DOUBLE CLOSINGS CLARIFICATION

thanks for the info kevin !!! i was just thinking to myself about a dbl closing and your post came up cool . one ? have you done a double closing? and if you did how does the closing cost differ? is their a discount on the costs? any other info on subject would be much appreciated thanks

There is so much confusion when it comes to these type of transaction but you made it clearer. I still have a few questions and concerns on these methdods. In Dean's new book he talks about the Instant Equity Exchange (IEE) method which is a basically a simultaneous closing. So this is illegal now? I plan on using a double closing on REO's using Coastal Funding. Should I inform the bank and my investor that I am doing a double closing? Is there 2 closing costs associated with a double closing? Lets end the confusion on these methods once and for all . Thanks!

What if you have both your buyer and seller at the title company at the same time BUT you proceed with a transaction involving Coastal funding (a double closing lender).

In other words: You arrange for both your seller and buyer to meet you at 10am at the title company. You close with the seller using Coastal Funding. Coastal wires funds to the title company who in turn wires funds into the sellers bank account. The seller leaves the title company happy. You immediately walk down the hall to the office where your buyer is waiting and sell the house to him. He wires funds to the title company who wires funds to Coastal and to you for the difference. Is this a simulataneous closing? I would think it to be a double closing. After all, you do own the house while your walking down the hall to sell to the buyer.

If I'm getting this right you are saying it is the buying of property with your BUYERS money that makes it a simultaneous closing and not the fact that your buyer and seller are at the title company at the same time.

It may prove helpful to simply use a savvy real estate attorney to close ALL of your deals. It may cost a bit more but you will be dealing with someone who knows the law and is more open to the needs of investors.

I would rather do a "simultaneous closing" using my buyer's money then to use a "double closing" and pay a fee to Coastal Funding. If the author is correct on these definitions , I would love to know if simultaneous closings work in PA. I been trying to investigate this for the past 2 days and I still don't know. I spoke to my Realtor about this and we walked down the hall to speak to his title company's agent about it. She didn't know and seemed a bit confused , EVENTHOUG they do DOUBLE closings all the time.

Yesterday I tried to call some lawyers in regards to this and I didn't get no where. The one guy I called seemed to be confused about double closings to begin with it. Another guy said something like "we don't participate on these" , like I am doing something illegal. I tell you what, it is sad that these people get paid to do a job and are lost . At the same time , it feels good to be schooling some of these "experts" in real estate.

Bigfella,
You have it correct sir! Coastal funding is a transactional funder out of Washington state, I believe. Exactly what you stated above is how it works...and your understanding of simultaneous closings are correct. It is the fact that you are using your buyer's money to fund your purchase with the seller that makes it a simultaneous close and potentially illegal.

jbtoggs,
Yes, I have done many closings and double closings as well. My father has been a mortgage agent since 2003. I used to sit in on closings to learn before I started investing. After I had 2 years of investing experience, I became a mortgage agent to learn even more and to network. My time in the mortgage biz only lasted approx. 2 years but I am so much farther ahead knowledge wise for having done it. Even as a rookie, I used to teach long time RE agents a thing or two! In my opinion, mortgage experience is much more helpful than RE experience. I've found that many of my more knowledgeable investor friends have mortgage or banking experience.
Ask your title company for a discount on closing fees, normally referred to as a 'hold open.' They should be glad to do it. You will still pay the normal fees for recording the deed, transfer taxes(if any) and other fees associated with 3rd parties twice so make sure you figure this in when calculating your profit. However, the few hundred dollars the title company collects to do the title search and paperwork to close will normally be discounted.

The Great Martini,
You do not need to inform the banks, lenders, sellers, or your buyers of the double closing. You are purchasing the property just like you would with a normal mortgage only you are using transactional funds - not a conventional mortgage. Therefore, everything is normal and nobody needs to know anything. Except your title company or closing attorney because they need to have both of your closings scheduled within a close time frame, they need to know what's going on with the transactional funder, and they need to give you some discounts for closing both purchases with them. The IEE is simply a way for you to put property under contract, find a buyer, and get paid by backing out of your original agreement. It has nothing to do with 'double' or 'simultaneous' closings. In the IEE, your buyer is closing with your seller at the title company as normal. You get paid because you have an agreement with the seller that allows the title company to essentially 'buy you out of the contract' so that the new contract between buyer and seller can happen. Think of it as like a lien on the property. The closing agent can not deliver a clear title (which is needed to complete the sale/purchase of the property) until all liens are satisfied. ie, past due utility bills, past due taxes, your interest in the property, etc. Re-read pages 258-259 if you need to. By using the IEE method, the seller has given you legal interest in the property which must be satisfied in order for it to sell. So, you agree to tear up your contract and allow it to close so long as you are paid.

