What is Double Closing in Real Estate?
A double closing (also called a simultaneous close, back-to-back close, or double escrow) is a real estate transaction structure where two separate closings happen on the same property, typically on the same day or within a few days of each other. The wholesaler first buys from the seller (the A-to-B transaction), then immediately sells to the end buyer (the B-to-C transaction). For a brief moment, the wholesaler actually takes title to the property.
Double closing is one of the three primary disposition methods in wholesale real estate, alongside assignment of contract and novation. Each has its own advantages, costs, and use cases. Understanding when to use a double close versus an assignment is a critical skill for any serious wholesaler.
How a double close works
The mechanics involve two entirely separate transactions that happen in quick succession at the same title company:
Transaction 1 (A-to-B): The seller (A) sells the property to the wholesaler (B) at the originally contracted price. The wholesaler signs closing documents, title transfers to the wholesaler, and the seller receives their proceeds.
Transaction 2 (B-to-C): The wholesaler (B) immediately sells the property to the end buyer (C) at the higher price. The buyer signs their closing documents, title transfers from the wholesaler to the buyer, and the wholesaler receives the difference between the two prices as profit.
Both transactions typically happen at the same title company, often in the same conference room, sometimes within the same hour. The seller leaves, the buyer comes in, and the deal is done.
When to use a double close
Double closing makes sense in several specific situations:
- Large spreads: If your wholesale spread is $30,000 or more, an assignment would show the seller and buyer exactly how much you're making. A double close keeps each party's numbers private.
- Non-assignable contracts: Some purchase contracts include a clause prohibiting assignment. A double close works around this because you're actually purchasing the property, not assigning rights.
- Financed buyers: Many lenders won't fund a purchase that involves an assignment. If your end buyer needs financing, a double close is often the only option.
- REO and bank-owned properties: Banks almost never allow assignments. Double closing is the standard approach for these deals.
- Professionalism: Some wholesalers prefer double closing for all deals because it looks and feels more like a standard real estate transaction to all parties involved.
Costs of a double close
The primary downside of double closing is the additional cost. You're running two full transactions instead of one:
| Cost | Typical Range |
|---|---|
| Transactional funding fee | 1-2% of A-to-B purchase price |
| Second set of closing costs | $500-$1,500 |
| Title insurance (second policy) | $200-$800 |
| Recording fees (second deed) | $50-$200 |
Total additional costs typically range from $1,000 to $3,000 depending on the purchase price and your transactional funding source. These costs only make sense when the spread is large enough to absorb them while still leaving a healthy profit.
Transactional funding explained
Since you need to actually purchase the property in the A-to-B transaction, you need capital. Transactional funding (also called flash funding or same-day funding) is a short-term loan specifically designed for double closings. The lender provides the funds to close the A-to-B transaction, knowing that the B-to-C transaction will close immediately after and repay the loan.
Transactional funding typically costs 1-2% of the loan amount with a 1-3 day term. Some lenders charge a flat fee. The key requirement is that you must have a committed end buyer with proof of funds or financing approval before the transactional lender will fund your deal.
Double close vs assignment
| Factor | Assignment | Double Close |
|---|---|---|
| Number of closings | One | Two |
| Take title? | No | Yes (briefly) |
| Spread visibility | Both parties see it | Private |
| Funding needed? | No | Yes (transactional) |
| Additional costs | $0 | $1,000-$3,000 |
| Buyer financing OK? | Usually no | Yes |
| Speed | Faster (one closing) | Slightly slower |
Most wholesalers use assignments as their default method because it's simpler and cheaper. They switch to double closing when the situation demands it: large spreads, non-assignable contracts, or financed buyers.
Legal considerations
Double closing is legal in all 50 states, though regulations vary. Some states have specific disclosure requirements. A few title companies won't handle same-day double closings, so you need to find an investor-friendly title company that understands and regularly handles these transactions. Always work with a real estate attorney or knowledgeable title company to ensure compliance with your state's specific requirements.
How Deal Run helps with double closings
Whether you're assigning or double closing, the disposition process is the same: find qualified buyers, send them a professional marketing package, and close fast. Deal Run's buyer identification tools help you build a list of active investors who can close quickly, which is especially important for double closings where timing is critical.