Double close's

Many people are using this method because usually your end buyer is not using a bank to close the deal. End buyer is a cash buyer. The key point to remember is that the certified funds are already in the hands of the attorney/title company at the time of the closing for the B to C transaction, so there is a certainty that the first transaction (the A to B transaction) will close. These two closings will generally take place 15–20 minutes apart. Once the B to C transaction is completed, the A to B transaction takes place. The funds that I just “made” on the sale of my property are actually used for my original purchase (the A to B transaction)

Certain people use the double close strategy to not let the buyer or seller know how much theyer making on the deal, typically more than $10K on a deal. Like you said most banks would not let you perform a double close, but thats why you have to do this strategy with FSBO's. Now if your dealing with a bank you can sell your LLC or use a land contract. Remember doing a double close would cost more money out of wholesale fee because you have to pay for the transactional funding from any company you would be using. Anywhere from $3K-$4K.

Thank you Reynold and Reynolds & Haidee for your answers.

John

There are actually two types of double closes.

There is a "dry" double close, which is what Reyn has described above and a "wet" double close, which is what Ray is referring to.

In the "dry" DC, you do not have to use Transactional Funding. The closing entity (atty, title/escrow co, or whoever does closings in your state) closes the second half of the deal (the B-C half) first, exactly as Reyn describes above, and then uses those funds to fund the first half (the A-B deal). It is getting more and more difficult to find a closing entity to do "dry" double closes but there are still some out there. When I moved to SC, I kept getting the old "it's illegal here" runaround. But I finally found an atty here who will do them as long as we have full disclosure to all parties.

The "wet" DC is where you will have to have your funding for the A-B portion that will not intermingle using the funds from the B-C part of the deal. (as referred to by Ray). That is where you will have to have your Transactional Funding or Private Money for the deal.

Personally, I assign up to a $20k profit and use DC for profits higher than that.

Karen

Thank you Karen for your answer. It along with the other answers are helping me understand this process better. When you say you assign deals up to 20k does that mean on FSBO deals because most MLS REO's are not assignable?

Thanks again,
John