assignment of contract vs double closing

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Assignment Closings vs. Double Closings – Know the Difference and How We Can Help!

The success of your real estate investment hinges on your ability to sell your properties in the most expeditious, risk-free, and profitable manner possible. The two most common approaches for property wholesalers and investors are Assignment Closings and Double Closings, each with their particular pros and cons. Knowing the difference between these two methods and when to use them will go a long way towards maximizing your returns. Get started with a quick primer by the title and closing experts at Marina Title.

Assignment Closings This is usually the less expensive and more straightforward of the two closing methods. Once you have signed a contract to purchase a property, you can then “assign” your right to buy the property to a third party for an assignment fee. Essentially, you are helping a buyer find a real estate opportunity in exchange for a sum. To illustrate how this works, consider the following scenario.

Say you find a distressed property and sign a contract with the seller to buy it for $50,000. You can make a quick $5,000 profit by locating another buyer who would be willing to buy the same property for the same price plus a $5,000 assignment fee to you.

If the third-party buyer agrees, then you seal the deal with an Assignment of Contract, which states that you are giving up all rights to purchase the property to the buyer in exchange for the fee to be paid when the deal closes. Unlike a double closing, there is only one set of closing costs, which is paid by the third-party buyer.

Many investors find that the main drawback of this approach is the lack of privacy: all the parties involved, from the seller to the third-party buyer, will see how much money the investor is making on the deal. This could be a source of contention for the end buyer, who may think that the investor is making a lot of money without taking on comparable risk. Hence, many investors use this method very selectively.

Double Closings Also known as the “A-B and B-C” approach, double closings also require securing a third party to purchase a distressed property, but with an extra step: rather than assigning the contract to buy the property, you purchase the property and then resell it to the end buyer. Many investors like this approach because unlike in an assignment closing, the original deal remains private for a time being.

The catch with a double closing is that, by definition, you must manage two different transactions, and do so in a timely and efficient manner. This is especially true if you are relying on transactional funding, which usually requires that you close with the third-party buyer within a certain time frame, typically as early as 24 hours from the first closing.

Marina Title Specializes in Both Assignment Closings and Double Closings

As a full-service title and settlement firm, Marina Title has all the expertise and experience you need to successfully carry out either closing method. We successfully close deals under both methods on a regular basis and can also assist with preparing the assignment of contract and serving as the closing, title, and escrow agent. To learn more about how we can help, call (305) 901-5628  or email us at  [email protected] !

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What does double closing mean in real estate

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• October 17, 2023

In the realm of real estate transactions, the term "double closing" refers to a specific type of property sale process. This article aims to provide a clear and concise understanding of what double closing means, its benefits, and the circumstances in which it can be utilized. Whether you are a buyer, seller, or investor, familiarizing yourself with this concept can prove immensely useful in navigating the real estate market effectively.

I. What is Double Closing?

• Definition: Double closing, also known as simultaneous closing or back-to-back closing, is a real estate transaction strategy involving two separate property transactions that occur on the same day.
• It typically involves three parties: the seller, the buyer A (the "intermediary"), and the buyer B (the "end buyer").
• In this process, the intermediary purchases the property from the seller and immediately resells it to the end buyer, often at a higher price.

II. Benefits of Double Closing:

• Double closing allows intermediaries to capitalize on the difference between the purchase price and the subsequent sale price, enabling them to earn a profit without assuming ownership of the property.
• End buyers can also benefit from this strategy

Table of Contents

What's a double closing in real estate?

What is an example of a double closing, what is a double closing called, how do you do a double close, how does a double close work in real estate.

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Is double closing considered wholesaling?

Frequently asked questions, what is the 2 rule in real estate, what is the difference between assignment and double closing, what does double mean in real estate, what does the pa designation mean, what is pa real estate commission, how do you get a pa in real estate.

