract #2)
T gives A a check for the contract #1 sales price less costs
T gives B a check for the difference between contracts. Specifically, this is (contract #2 sales price less seller costs for contract#2) -
(contract #1 sales price plus buyer costs for contract#1)
T gives C a deed

Double close with transaction funds
B makes contract#1 to purchase from A
B makes contract#2 to sell to C
both contracts go to T
C brings cash for contract #2 to T
(This is contract #2 sales price plus buyer costs for contract #2)
L sends cash for contract #1 to T
(This is contract #1 sales price plus buyer costs for contract #1)
T gives A a check for the contract #1 sales price less costs
T gives L a check for the transactional loan amount plus transactional funder fees
T gives B a check for the difference. In this case this is
(contract #2 sales price less seller costs for contract#2) -
(total amount paid to L)
T gives C a deed

There are other more complicated variants.

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