Breaking Down The Double Closing Wholesale Strategy

To put things into perspective, a double closing will have two separate transactions. The first transaction will occur between the home’s original seller and the investor that intends to wholesale the property. The second transaction is, therefore, between none other than the wholesaler and the new buyer. That’s an important distinction to make, as a double close must consist of two individual transactions, each of which has its own settlement statements.

The first set of settlement statements, referred to as the HUD-1, will outline the deals agreed upon numbers—how much you have negotiated to buy the property for. Not surprisingly, the second statement will identify how much you have agreed to sell the same property to a final buyer.

When it comes time to sell the deal to another buyer, you will enter into a second purchase and sale agreement, only this time it’ll be contingent on the first closing (the one that had you buy the property from the original owner). As a result, you must disclose that there is another agreement that must close before the subsequent agreement can move forward. To be clear, you must disclose everything about the first transaction to the parties involved in the second transaction.

If you have yet to sign any double closing contracts of your own, I highly recommend seeking legal advice. Don’t make any moves until a legal professional has made sure everything is on the up-and-up. A double closing real estate transaction isn’t exactly rocket science, but many rules need to be followed. With a legal representative in your corner, there’s no reason you shouldn’t know how to do a double closing within the confines of the law.

It is worth noting that, over the course of a double closing, investors will incur the standard fees associated with a real estate closing, which are directly correlated to the state in which the transaction takes place. What’s more, the investor will be added to the chain of title, as they briefly owned the property at one point.


[ Looking for ways to start increasing your monthly cash flow? Register to attend our FREE real estate class to learn how to utilize passive income strategies in your local market! ]


Double closing real estate

Double Close Vs Contract Assignment

As I already alluded to, there are two primary wholesaling strategies: contract assigning and double closing. The latter I went over in-depth already, but the former has several differences that warrant your attention, namely, the transfer of ownership, or lack thereof. Whereas a double closing will have a wholesaler actually purchase the property (therefore being committed to the chain of title), assigning a contract will not require the wholesaler to purchase it. Instead, contract assignment (otherwise known as selling a contract) wholesale strategies will witness wholesalers sell their rights to purchase the subject property—not the property itself. That’s worth repeating: when you sell a contract, you are not selling the property—you are actually selling your right to buy the property to another investor.

View single page >> |

Disclaimer: The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.