• Complete 75 hours of approved Pre-Licensing education.
• Pass the course final exam.
• Pass the Pennsylvania real estate salesperson exam.
• Select a sponsoring broker.
• Complete the real estate license application.
• Abbreviation for personal assistant : someone whose job is helping someone in a higher position, especially by writing letters, arranging meetings, and making phone calls: PA to sb She is PA to the director of the organization.
• It stands for “ Professional Association ,” which is a type of corporation reserved for licensed professional businesses (lawyers, doctors, accountants, and architects, etc.).
• Used in a Sentence: Florida law requires that a professional corporation includes the words “ professional association ” or the abbreviation “PA” in the name.
• It is now largely obsolete, but some lawyers still use it. Most of the other initials refer to the form of business organization that a lawyer or law firm uses. More specifically: "PA" means " professional association " a form of organization which reduces the individual liability of members of the firm.
• Jul 31, 2023 — The double close strategy lets a real estate investor have two private deals – one with the seller and one with the end buyer .

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Wholesaling Closing Methods – Assignments vs Double Closings

Cody sperber.

Both of these approaches can help you close a transaction and get paid, and both have advantages and disadvantages.

Look, as a newbie real estate investor or someone who is new to the wholesaling game, there are two proven methods that work for closing wholesale deals and you need to know how to use them.

Let’s jump in and learn about the different closing methods used for wholesale deals!

Wholesale Deals Closing Methods

The assignment method.

What It Is: In this method, you’ll simply “assign” your role in the distressed seller’s contract over to your cash buyer. Here’s the trick: because you’re a principal in the transaction, you do not need a Realtor’s license to wholesale properties this way, so you are allowed to charge an “assignment fee” (which is similar to the commission that a real estate agent would earn). And boom! Money in your pocket; deal is done.

• Find a cash buyer.
• Fill-out a one-page assignment form that “assigns” your rights in the original contract over to your cash buyer.
• Collect your “assignment fee” when the deal closes.
• This method is cheap , requiring only one set of closing costs (paid by your cash buyer).

Privacy goes out the window. Due to the requirement of the assignment contract, all players involved will see how much money you’re making on the deal . It can get a little dicey if you’re profiting a large amount. Why? Well, because you’re basically making bank for doing nothing and not taking any risk. I’d suggest you do what I do regarding this method… only use the Assignment method if you’re making $10,000 or less in profit.

The Double Close Method

What It Is: It’s really two transactions, commonly referred to as the “A-B & B-C” strategy. A is the distressed seller, B is you, and C is your cash buyer. In the A-B transaction, you buy the property from the distressed seller. In the secondary B-C transaction, you sell the property to your cash buyer. And now you know your ABCs!

• Privacy remains intact. No one but you sees how much profit you’re bringing in from the deal. Again, I’d suggest you do what I do… always use this method when making more than $10,000 – or if the other parties involved seem to be super uncomfortable about it.
• Since there are technically two transactions, you’ll have to work with two different sets of closing costs. Annoying, but this shouldn’t be a reason not to use this method.

What Do You Need For An Assignment Contract?

You simply need “and/or assignee” terminology in your contract. Generally, there are five terms that should be agreed to in the assignment contract:

• Close of Escrow Date
• Earnest Deposit
• Inspection/Escape Clause
• Closing Agent Named

I can’t stress enough how important it is to establish a solid working relationship with an investor-friendly title company that understands both the Assignment and Double Close methods.

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• Assignment Closings vs. Double Closings

Assignment Closings vs. Double Closings – Know the Difference and How We Can Help!

The success of your  real estate investment  hinges on your ability to sell your properties in the most expeditious, risk-free, and profitable manner possible. The two most common approaches for property wholesalers and investors are Assignment Closings and Double Closings, each with their particular pros and cons. Knowing the difference between these two methods and when to use them will go a long way towards maximizing your returns. Get started with a quick primer by the title and closing experts at Excellence Title Partners.

Assignment Closings

This is usually the less expensive and more straightforward of the two closing methods. Once you have signed a contract to purchase a property, you can then “assign” your right to buy the property to a third party for an assignment fee. Essentially, you are helping a buyer find a real estate opportunity in exchange for a sum. To illustrate how this works, consider the following scenario.

