Double Closing

What is a double closing?

A double closing is when a buyer purchases a property from a seller and then immediately sells the property to another buyer, capturing the difference as profit.

In a double close, there are two (2) separate transactions that happen in a very short period of time, in many cases on the same day.

• Transaction 1: Seller sells to Buyer (Wholesaler)
• Transaction 2: Wholesaler sells to Buyer (End Buyer)

What is an example of a double closing?

For example, let's say Jane (Seller) accepts an offer to sell 123 Main St to Tom (Wholesaler) for $100,000. Tom, in many cases using "transactional funding", purchases the property for $100,000. On the same day, Tom sells 123 Main St to Mike (End Buyer) a local flipper, for $120,000. Tom's gross profit is $20,000 and his profit net of fees is $10,000.

What is the difference between a double close and assignment of contract?

In an assignment of contract wholesale transaction, the wholesaler ("Assignor") is technically selling the contract to another person or entity ("Assignee") who takes over responsibility to close the transaction with the seller.

An assignment agreement is used to memorialize the fact that the Assignee is taking over the role of buyer and paying an assignment fee to the Assignor. The assignment fee is commonly paid to the Assignor at closing, and included on the HUD-1 settlement statement.

In this type of wholesale transaction, there is only one transaction and the seller may not be aware that the original buyer (Wholesaler) is assigning the contract for a fee. Contract Of Sale (otherwise known as "Purchase And Sale Agreement" or "Purchase Contract") are assignable by default and sellers who wish to avoid assignment are required to stipulate this in the contract.