Transactional closing question

[Terry Giancaterino]

Say I have to do a transactional closing and my mother is going to provide the line of credit or proof of funds letter. In the transaction, does any of her money ACTUALLY get used or is it all just paperwork on the day of closing?

[J Scott]

There are two types of wholesale closings you're asking about (Party A is the seller, Party B is you, and Party C is your end-buyer):

1. Simultaneous Closing: This is where the end-buyer's funds (Party C) is used to pay the seller (Party A). You don't need to bring any cash to the closing and all movement of money is handled in the paperwork by the closing agent.

2. Double Closing: This is where you (Party B) pays to close on the property from the seller (Party A), and then at a later time (maybe a couple hours or days), the end-buyer (Party C) pays to buy from you (Party B).

#1 isn't too common these days -- most title companies and closing agents won't do them, as they cause potential chain-of-title issues (and some would argue that it's illegal, though I've never seen that supported). There are a couple people here on BP who have indicated that they can still get simultaneous closings done, but it's pretty rare that someone says that these days.

#2 is far more common, and will require you to bring cash to the table to close.