Say you find a distressed property and sign a contract with the seller to buy it for $50,000. You can make a quick $5,000 profit by locating another buyer who would be willing to buy the same property for the same price plus a $5,000 assignment fee to you.

If the third-party buyer agrees, then you seal the deal with an  Assignment of Contract,  which states that you are giving up all rights to purchase the property to the buyer in exchange for the fee to be paid when the deal closes. Unlike a double closing, there is only one set of closing costs, which is paid by the third-party buyer.

Many investors find that the main drawback of this approach is the lack of privacy: all the parties involved, from the seller to the third-party buyer, will see how much money the investor is making on the deal. This could be a source of contention for the end buyer, who may think that the investor is making a lot of money without taking on comparable risk. Hence, many investors use this method very selectively.

Double Closings

Also known as the “A-B and B-C” approach, double closings also require securing a third party to purchase a distressed property, but with an extra step: rather than assigning the contract to buy the property, you purchase the property and then resell it to the end buyer. Many investors like this approach because unlike in an assignment closing, the original deal remains private for the time being.

The catch with a double closing is that, by definition, you must manage two different transactions, and do so in a timely and efficient manner. This is especially true if you are relying on transactional funding, which usually requires that you  close with the third-party buyer  within a certain time frame, typically as early as 24 hours from the first closing.

Excellence Title Partners Specializes in Both Assignment Closings and Double Closings.

As a full-service title and settlement firm, Excellence Title Partners has all the expertise and experience you need to successfully carry out either closing method. We successfully close deals under both methods on a regular basis and can also assist with preparing the assignment of contract and serving as the closing, title, and escrow agent. To learn more about how we can help, call (689) 345-5550 or email us at  [email protected] !

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Assignment of Contract – Assignable Contract Basics for Real Estate Investors

What is assignment of contract? Learn about this wholesaling strategy and why assignment agreements are the preferred solution for flipping real estate contracts.

Beginners to investing in real estate and wholesaling must navigate a complex landscape littered with confusing terms and strategies. One of the first concepts to understand before wholesaling is assignment of contract, also known as assignment of agreement or “flipping real estate contracts.”  

An assignment contract is the most popular exit strategy for wholesalers, and it isn’t as complicated as it may seem. What does assignment of contract mean? How can it be used to get into wholesaling? Here’s what you need to know.

What Is Assignment of Contract?

How assignment of contract works in real estate wholesaling, what is an assignment fee in real estate, assignment of agreement pros & cons, assignable contract faqs.

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Assignment of real estate purchase and sale agreement, or simply assignment of agreement or contract, is a real estate wholesale strategy that facilitates a sale between the property owner and the end buyer.

This strategy is also known as flipping real estate contracts because that’s essentially how it works:

• The wholesaler finds a property that’s already discounted or represents a great deal and enters into a contract with the seller,
• The contract contains an assignment clause that allows the wholesaler to assign the contract to someone else (if they choose to!), then
• The wholesaler can assign the contract to another party and receive an assignment fee when the transaction closes.

Assignment of contract in real estate is a popular strategy for beginners in real estate investment because it requires very little or even no capital. As long as you can find an interested buyer, you do not need to come up with a large sum of money to buy and then resell the property – you are only selling your right to buy it .

An assignment contract passes along your purchase rights as well as your contract obligations. After the contract assignment, you are no longer involved in the transaction with no right to make claims or responsibilities to get the transaction to closing.

Until you assign contract to someone else, however, you are completely on the hook for all contract responsibilities and rights.

This means that you are in control of the deal until you decide to assign the contract, but if you aren’t able to get someone to take over the contract, you are legally obligated to follow through with the sale .

Assignment of Contract vs Double Closing

Double closing and assignment of agreement are the two main real estate wholesaling exit strategies. Unlike the double closing strategy, an assignment contract does not require the wholesaler to purchase the property.

