I’m new to investing so please bear with me as I am still in the investigative stage.
I read an article yesterday talking about wholesaling properties. The author suggested doing dual closings when wholesaling, but one of the things he said really puzzled me. He said that in a dual closing, you would actually sign the paperwork to buy the property and then the paperwork to sell the property…BUT that the deed would transfer directly from the original seller to your buyer.
So, my question is how can I buy the property and then sell the property but never own the property? I would think I would have to sign the deed, even if it is only for a moment before I transfer it to my buyer. The way he describes it is, to me, more like just assigning the deed, which is a little different than wholesaling, correct?
what you are referring to as double closings is a very risky way to do real estate transactions. The reason I say that is because in doing a double closing, the seller and end buyer sees EVERYTHING including your fee on the deal listed on the Hud-1 statement and many sellers have pulled out when they find out they could have gotten more for the property. Also, many title companies now adays frown on them and fewer and fewer are doing them as an ordinary course of doing business, especially in California. Assignments are different, you never take title to the property and usually don’t go to closing meetings in escrow; you make an offer, get it in writing with the seller, and sell the contract to an end buyer or assign it for a fee. You are wholesaling because you are getting the property below market and reselling or assigning the right to purchase for a fee still below market price. You avoid having to do title searches, opening escrow accounts, coming up with exhorbient fees. It is also less risky because you can stipulate in your contract the phrase “and/or assigns” so you can sell the contract before the closing date. There is also another transaction you could do called a “straight option” contract. You don’t take title to the property then either, but the deposits can be quite high, usually up to 10% of the purchase price of the property. Thomas Lucier has some good books on the subject if you want to learn more. Search Real Estate on amazon.com or book sellers about the author regarding wholesaling Real Estate. I would avoid the costly seminars and gurus out there because more and more they are in the business of selling you prepackaged information instead of showing you how to invest. Good luck…T
Thank you, Timo, very much for your response. I completely understand what you’re saying and see that assigning is the best way to handle the wholesaling side of things.
Question: If I make an offer to purchase and assign it to someone else, I don’t have to worry about doing anything else at all, right…other than collecting my check?
From what Ive read on the posts, you are done after assignment.
I had a question on the specifics of the closing when doing an assignment.
Sometime before closing, an assignment contract between you and the buyer is signed, seperate from the purchase contract.
Now, is the assignment fee written in the assigment contract conveyed on the HUD1? and do you collect the assignment fee as part of the deal. In other words, does your buyer get a loan for purchase amount+ assignment fee?
Why would the seller see the HUD with the end buyer? For all they know you are buying it for yourself to fix up. I have never had a seller back out when doing a double closing. All they care about is getting their money. When they are motivated and desperate to get rid of it they are not going to ask questions, they just want it out of their hair. I haven’t done an assignment yet ( I work mostly REOs and short sales) but from what I hear, it is an assignment that shows everything on the HUD. A double closing is two separate transactions. There are no “wholesaling” fees on them. It’s true that title companies don’t like to do double closings but if you look hard enough, there is always someone willing to do the work for the right price. Good luck. :beer
I have done so many of these types of transactions that I have lost count.
When you do a double close. It is essentially two seperate transactions. The seller sells you the house at the agreed upon price and the buyer puchases the houses at the agreed upon price.
The seller never sees your buyer’s HUD and the buyer never sees your seller’s HUD.
You get what is left in the middle.
These are sometimes also referred to as simultaneous closings or pass throughs.
The second transaction (the end buyer) covers the first transaction. So you don’t have to come out of pocket to purchase or sell.
This has become more challenging a transaction lately because some title companies are wanting each transaction to stand on its own.
For example they would want the first transaction to fund by you or your lender and the second transaction funded by your buyer or buyers lender.
I still know companies that will allow a double closing in my area but most of the big ones are requiring to seperate fully funded transactions.
What most people will eventually have to do is go the form of an assignment with a memorandum of option.
Yes your seller will know that you wholesaled the deal to someone else, but your seller is also getting the amount that they agreed to in your contract.
If your seller backs out or threatens to back out, you have your memorandum of option filed that is clouding the title.
Sorry for the lolngwinded rant…just thought I would shed some light on the subject
When you do an assignment you are transferring the rights specified in the contract to another buyer. You are “asssigning those rights” for a fee known as an “assignment fee” or “wholesaling fee”. The document that you have them sign must be sent to the title company. They are now the new buyers. The title company/escrow agent pays you the assignment fee from the proceeds of the sale. Unless of course you can get the fee paid up front!
I’m not sure what TIMO is talking about. I’ve wholesaled a short sale via double close & the bank had no idea this occured, b/c it is not on the HUD-1 they received. I received a separate HUD-1 from my transaction w/ the buyer.
I use a Title Company that does double closings, and they have no problem with it. So I put and/or assigns on my contracts so that I can either assign them or double close them.
Totally not true. Whenever I double close the seller leaves when he/she signs the papers and then I finish with the buyer. I have never had a buyer walk out on me because he is already getting a good deal from me and I only deal with good buyers so he knows I am making a profit and has no problem with it. Neither seller nor end buyer know my profit. As far as title companies, many of them do the transactions. If you cannot find one go to your local real estate club. They have many members who are title companies.
