How to Double Close a Wholesale Deal: When and Why to Use It
A double close (also called a simultaneous close or back-to-back closing) is when you buy the property from the seller and immediately resell it to your end buyer in two separate transactions, often on the same day. Unlike an assignment where the buyer sees your fee, a double close keeps your profit private.
When to use a double close instead of assignment
Most wholesale deals work fine as assignments. But there are situations where a double close makes more sense:
- Large spreads: When your profit is $15K, $20K, or more, some sellers and buyers get uncomfortable seeing that number on a closing disclosure. A double close keeps both sides in the dark about your margin.
- Contract prohibits assignment: If you signed a contract that does not allow assignment (common with bank-owned/REO properties), you must close on the property yourself before reselling.
- Seller would object: Some sellers will refuse to close if they see someone making a large fee without doing any work. A double close avoids that conversation entirely.
- Buyer requires it: Some institutional buyers and hedge funds require that their seller be the title holder, not an assignee.
How a double close works
Transaction A: You buy from the seller
You close on the property at your contracted purchase price. For a brief period (sometimes minutes, sometimes hours), you are the legal owner of the property.
Transaction B: You sell to the buyer
Immediately after Transaction A closes, Transaction B closes. You sell the property to your end buyer at your marked-up price. The difference between what you paid and what you sold for is your profit.
Transactional funding
The challenge with double closes is that you need funds to close Transaction A before Transaction B funds are available. This is where transactional funding comes in.
Transactional lenders provide short-term funds (usually 1-3 days) specifically for double closes. They charge 1-2% of the loan amount. So on a $150K purchase, expect to pay $1,500-$3,000 for the transactional funding. Some title companies will allow the buyer's funds from Transaction B to fund Transaction A if both transactions close simultaneously, eliminating the need for transactional funding entirely.
Step-by-step process
- Get the property under contract with the seller at Price A
- Find your end buyer and execute a purchase agreement at Price B (Price B > Price A)
- Arrange transactional funding for Price A (if needed)
- Schedule both closings with the title company on the same day
- Close Transaction A (you buy from seller)
- Close Transaction B (you sell to buyer)
- Transactional lender is repaid from Transaction B proceeds
- You keep the difference: Price B - Price A - closing costs - transactional funding fee
Costs comparison: assignment vs double close
| Cost | Assignment | Double Close |
|---|---|---|
| Closing costs | One set | Two sets ($2K-$5K extra) |
| Transactional funding | None | 1-2% of purchase price |
| Title insurance | One policy | Two policies |
| Transfer taxes (where applicable) | One transfer | Two transfers |
| Total extra cost | $0 | $3K-$8K typically |
The extra cost of a double close means it only makes sense when the spread justifies it. A $5K assignment fee is not worth double closing. A $25K spread with extra costs of $5K still nets you $20K with full privacy.
Title company requirements
Not all title companies do double closes. You need a title company that:
- Understands and regularly handles back-to-back closings
- Can schedule both transactions on the same day
- Is willing to use transactional funding or allow pass-through funding from Transaction B
- Has experience with investor transactions
Ask upfront before sending a deal to a title company: "Do you handle simultaneous closings for investors?" If they hesitate, find another company. See our guide on investor-friendly title companies.
Legal and tax considerations
In a double close, you are briefly the owner of the property. This means:
- The transaction appears on your tax return as a sale (short-term capital gain or ordinary income)
- You are liable for transfer taxes in states that charge them
- You may need to disclose your ownership interest in some states
- Your entity (LLC) should be properly set up to hold and transfer real estate
Consult with a CPA and real estate attorney in your state to ensure your double close structure is compliant.
Related guides
- How to Assign a Contract Step by Step
- Wholesale Contracts Explained
- Investor-Friendly Title Companies
- How to Price a Wholesale Deal
- Closing Costs by State