Assignment of contract is usually the preferred option because it can be completed in hours and does not require you to fund the purchase . Double closings take twice as much work and require a great deal of coordination. They are also illegal in some states.

Ready to see how an assignment contract actually works? Even though it has a low barrier to entry for beginner investors, the challenges of completing an assignment of contract shouldn’t be underestimated. Here are the general steps involved in wholesaling.

Step #1. Find a seller/property

The process begins by finding a property that you think is a good deal or a good investment and entering into a purchase agreement with the seller. Of course, not just any property is suitable for this strategy. You need to find a motivated seller willing to accept an assignment agreement and a price that works with your strategy. Direct mail marketing, online marketing, and checking the county delinquent tax list are just a few possible lead generation strategies you can employ.

Step #2: Enter into an assignable contract

The contract with the seller will be almost the same as a standard purchase agreement except it will contain an assignment clause.

An important element in an assignable purchase contract is “ and/or assigns ” next to your name as the buyer . The term “assigns” is used here as a noun to refer to a potential assignee. This is a basic assignment clause authorizing you to transfer your position and rights in the contract to an assignee if you choose.

The contract must also follow local laws regulating contract language. In some jurisdictions, assignment of contract is not allowed. It’s becoming increasingly common for wholesalers to assign agreements to an LLC instead of an individual. In this case, the LLC would be under contract with the seller. This can potentially bypass lender objections and even anti-assignment clauses for distressed properties. Rather than assigning the contract to someone else, the investor can reassign their interest in the LLC through an “assignment of membership interest.”

Note: even the presence of an assignment clause can make some sellers nervous or unwilling to make a deal . The seller may be picky about whom they want to buy the property, or they may be suspicious or concerned about the concept of assigning a contract to an unknown third party who may or may not be able to complete the sale.

The assignment clause should always be disclosed and explained to the seller. If they are nervous, they can be assured that they will still get the agreed-upon amount.

Step #3. Submit the assignment contract for a title search

Once you are under contract, you must typically submit the contract to a title company to perform the title search. This ensures there are no liens attached to the property.

Step #4. Find an end buyer to assign the contract

Next is the most challenging step: finding a buyer who can fulfill the contract’s original terms including the closing date and purchase price.

Successful wholesalers build buyers lists and employ marketing campaigns, social media, and networking to find a good match for an assignable contract.

Once you locate an end buyer, your contract should include earnest money the buyer must pay upfront. This gives you some protection if the buyer breaches the contract and, potentially, causes you to breach your contract with the seller. With a non-refundable deposit, you can be sure your earnest money to the seller will be covered in a worst-case scenario.

You can see an assignment of contract example here between an assignor and assignee.

Step #5. Receive your assignment fee

The final step is receiving your assignment fee. This fee is your profit from the transaction, and it’s usually paid when the transaction closes.

The assignment fee is how the wholesaler makes money through an assignment contract. This fee is paid by the end buyer when they purchase the right to buy the property as compensation for being connected to the original seller. Assignment contracts should clearly spell out the assignment fee and how it will be paid.

An assignment fee in real estate replaces the broker or Realtor fee in a typical transaction as the assignor or investor is bringing together the seller and end buyer.

The standard real estate assignment fee is $5,000 . However, it varies by transaction and calculating the assignment fee may be higher or lower depending on whether the buyer is buying and holding the property or rehabbing and flipping.

The assignment fee is not always a flat amount. The difference between the agreed-upon price with the seller and the end buyer is the profit you stand to earn as the assignor. If you agreed to purchase the property for $150,000 from the seller and assign the contract to a buyer for $200,000, your assignment fee or profit would be $50,000.

In most cases, an investor receives a deposit when the Assignment of Purchase and Sale Agreement is signed with the rest paid at closing.

Be aware that assignment agreements can have a bad reputation . This is usually the case when the end buyer and seller are unsatisfied, realizing they could have sold higher or bought lower and essentially paid thousands to an investor who never even wanted to buy the property.

