Run Down of Double Closing Process - Who Pays Who and When
Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes
Run Down of Double Closing Process - Who Pays Who and When
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Centennial, CO · Member since 2009 · 758 posts · 251 votes
11yGeorgia closes only with attorneys, and I have not come across one that will allow use of the end-buyers funds; so your thinking about using transactional funding is appropriate. The transactional funder authorizes disbursement of their funds once the end buyer funds are in escrow with the same closing attorney. They then close and record your purchase and immediately after close and record the Deed on your sale to the end buyer. Fees for the funder and your profit are then disbursed from the second (your sale) transaction.
Because your purchase is being handled by the banks chosen closing agent I suggest you contact them soon regarding your desire to resale same-day. Approach them with "I am going to resell this property and would like to give you that business also". Be aware that some bank appointed closing agents will not want to do both transactions because their primary interest is in the relationship they have with the selling bank. I have found that most in Georgia will do both closings. If they will not you can possibly do a split escrow with the second transaction happening with a different closing attorney. Most transactional funders will not allow this (the split escrow) but it is possible to accomplish.
26 Replies
- Investor · Smithville, MO · Member since 2014 · 160 posts · 19 votes11y
The nuts and bolts of it is pretty easy. For a double close, think of it as A-B-C where the seller is "A", you are "B" and the ultimate buyer is "C". With an investor friendly title company they will close everyone at the same time (in different rooms). They will use funds from the B-C transaction to fund the A-B transaction.
I've never used transactional funding before. If I understand it correctly, you would close just as if you were going to keep the house. Then close the same day, or soon after to sell the house.
Is that about what you were thinking?
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
Originally posted by @Rob Scarborough:
The nuts and bolts of it is pretty easy. For a double close, think of it as A-B-C where the seller is "A", you are "B" and the ultimate buyer is "C". With an investor friendly title company they will close everyone at the same time (in different rooms). They will use funds from the B-C transaction to fund the A-B transaction.
I've never used transactional funding before. If I understand it correctly, you would close just as if you were going to keep the house. Then close the same day, or soon after to sell the house.
Is that about what you were thinking?
Thanks Rob,
I understand the general concept but not really sure when the attorney/tittle company receives then disperses the funds.
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
Originally posted by @Tim Ball:
You are not assigning the contract right? As far as the Seller is concerned, you are purchasing the property?
Thanks Tim.
Your correct, I'm not assigning because it's an REO deal. All I'm worried about is timing and when the attorney/tittle company requires funds and dispenses funds and what issues may come up if I don't time it right.
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
If I don't have the choice of the tittle company because I've aloud the seller to choose, how will I know they are investor/double-closing friendly.
- Investor · Smithville, MO · Member since 2014 · 160 posts · 19 votes11y
If you are using transactional funding (a short term loan), you would bring a certified check to the title company to close on the home. The title company would disperse the funds to the seller.
Your buyer would bring certified funds to their closing as well. Only this time you would receive the funds from the title company.
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11yThanks Rob Just needed a bit of clarity
- Investor · Chicago, IL · Member since 2015 · 677 posts · 309 votes11y
First the transaction funds are not in escrow until the buyer's money is in escrow. The closing of A to B comes first then the closing form B to C comes next. Usually this is done on the same day and hopefully can be done back to back.
First closing you are buying the property
Second closing you are selling the property.
- 11yUriah D.Pro MemberInvestor · Apex, NC · Member since 2014 · 340 posts · 188 votesRichard Prescott Be careful of the b-c funding a-b transaction. NC does not allow this. GA may or may not. You will want to contact a couple local attorneys and ask. Reason I say ask a couple Is that in nc one attorney will say something is fine, while another will say it's not. If you do intend to do transactional as others have said you will bring the c buyer to the same attorney and their funds will need to be in place a day or two early. Then you'll come in the day of and sign the purchase, then 5 minutes later sign the sale docs including deed. I pulled his from Harlan-law dot com. I don't know these guys in any capacity, they just came up from a double RE closing GA Google search. Pay close attention to #2. Will you perform simultaneous or double closings? A Double Closing is the simultaneous purchase and sale of real property. In a typical double-closing scenario, a real estate investor acquires property from a seller at one price and immediately resells it to an end-buyer at a higher price. The difference between the two prices represents the profit to the investor. Double Closings are also commonly-referred to as simultaneous, back-to-back, or same day closings. We have, and will, handle these types of closings under limited circumstances: 1. The end-buyer's lender must be specifically informed that the seller for their transaction is not in title; and they must consent in writing to the transaction. 2. Each half of the transaction must be kept fully separate and stand on its own. The initial acquisition must be fully funded and disbursed with money coming from and going to all appropriate parties. The end sale must also stand on its own. The proceeds from the sale can not be used to fund any portion of the acquisition. Harlan and Associates will not handle any type of simultaneous or double closing if the first of the transactions is a short sale. As a practical matter, double closings are only possible if the end purchaser is paying with either Hard Money or cash. Because assignment fees are also appropriate in most of these transactions, we encourage their use instead in order to save you the costs of paying for two separate closings. Please understand that the circumstances in which a double or simultaneous closing would be appropriate are exceedingly rare, and as an investor you are probably better served by looking at alternate financing and investment options.