Hope this helps, sorry for the delayed response!

you have made the picture much clearer. Info is appreciated.

thank you for the info sounds like your mortgage experience indeed was well worth it and that is great you learned that way from your dad !! reminds me of rich dad poor dad !!{book} thanks again i appreciate your response.

So what you guys are saying is: In a DBL Closing what I have learned, I will give an example. I have the buyer come at a different time than have the seller come at a different time also. From there I sign the contract with the seller giving me the property, let say 70k (buying). Later on, I sign a new contract with the buyer re-selling to him at 90k.(I will make 20k profit) The title company will then wire funds into a escrow account (giving them the correct paper work for me to get paid) so they can cut me a check. As for what the simo reasoning can be very hard to understand, if people been useing the dbl closing method.

Thanks for the info Kevin! I guess this is the first time I read this thread. It was very informative!
I'm sure it varies by state, but in May I did a double-close that essentially was a simultaneous, except the order of the signing. It may have been because the end buyer was working with a local bank. We all worked together to make it work. The rep from the title insurance company (not sure what her actual title is) was SO instrumental. (She also worked with the RE attorney to keep everything legit). She oversaw each of the transactions, and my end buyers' loan covered the expenses all the way through, so I needed NO funds for any of it. I was very impressed. I had to do a lot of searching to find this company, but it sure was worth it, and now I've done (or have currently in the works) 5 different deals through them.

Here was the order of the deal at closing (we all took turns at end buyer's bank):

Seller signed.
I signed.
End buyer signed for their loan.
I signed over to buyer.
Their money transferred through to first transcation (seller and myself).
I walked away with a check for $5,000.

It pays to work with local banks, I guess. Can be much less complicated. And a good "team" is essential!

My question is, do you think that's typical, and should people try to insist that it can be done wherever they are investing? (Sometimes it takes a stubborn REI to make things work! lol)

Thanks,

Rina

Hi Rina,

Thanks for the comment. I do think that situation could be common for those who are in your situation. I have the same relationship with a title company that I've been using for years from when I was in the mortgage biz. They understand all the "little nuances" in closing transactions legally. We have been doing simultaneous closings all along. However, some RE agents and title agents have been scared and jaded by all of the news concerning fraud and have gotten "cold feet." I don't think it will be typical for most investors on this forum bc there are a lot of nuances that can only be learned through experience. But for the experienced and maybe for a few of the really persistent, simultaneous closings can still happen...It's all about relationships!!!

I posted something on this a while back too, when I talked to one title company they said it was an "illegal flip" and the banks look at it as fraudulent (did I spell that right?). I found a title company that works with a RE Attorney who WILL do a double close, ya just gotta look around!

Thanks for the step by step Rina!

Dawn

Banks and lenders do it all the time! Here we are talking about simultaneous closing and double closing which required the parties involvement. From the sellers, the investors, and end buyers have to signed all the documents for any deals to go through. However, the banks and lender do not have the audacity to ask for my permission or approval when they sell/or assign my mortgage to another bank or lenders. One of the property i purchased in November last year has been sold and assigned four different times to four different banks. Now, you tell me how the hell banks can do this without my authorization or signature, and yet,when we decided to sell/or assign deals which required title company, attorney, and realtors, and they make a fuss about it. I think the banks are the most fraudulent industry in the world and they are the reason we are in the situation we are right now. That's my two cents in!

Lloyd

Agreed!!! Hit the nail on the head!

Hey Lloyd:

I believe somewhere in all the realestate and loan contract mumbojumbo with the bank that fiances you it says somewhere that this bank does or does not hold mortgages in house if they check does not there is another little disclaimer that says they have the right to sell the mortgage on the secondary market which then forwards to each bank giving them the right to sell it to somebody else. Which if u the customer did that say with a check you would be arrested for kiting but if your a bank your just transferring assets. Banks the IRS and other govt agencies should have a big sign that says Does not play well with others because what's yours is mine and what's mine is mine. Tee Hee

I could be wrong but I thought I read that when we got our loan for our house the mortgage officer told me to read page such in such when I ask her if they were going to service our loan.

Happy selling

Donna

If that is the case, then you just proved my point. The bank put up the red flag when we try to sell/or assign contract, but yet, they are the ones who practice the same method. The point is, when we do a simultaneous closing or double closing, the banks are the ones who makes more it difficult for us to do assigment, but yet they are the ones who's taking advantage of the situation. The rules only apply to us, but not them. If that is the case, then you just have proven my point. Thanks!

Lloyd

Always willing to do my part to keep everyone happy!!!!!!!!!

Donna

I must tell you from what i just read,What passion in your comments! And for myself...How important being around people that share my ideals!!!(closing too)

Randall

I was just wondering if you let the seller and end buyer know that you were doing a double closing on the property?