Opting for the standard, flat assignment fee is much more readily accepted by sellers and buyers as it’s comparable to a real estate agent’s commission or even much lower and the parties can avoid working with an agent.

Real estate investors enjoy many benefits of an assignment of contract:

• This strategy requires little or no capital which makes it a popular entry to wholesaling as investors learn the ropes.
• Investors are not added to the title chain and never own the property which reduces costs and the amount of time the deal takes.
• An assignment of agreement is easier and faster than double closing which requires two separate closings and two sets of fees and disclosures.
• Wholesaling can be a great tool to expand an investor’s network for future opportunities.

As with most things, there are important drawbacks to consider. Before jumping into wholesaling and flipping real estate contracts, consider the downsides .

• It can be difficult to work with sellers and buyers who are not familiar with wholesaling or assignment agreements.
• Some sellers avoid or decline assignment of contract offers because they are suspicious of the arrangement, think it is too risky, or want to know who they are selling to.
• There is a limited time to find an end buyer. Without a reliable buyer’s list, it can be very challenging to find a viable end buyer before the closing date.
• The end buyer may back out at the last minute. This may happen if they do not have owner’s rights until the contract is assigned or they do not want to pay an assignment fee.
• Not all properties are eligible for wholesaling like HUD and REO properties. There may be anti-assignment clauses or other hurdles. It is possible to get around this by purchasing the property with an LLC which can then be sold, but this is a level of complication that many wholesalers want to avoid.
• Assignors do not have owner’s rights. When the property is under contract, investors cannot make repairs or improvements. This makes it harder to assign a contract for a distressed property in poor condition.
• It can be hard to confirm an end buyer is qualified. The end buyer is responsible for paying the agreed upon price set by the seller and assignor. Many lenders do not handle assignment agreements which usually means turning to all-cash end buyers. Depending on the market, they can be hard to find.

In the worst-case scenario, if a wholesaling deal falls through because the end buyer backs out, the investor or assignor is still responsible for buying the property and must follow through with the purchase agreement. If you do not, you are in breach of contract and lose the earnest money you put down.

To avoid this worst-case scenario, be prepared with a good buyer’s list. You should only put properties under contract that you consider a good deal and you can market to other investors or homeowners. You may be able to get more time by asking for an extension to the assignment of contract while you find another buyer or even turn to other wholesalers to see if they have someone who would be a good fit.

What is the difference between assignor vs assignee?

In an assignment clause, the assignor is the buyer who then assigns the contract to an assignee. The assignee is the end buyer or final buyer who becomes the owner when the transaction closes. After the assignment, contract rights and obligations are transferred from the assignor to the assignee.

What Is an assignable contract?

An assignable contract in real estate is a purchase agreement that allows the buyer to assign their rights and obligations to another party before the contract expires. The assignee then becomes obligated to meet the terms of the contract and, at closing, get title to the property.

Is Assignment of Agreement Legal?

Assignment of contract is legal as long as state regulations are followed and it’s an assignable contract. The terms of your agreement with the seller must allow for the contract to be assumed. To be legal and enforceable, the following general requirements must be met.

• The assignment does not violate state law or public policy. In some states and jurisdictions, contract assignments are prohibited.
• There is no assignment clause prohibiting assignment.
• There is written consent between all parties.
• The property does not have restrictions prohibiting assignment. Some properties have deed restrictions or anti-assignment clauses prohibiting assignment of contract within a specific period of time. This includes HUD properties, short sales, and REO properties which usually prohibit a property from being resold for 90 days. There is potentially a way around these non-assignable contracts using an LLC.

Can a non-assignable contract still be assigned?

Even an non-assignable contract can become an assignable contract in some cases. A common approach is creating an agreement with an LLC or trust as the purchaser. The investor can then assign the entity to someone else because the contractual rights and obligations are the entity’s.

