Wholesale Real Estate Investing: Simultaneous Closing

If you are a real estate investor that buys houses directly from motivated sellers, you will find that you cannot handle all the properties you buy. You have to sell such properties at wholesale prices to other real estate investors.

This is called wholesale real estate investing.
Simultaneous closing, also called double closing, occurs when you buy a property from the seller and sell it to your buyer at the same closing table.   At closing, you get a check of the difference between your buying price and selling price less any closing costs.

When do you do a simultaneous closing?
If the deal will make you a tidy profit, you do not want the buyer or the seller to know how much you will make. It is common for them to walk away from the deal after getting cold feet.

Simultaneous closing is an excellent option to prevent this.

How does it work?
1)    Sign the contract to buy
Once you identify a good deal, put the contract under contract to buy from the seller. Fax this to your title company or closing attorney to do title work.

2)    Sign contract to sell
Get a real estate investor who buys houses in your area.   Put it under contract with you as the seller and they as the buyer.

We are assuming that your selling price is higher than your buying price.

Fax this second contract to the title company. When you sign the contract, make sure you collect earnest money.

3)    Close the deals
The closing company will then prepare two closing statements (HUD1), one where you buy the property and one where you sell it.

This means you will have two sets of closing fees. Usually the money your buyer brings is also used to close the first transaction.

If the second transaction is being funded by a lender, the lender must agree to have their money used to fund the first transaction. Your check will be the difference between your buying price and your selling price.

Notice that the buyer or seller cannot know how much you make in the transaction.

Advantages and disadvantages of simultaneous closing
In simultaneous closing, there are two sets of closing costs, one when buying the house, one when selling it.

Your buyer's lender can refuse to allow their funds to be used to close the first transaction. This means you must find a way to finance the first transaction.

Unless you have ready cash to finance this transaction, you might have to get transactional funding from a hard money lender. Transactional funding never leaves the closing table and just allows you to close the first transaction.

This can be an added cost to the deal.

If your buyer borrows from a conventional lender, the lender might require seasoning for at least 90 days.   Avoid getting such buyers in your wholesale deals.

When all is said and done, simultaneous closing provides a way of making big pay days out of your wholesale deals.

About the Author

In successful real estate investing, you must be able to sell your houses quickly to stay in business, especially in a slow market. Learn how an interactive website for real estate investing can help you sell your houses faster by creating a buyers list and using the power of social media to reach many buyers in your market.

Author (simon87). Submitted on Wed, 28 Dec 2011 Time: 7:02 PM

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