Question About Deal Structure and Closing

Hey REIClub,

I have a broker who is representing a buyer in a transaction. He’s supposed to send me an offer in the next few days. When I get the offer, I plan on opening title with it. I don’t have a company or anything and it’s my first deal so this will all be in my own name. When he submits the offer to me, where does the earnest money go? Does it come to me in the form of a check before I even open title? Or does it go into escrow at the title company? If they don’t perform will the title company still send me the check?

I don’t have a contract with the seller yet. I’m waiting to get this offer and then I’ll send an offer to the seller that’s a little less so I can make $5,000 or so.

Based on all this information, how is this transaction supposed to go? Please keep in mind that this is a portfolio of properties that the buyer wants to cherry-pick from. It might be 10 properties or it might be 65 properties. That’s why I’m waiting to get the offer from the buyer before I make an offer to the seller. Because if the transaction ends up being $500,000 or more then $5,000 or $10,000 won’t make a big difference to anyone.

Is my train of thought correct on this? Can somebody help me? Maybe even give me like 5 or 10 steps as to how this is supposed to go. For example, 1. Get contract from buyer. 2. Open title. 3. and so on and so on.



How is it you can legally except a contract on something you don't own or control! If something went south and your end buyer or seller sued you for any reason you will have serious problems when in discovery the aposing council requests depositions on dates and days and it is discovered you excepted a contract on something that, that day you did not have the rights or control to resell!

I have an extended family member who is a Sheriff’s Captain, I think if I asked him what you are proposing his word would be starting with the “F” word! (The 5 letter “F” word)

Now in a transaction the escrow check is made payable to a title company and either the seller, sellers agent or buyers agent can open escrow, and whether the earnest money is liquidated damages for non performance depends on the contractual wording within state laws and whether there are circumstances outside of buyers control prohibiting a purchase and sale!

But it is likely the buyers would get there earnest money back in most states and circumstances!

Are you doing an assignment and assigning your contract? If so you need to get a letter of intent from the buyer and contract the properties and assign your contract to end buyer! Or you have to use transactional funding to close each one to you and then close to your end buyer!

  1. Contract signatures and earnest money check!

  2. Open escrow by submitting contract and earnest money check to escrow!

  3. Escrow verifies ability to insure title’s!

  4. Buyer and seller recieve preliminary HUD 1’s!

  5. Any inspections are performed!

  6. Appraisals are done and submitted to buyers lender! (Still required for HML!)

  7. Buyer removes any outstanding contingencies!

  8. Documents are drafted and submitted to buyer and seller for errors!

  9. Buyers funds are transfered to escrow trust account!

  10. Seller signs documents!

  11. Buyer signs documents!

  12. Escrow closes and records!


Thanks for the help GR. Yes, I will be assigning the contract to the end buyer. I may have to double-close, I don’t know just yet. The broker mentioned an LOI and contract. Once I get that I was planning on taking that to a title company. Is that the right thing to do? If so, do I just wait for the title company to send the HUD 1s to both buyer and seller and then get out of the way? Or is there a step in between for me to call the seller and tell her what’s going on?

Please forgive me for not being crystal clear. This would be my very first deal. I hope what I’m saying makes sense. I’m very grateful that you’ve even taken the time to reply. If I can just get the process down, then all I have to do is rinse and repeat.



An Assignment is where your buyer litterally and physically takes over your contract and performs and closes exactly as your contract is written! A double closing is where you have a contract with the seller and you the buyer (A-B) and then you have a contract between you as seller and your end buyer (B-C) you have to use and pay for transactional funding to do this kind of transaction!

If your ok with making a maximum of $5 or $6k per hundred thousand dollars ($100k) then an assignment is great, if you intended to make more than 6% on your transaction then your almost forced to do purchase through transactional funding and sale to your end buyer!

I am sending you a PM!