Assignment agreements are not as complicated as they may sound, and they offer an excellent entry into real estate investing without significant capital. A transaction coordinator at Transactly can be an invaluable solution, no matter your volume, to keep your wholesaling business on track and facilitate every step of the transaction to closing – and your assignment fee!

Adam Valley

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Double Closing On a Deal?

Assignment Closing Vs. Double Closing: Which Is the Better Strategy?

As a real estate wholesaler, your success depends on how fast you can close properties for maximum profits. Veterans in the investing business use two common real estate investing strategies: assignment closing and double closing .

Both investment strategies have pros and cons, and knowing their differences can help you choose the right plan that maximizes your returns. This post gives you a quick primer on assignment closing and double closing to help you make informed decisions.

Assignment Closing

In this real estate closing strategy, you act as the intermediary between the distressed seller and the cash buyer. Since you’re a principal in the transaction, you do not need a realtor’s license to buy and sell properties this way. You can still charge an assignment fee, similar to the commissions real estate agents charge.

It’s a super-easy process since you only need to find a cash buyer and fill out an assignment form that legally assigns your right to the cash buyer. Plus, you get to collect the assignment fee at the time of deal closing. It also involves only one set of closing costs, paid by you to the cash buyer.

There’s no privacy with this type of deal. Due to the nature of the contract, all the parties involved in the process can quickly determine how much money you’re making on the sale. This transparency can sometimes get a bit dicey, especially if you’re hoping to make a lot of money. We recommend using the assignment method only on sales where your profit is $10,000 or less.

Double Closing

As the name implies, in the double close method, there are two transactions involving two closings. It’s also known as the A-B and B-C strategy. Here, A is the distressed seller, B is the real estate investor, and C is the buyer. In the first transaction, B buys the property from distressed seller A. In the second transaction, B sells the property to C, the cash buyer.

You will have your privacy. No one besides you knows how much profit you’re making from the deal. Often, real estate investors use the double-close strategy for sales, where they make a hefty profit, usually above $10,000. This method can help you avoid discomfort between the seller and the cash buyer.

Technically, you’re closing two deals and will have to pay two closing costs. However, it is relatively easy since you’ll use the same title company for both transactions.

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As a leading transactional lender , we help you secure the right financing to complete real estate deals using the double-close method. To learn more about our funding policies and how we can help you, connect with our team at 866-901-4046 . Use this form to share information about your deal and get it funded fast!

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Understanding Double Closing in Wholesaling Real Estate

Real estate wholesaling is a fast-paced business strategy that involves the contract assignment for a property to an end buyer. One of the key elements in this process is "double closing." This term might sound complex initially, but it's a straightforward concept once you get the hang of it.

What is Double Closing?

Double closing, also known as "simultaneous closing," is a real estate transaction strategy where the wholesaler acquires a property from a seller and then immediately sells it to an end buyer. It involves two separate transactions - first between the seller and the wholesaler, and second between the wholesaler and the buyer.

In other words, the wholesaler temporarily becomes the owner of the property before selling it off. This period of ownership can be as short as a few hours.

The Process of Double Closing

Here's a step-by-step breakdown:.

1. Property Identification: The wholesaler identifies a potentially profitable property and negotiates a purchase agreement with the seller.

2. End Buyer Search: Parallel to this, the wholesaler looks for an end buyer interested in purchasing the property.

3. First Closing: Once both parties are lined up, the wholesaler completes the purchase of the property from the seller, officially becoming the owner.

4. Second Closing: Immediately following the first closing, the second closing occurs where the wholesaler sells the property to the end buyer.

5. Profit: The wholesaler makes a profit from the difference between the price they bought the property for and the price they sold it at.

Benefits of Double Closing

Double closing offers several benefits:.

Privacy: The purchase and sale prices remain confidential since the end buyer and the seller are not involved in the same transaction. This can be advantageous when the wholesaler wants to keep their profit margin private.

Control: The wholesaler has more control over the process as they officially own the property, even if it's just for a short time.

