Originally posted by @John Leonard:
Does anyone ever buy the property first, then after it closes, start to market the property and sell it? Why do you need to double close all at once? Whether assigning, or double closing, when you do either of these activities and market the deal (with whatever legal verbiage you need) all at the same time, don't you increase your risk and give up control of the deal?
For example, if you are going to double close or assign, you market the deal appropriately while the contract is still open. You still would need to ask the seller if people (investor buyers) can come see the house (inspect it), while it is still under contract. Unless you cloud title, other buyers now know the address and can find out if the property is available or not. Not only that, they have already inspected the property because you set everything up for them. All they have to do now is contact the seller directly, offer a higher price than what you have it under contract for, and cut you out of the deal! This can and does happen. So what are you going to do? Sue the distressed homeowner for breaking their contract!? Or what happens if you hold an inspection and one of the buyers' contractors goes in and the seller claims they damaged something? You are liable under the contract. What happens if your buyer backs out? Sue them too? Yo-yo back and forth between seller and buyer until it closes?
Again, you don't have complete control.
Why not get the buyers out of the picture, close on the deal and take complete ownership of the property. Then, with the sellers out of the picture, you market the property the next day to buyers. At that point you can say whatever you want and not be restricted by legal jargon and schedule whatever inspection you want whenever you want and nobody can cut you out of the deal. So what you lose a couple of weeks maybe, but you reduce your risk and still sell the deal and make money. Make the buyer pay a non-refundable deposit and closing costs on their transaction. Taxes exist no matter what the situation so that isn't a disadvantage. And who cares if they can see what you bought it for from the last closing, the fact is at this point, you own it and you are in control.
Are their any disadvantages to this that I am missing? Is there anything I have explained incorrectly?
Great foresight questions!!
I thought a double close could in effect handle some of that risk since at the time of B-C, B owns the property and I believe TREC states you don't have to have a license to sell a property you own. It seems owning the property first, even if just for an hour should meet this stipulation.... although the marketing part would still be limited. This being because you can't market the property until you own it, before that you can only market the contract (and please anybody who has actually completed these transactions feel free to correct anything I say that's not accurate). And if you're only marketing the contract, then the B-C transaction wouldn't be accurate if you sell the property but only marketed the contract, right?
It seems if the property is discounted enough, a double closing shouldn't kill a deal, even if needing 2 title policies. To me that's just someone being too greedy; yes the profit is very important, but in wholesaling it's more about the volume.
Hope to get some more answers here! :)
