To understand real estate wholesaling, you need to understand the mechanics of a double closing (also called a simultaneous closing).
Wholesalers earn a living in real estate by selling a large number of investment properties for a small profit, and double closings are often employed to quickly accomplish this task.
So, here is some important information about double closings.
What is a Double Closing?
In a double closing, a real estate wholesaler essentially acts as an intermediary broker or middleman. The wholesaler simultaneously purchases and sells an investment property, purchasing it from the original seller and selling it to the final buyer.
Through the process of a double closing, a real estate wholesaler makes a small profit for the service of locating a desirable investment property. And because both transactions (buying and selling) occur simultaneously, the wholesaler is not required to personally put cash in the deal, and can continue to use his cash resources to locate investment properties for clients.
Mechanics of a Double Close
In general terms, a wholesaler simultaneously buys and sells a property in a double closing, taking the proceeds from the sale to buy the property. The money left over after everything is finalized is the wholesaler’s profit on the deal.
From a mechanical perspective, double closings require all parties to be present in one place. Often the wholesaler and original seller will close in one room, and the wholesaler and final buyer will close in another room. A single title company traditionally coordinates both closings, and oversees the exchange of funds.
Considerations for Double Closings
Before rushing into a double closing, there are a few things you should keep in mind.
First, not all title companies do double closings; so make sure you have a title company that can perform double closings.
Second, double closings are traditionally conducted with the final buyer purchasing the property for all cash. Generally, mortgages are not acceptable for a double closing. So if the final buyer is going to finance the transaction, special care must be taken in structuring the deal.
Why Double Closings?
Double closings might sound like double work, but double closings can benefit all three parties: original seller, wholesaler, and the investor.
Investors and sellers find that double closings are a fast and efficient way to close deals. Since double-close deals are typically all cash and often without contingencies, they can close in just a few days.
Wholesalers also benefit from double closings, not just from the speed of the deal, but also because he doesn’t need cash to buy and sell investment properties.
Graystone Investment Group
Graystone Investment Group is an experienced Investment Group, wholesaling properties in the Greater Tampa Bay market.
Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.