Flexibility: It allows for more flexibility in terms of financing. Since the wholesaler is the temporary owner, it can be easier to secure funding.

Considerations for Double Closing in Wholesaling

While double closing has its benefits, it's not without considerations:.

Closing Costs: Double closing involves two separate transactions, which means two sets of closing costs. This can eat into the wholesaler's profits.

Funding: Wholesalers need to have the funds available to purchase the property initially, which can pose a challenge for some. Note: It has been done without funding the deal first. Check with your title company or closing attorney :)

'1' Day Funding or Short-Term Funding: You may want to consider reaching out to companies such as Lima One Capital for further information.

In conclusion, understanding the concept of double closing is crucial for anyone looking to enter the wholesaling real estate business. It's a strategy that, when used correctly, can lead to significant profits and success in the industry. Always remember to conduct due diligence, understand your financial capabilities, and consult with a real estate attorney or expert when necessary.

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What is an Assignment Contract in Wholesale Real Estate?

The most successful real estate investors are ones who market to and work directly with homeowners to buy property. When investors talk directly to sellers, they have several options for closing lucrative real estate deals. For real estate investors who don’t have a lot of time or money to invest in any single property, wholesaling is an attractive option.

Wholesaling real estate is a great way to get into real estate investing, and it’s a strategy that allows you to invest without putting down any upfront capital of your own. 

But how? 

In real estate wholesaling, a wholesaler contracts an off-market home with a seller, then finds an interested third-party buyer to purchase the contract at a higher price. The wholesaler then keeps the difference as profit. This process of selling a contract before the wholesaler purchases the property themselves is called an assignment of contract . 

What is an assignment of contract? 

An assignment of contract is a transfer of contractual obligations from one party to another. In real estate, an investor makes a deal with a property owner, and then sells the contract to a third party before the home closes. The investor collects an assignment fee for finding the deal. 

You may have dealt with situations that are similar to an assignment of contract. For example, if the mortgage on your home has ever transferred from one company to another, you’ve been privy to an assignment of mortgage, where your original mortgage company has transferred their contractual obligations to a new company. 

Do I need to put down any of my own money using an assignment of contract? 

No! The benefit to wholesaling with an assignment of contract in real estate is that you don’t need to use any of your own money in order to profit from a real estate transaction. Minimal costs to wholesalers include building a quality list of leads (often distressed properties) through driving for dollars, and sending mail to those leads. 

What is the difference between assignment of contract and double closing? 

Unlike an assignment of contract in real estate, double-closing involves two separate transactions with the seller and buyer. In double closing, a wholesaler purchases a home in their name, and then sells the property within 30 days without making any updates to the home. The benefit of double closing is that a wholesaler can keep their own profit undisclosed to both the seller and the buyer. The downside is that the investor has to put up their own money in order to close the first part of this real estate deal.

How do I find someone to buy my contract?

Finding buyers to purchase your real estate contracts may seem daunting, but there are lots of investors and entrepreneurs who are looking for their next deal. A great way to start building a buyers list is to go to local REI meet-ups and exchange business cards with investors who are actively making deals. You can also post on social media to get the word out about your business. As you’re out driving for dollars, keep an eye out for signs that say “For Rent.” You may be able to connect with those owners to see if they’re interested in growing their rental portfolio.  

Is an assignment of contract in real estate legal? 

Yes - but it’s important to research and keep an eye on the wholesaling regulations in your state. In Illinois, for example, non-licensed investors are allowed to wholesale one real estate deal every 12 months. Investors in Illinois who want to do more wholesaling deals than one per year need to obtain a license. In Oklahoma, real estate investors are required to obtain a license in order to sell an assignment of contract and must abide by all state real estate laws. Be sure to review the laws in your state and keep up to date on local real estate investing news in your area. 

Can I make money wholesaling?