- Centennial, CO · Member since 2009 · 758 posts · 251 votes11y
Georgia closes only with attorneys, and I have not come across one that will allow use of the end-buyers funds; so your thinking about using transactional funding is appropriate. The transactional funder authorizes disbursement of their funds once the end buyer funds are in escrow with the same closing attorney. They then close and record your purchase and immediately after close and record the Deed on your sale to the end buyer. Fees for the funder and your profit are then disbursed from the second (your sale) transaction.
Because your purchase is being handled by the banks chosen closing agent I suggest you contact them soon regarding your desire to resale same-day. Approach them with "I am going to resell this property and would like to give you that business also". Be aware that some bank appointed closing agents will not want to do both transactions because their primary interest is in the relationship they have with the selling bank. I have found that most in Georgia will do both closings. If they will not you can possibly do a split escrow with the second transaction happening with a different closing attorney. Most transactional funders will not allow this (the split escrow) but it is possible to accomplish.
- Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes11y
@Richard Prescott You likely will NOT be able to fund the A-B purchase with the funds from C as was suggested previously. Maybe in some cases if you have express written permission from the C buyer to do so, but probably not at all if they're using financing (lender won't likely allow it).
You're better off using your own money to fund the A-B purchase, or (if you don't have the money) use transactional funding.
Just out of curiosity, how do you plan to put the house under contract initially? Since it's an REO, you'll have to write the offer in your name (the name you intend to close under) and show either proof of funds or pre-approval for financing.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes11y
@Richard Prescott Do you have an accepted contract on this yet? If. Or, you may be a little optimistic, but Do Not use the bank's closing attorney/title co., you can choose to use your own.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I see these deals that are bank owned getting a little stickier I just closed one up in PA were the sellers title company ( seller mandated) the people working the transaction were in India it was a strange experience to say the least and there is no way your going to get any kind of back to back closing with a company like that.. you need the cash to buy then you need to open escrow at a different title company once you own it and resell. won't be any flipping or back to back or any assignments with these new Virtual title companies that are springing up to help with OREO sales.. they could hardly make it threw my transaction.
- Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes11y
Yep, sounds like Ocwen. We just closed one with Fannie, no way I would have tried to coordinate a double closing thru their title co.
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
Originally posted by @Wayne Brooks:
@Richard Prescott Do you have an accepted contract on this yet? If. Or, you may be a little optimistic, but Do Not use the bank's closing attorney/title co., you can choose to use your own.
No contract yet, I'll be honest my realtor isn't a little slow on this one. Thanks for your advice
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
Originally posted by @Jay Hinrichs:
I see these deals that are bank owned getting a little stickier I just closed one up in PA were the sellers title company ( seller mandated) the people working the transaction were in India it was a strange experience to say the least and there is no way your going to get any kind of back to back closing with a company like that.. you need the cash to buy then you need to open escrow at a different title company once you own it and resell. won't be any flipping or back to back or any assignments with these new Virtual title companies that are springing up to help with OREO sales.. they could hardly make it threw my transaction.
Interesting to hear that. I guess they are very cheap to close with and the seller has some sort of relationship with, which Is good for them but not for the buyer.
Thanks for your input
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
Originally posted by @Kyle J.:
@Richard Prescott You likely will NOT be able to fund the A-B purchase with the funds from C as was suggested previously. Maybe in some cases if you have express written permission from the C buyer to do so, but probably not at all if they're using financing (lender won't likely allow it).
You're better off using your own money to fund the A-B purchase, or (if you don't have the money) use transactional funding.
Just out of curiosity, how do you plan to put the house under contract initially? Since it's an REO, you'll have to write the offer in your name (the name you intend to close under) and show either proof of funds or pre-approval for financing.
I defiantly won't be using C's money. No attorney will close on that from my understanding. I write all my offers under our LLC with POF funds from the transactional lending company, very easy to do so. The transactional lending company will require funds in escrow from the end buyer first before releasing funds. Once funds from both parties are in escrow the attorny will close.
That's my understanding. I just have to time things right.
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
Originally posted by @Ted Akers:
Georgia closes only with attorneys, and I have not come across one that will allow use of the end-buyers funds; so your thinking about using transactional funding is appropriate. The transactional funder authorizes disbursement of their funds once the end buyer funds are in escrow with the same closing attorney. They then close and record your purchase and immediately after close and record the Deed on your sale to the end buyer. Fees for the funder and your profit are then disbursed from the second (your sale) transaction.
