Why the double close?

1. Your fee is the spread between your purchase price and your sales price minus closing costs. Disclosing large assignment fees can lead to buyer and/or seller dissatisfaction. By double closing, neither party will know your wholesale fee. This avoids conflict with both parties and possible renegotiation of either the buy or sales price to lower your fee.

2. Real estate agents receive their commissions on the B to C closing without wholesale assignment fees listed on the HUD closing statement. Most brokerages do not want an agent commission and assignment fee to appear on the closing statement for fear how the state real estate commission will respond during a scheduled audit. Keep it clean and keep agent commissions separate from your fees.

Your contract grants you the right to list the property on the MLS, and include language stating this. You want to actively market the property on the MLS to attract offers, and be prepared to reduce prices aggressively if you don’t receive offers at or near the asking price. You want a specific pricing procedure process in place to ensure this process runs smoothly.

Once you have a property under contract, it specifies to the seller that the due diligence period begins after the inspection is completed. This gives you the maximum time to market and sell the property. You want to avoid issues with sellers delaying inspections, which reduces your inspection timeline to find a buyer.

Include in your MLS listing the following:

1. “Seller has equitable interest in the property” – You hold the property under contract and have equitable interest. This means you are marketing the contract rather than the property itself, in compliance with most MLS rules.

2. “Sale subject to fee simple title” – This is crucial for double closings. If, for any reason, you cannot close on the A to B transaction with your seller, your B to C buyer cannot sue you for non-performance.

3. “As is sale” – You are stating you are not making any repairs. If the house is in very good condition, most buyers with financing contingencies will accept this. If the house needs significant repairs, your offers will need to be cash. Why? Offers with financing require appraisals. If the appraiser notes the house needs a new roof for example, the lender may require the seller (that’s you) to replace it prior to the sale. Remember, you do not own the house and you certainly do not want to come out of pocket for repairs on a property you do not own.

4. “Buyer to pay all seller closing costs” – If you are paying all closing costs on your A to B closing with your seller, offset some of these costs on to your buyer with the B to C closing. If it is a great deal for your buyer, they should not have any issues with paying your closing costs.

5. “Title, closing and escrow to be handled by seller’s title company” – You have already started title work with your title company and want to maintain as much control over the closing process with a title company of your choosing who understands double closings and has experience working with investors.

Steps After Receiving an Offer

1. Renegotiate with Seller: Once you have a solid offer you want to accept, return to your seller to renegotiate a lower price and state that all contingencies shall be waived 48 hours after acceptance. Of course, you do not have to renegotiate the price but it may be necessary if your offers are coming in lower than expected.

2. Earnest Money Deposit: Ensure your buyer closes escrow with their deposit at the title company within 24 hours before you waive contingencies with your seller.

3. Have a Backup Offer Ready: Always have a backup offer ready to accept in case your buyer fails to close escrow within the 48 hour period. Your backup offer needs to close escrow within 24 hours. This keeps you within your 48 hour deadline to waive final contingencies with your seller.

There are many moving parts to this process but when managed successfully, double closings should be smooth and profitable without any surprises. Keep control, manage contingencies wisely, and always have a backup plan.