I’m still working on my first deal and I would like to get a little info on how to handle a double closing. I would have preferred to just assign the contract, but the seller wants a $2,000 earnest money deposit. Being realistic, I think I will get about $2500 for the contract. Leaving me with $500. Don’t want to sound greedy but I think that I should be able to pull more out of this deal. Is there any way to make more off of the assignment? If not can someone give me a simple run down on a double closing? Will I have to pay closing costs, is there any way around it? Thanks for everyone’s help up to this point.
A double-closing is when you buy and sell a property simultaneously and since your end buyer is bringing money to the table you (normally) should not have to. Yes, closing costs, taxes, etc are paid twice. This can vary depending on the types of loans involved but more specifically the closing company doing the closing. Always use a closing company that is experience w/double-closings.
I’m not sure I entirely understand what you are asking but the amount of money you will make assigning a contract is the difference between what you put it under contract for and what your investor will purchase it for.
If you are assigning a contract for $2,500 (or more) then you will get your deposit back at settlement from the ultimate purchaser.
Your investor is taking the most risk by actually purchasing the property. Leave them plenty of profit and run your numbers to determine your fee.
You need to know how much your investors are looking to pay for a property. If you purchase using a formula such as:
(ARV * 70%) minus repairs & minus your wholesale fee = MAO
BUT your investor uses 65% then you will have to cut your fee…if your investor purchases using 75% then you can take more.
Often the best thing to do is to know the exact purchase criterion of the investors who you are going to assign the contract to before you go out and find properties. Do NOT put a property under contract that you “think” is a good deal for someone (unless you plan on buying it if you can’t assign it).
Hope this helps,
Chris
thanks for the info, it really helped. I’ll give an update soon.
I would have preferred to just assign the contract, but the seller wants a $2,000 earnest money deposit.
Sounds like you may be a bit confused. The fact that the seller wants 2k in earnest money should have nothing to do with assigning vs double close. Your best bet is always to assign. You should VERY rarely, if ever, have to double close.
Also, with a double close, you would pay an extra set of closing costs therefore you would make less…not more.
Best Wishes,
Sean Flanagan
even though it is more expensive to double close, in some cases you may have no choice as some institutions (both the sellers and possibly your buyers lender) won’t let you assign contracts. soime will insist that your name be on the chain of title.
find your attorney, nail down your closing cost in advance and get comfortable with the process…
first off, if you have the home under contract for $30,000, and the seller requires a $2,000 deposit then the balance owed on the home is only $28,000 so if you sold the contract for $32,500 you would still be getting to keep $2500. Remember the deposit money is taken off from the total purchase price.
You can make as much money off of an assignment as your buyers are willing to pay. Remember you are paid by the difference in your contract price with the seller, and the contract price with the buyer.
buy a wholesaling course off of ebay, learn as much as you can, before you end up losing money. It sounds like a bit more education might be needed.