Because your purchase is being handled by the banks chosen closing agent I suggest you contact them soon regarding your desire to resale same-day. Approach them with "I am going to resell this property and would like to give you that business also". Be aware that some bank appointed closing agents will not want to do both transactions because their primary interest is in the relationship they have with the selling bank. I have found that most in Georgia will do both closings. If they will not you can possibly do a split escrow with the second transaction happening with a different closing attorney. Most transactional funders will not allow this (the split escrow) but it is possible to accomplish.
This is very helpful, I'm aware spliting escrow may be an option but I doubt I'll aim to go down that route. I'm just trying not to assign any of my contracts for a couple reason really.
1- Stigma attached to the clause in the contract
2- REO wont accept offers with that assignment clause in there
3- More profit for me generally speaking (DEPENDING ON THE DEAL)
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
Originally posted by @Uriah D.:
Richard PrescottBe careful of the b-c funding a-b transaction. NC does not allow this. GA may or may not. You will want to contact a couple local attorneys and ask. Reason I say ask a couple Is that in nc one attorney will say something is fine, while another will say it's not.
If you do intend to do transactional as others have said you will bring the c buyer to the same attorney and their funds will need to be in place a day or two early. Then you'll come in the day of and sign the purchase, then 5 minutes later sign the sale docs including deed.
I pulled his from Harlan-law dot com.
I don't know these guys in any capacity, they just came up from a double RE closing GA Google search.
Pay close attention to #2.
Will you perform simultaneous or double closings? A Double Closing is the simultaneous purchase and sale of real property. In a typical double-closing scenario, a real estate investor acquires property from a seller at one price and immediately resells it to an end-buyer at a higher price. The difference between the two prices represents the profit to the investor.
Double Closings are also commonly-referred to as simultaneous, back-to-back, or same day closings. We have, and will, handle these types of closings under limited circumstances:
1. The end-buyer's lender must be specifically informed that the seller for their transaction is not in title; and they must consent in writing to the transaction.
2. Each half of the transaction must be kept fully separate and stand on its own. The initial acquisition must be fully funded and disbursed with money coming from and going to all appropriate parties. The end sale must also stand on its own. The proceeds from the sale can not be used to fund any portion of the acquisition.
Harlan and Associates will not handle any type of simultaneous or double closing if the first of the transactions is a short sale.
As a practical matter, double closings are only possible if the end purchaser is paying with either Hard Money or cash. Because assignment fees are also appropriate in most of these transactions, we encourage their use instead in order to save you the costs of paying for two separate closings.
Please understand that the circumstances in which a double or simultaneous closing would be appropriate are exceedingly rare, and as an investor you are probably better served by looking at alternate financing and investment options.
This all makes sense and thanks for your time in replying. Great Advice
I wont be using c's cash for the transaction. Also I'm looking to have all my end buyers deal with cash not sure if number 1 will be appropriate. 2 I'm aware they are both completely separate and need to make sure the funds are separate too.
I'm not sure I agree with them saying "Please understand that the circumstances in which a double or simultaneous closing would be appropriate are exceedingly rare." Maybe they don't like doing double closes and are putting off their client by saying this. It makes sense to me to double close that's all.
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
Originally posted by @Gilbert Dominguez:
First the transaction funds are not in escrow until the buyer's money is in escrow. The closing of A to B comes first then the closing form B to C comes next. Usually this is done on the same day and hopefully can be done back to back.
First closing you are buying the property
Second closing you are selling the property.
Great, Thanks Gilbert.
- Investor · Atlanta, GA · Member since 2015 · 12 posts · 2 votes11y
My transactional lender is saying it takes them up to 3 week to release funds which I think is way too long.
What are your thoughts?
Would this would slow down the whole process and possibly annoy all parties involved.
- Investor · Chicago, IL · Member since 2015 · 677 posts · 309 votes11y
That I know of most transactional funds are not wire to escrow until the buyers funds are in escrow and you might be charges anywhere from 4% up to 10 % so you do not want the transactional funds in escrow long , its very expensive just depends on who you are dealing with. I have head of rates from 1% up to 4% per day and up to 10% if the funds need to stay in escrow for a few days.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
your not dealing with a true transactional lender if it takes 3 weeks.. that's more of a HML turn around time.
- Investor · Athens, GA · Member since 2011 · 306 posts · 156 votes11y
You should talk with Halperin and Lyman in Atlanta. They are great for investors. Or ask the Transactional lender who they use to close. In Georgia you pay the attorney, and the funds from their account pay for the property in each transaction. If you are still searching for Transactional funding check out @James Melton. He is the super pro of Atlanta.
- Wholesaler · Columbia, SC · Member since 2015 · 123 posts · 15 votes11y
@Richard Prescott, great question! This dialogue is great for a new wholesaler like myself. I have been debating whether or not I want to do deals by assigning contracts or by double closings. This is a great discussion on double closings.
Ashley J.
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