Yes! Just take a look at a few DealMachine customer success stories. Real estate investor Ramin Qudus made $50,000 on a wholesaling deal during his 7-day trial with DealMachine. Rita Grimes talked with our Director of Community Experience, Elise Knaack, about how she was able to make $178,000 in the first half of 2021 through wholesaling and driving for dollars. Just one week after Ashley and Anthony Warren started marking to their D4D leads, they had their first deal under contract for $62,000. 

About David Lecko

David Lecko is the CEO of DealMachine. DealMachine helps real estate investors get more deals for less money with software for lead generation, lead filtering and targeting, marketing and outreach, and acquisitions and dispositions.

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Paul Do Campo

How to double close a real estate transaction.

• April 25, 2023
• , How to , Real Estate Investing Tips

Whether you’re a real estate investor or an agent… you’re going to come across the term “double close”. And if you’re going to be in a real estate career for the long run, it’s best if you understand the ins-n-outs of a double close transaction — and we’ll show you in this article today!

What is a Double Close in real estate?

A double close is a type of real estate closing transaction that involves 2 closings, one between the seller (A) and the middleman (B) (or wholesaler), and a second between the middleman (B) and an end buyer (C). All this takes place on the same day, sometimes the same hour.

(A) sells the property to (B).

(B) sells the property to (C). 

In this type of transaction, the buyer acts as a middleman or intermediary, and the second buyer is often unaware of the seller’s identity or the original purchase price. The goal of a double close is to make a profit by buying and reselling the property at a higher price. Double closings are legal and commonly used in real estate transactions, but they require careful planning and execution to avoid legal complications or fraudulent activities.

It’s important to get with a real estate attorney for the correct documentation.

Why use a double close?

Double closing essentially allows you to make a real estate transaction, without having your own money, and still make a profit (without ever BUYING the property yourself.

It’s for:

• Wholesalers
• Buy and sell real estate businesses
• If you change your mind about the property

If you have a property under contract, but you don’t intend on holding onto it, or rehabbing it as a flip, but you still want to make a profit… than double closing (or assigning the contract — we’ll talk about this later) is the way to go.

If you’re a wholesaler, then a double close will be a tool in your toolbox you MUST be familiar with.

And it’s also a great option for beginning investors who aren’t interested in delving into traditional financing options like mortgages, yet can still benefit from the buy-and-sell business of investing.

Hiding your profit

Another great reason to double close (rather than assign the contract) is that you can conceal your profit made from both the buyer and the seller. When you assign a contract during the closing your profit will be shown in the HUD statement. This isn’t a big deal typically because sellers won’t really understand it, and buyers won’t care if you’re making $5k-$20k on it.

But if this is a big margin for you (say in the range of $50k+), you’d rather not have the parties involved know about this.

So that’s where 2 separate documents come into play. A closing statement between you and the seller, and a closing statement between you and the buyer: AKA: double close.

It’s a perfect way to conceal your profit if you need/want to.

Cons to Double Closing

There’s really only one con and it’s that it’s a bit more expensive to perform this because you’re doing 2 closings rather than one.

How do perform a double close?

It’s important to work with an escrow/title company (or closing attorney if you’re in an attorney state) that understands what you’re doing and your intent.

So step one: Find a closing company PRIOR to attempting this.

Step two is to have all your documents ready to go. We won’t dive into HOW to create the right documents here, because it depends on your state… but it’s important to talk to a licensed real estate attorney in YOUR state before going to legal zoom thinking you can create one on your own.

Here’s a video that explains how it’s done:

Basically the gist of the “steps” go like this:

1. Open escrow: Once you have the property under contract, The first step to performing a double close is to open an escrow account. Send the documents (the purchase and sales agreement to the escrow/closing attorney. Let them know that you’re performing a double close for an all-cash transaction.

2. Find your buyer:  Hopefully, you have a buyer lined up already, or you’re reverse wholesaling , or you have a prominent cash buyers list you can send the deal to. But once, you open up escrow and inform escrow that it’s a double close, it’s time to fill that “gap” and find your money.

3. Buyer funds account: Once the buyer is ready to move forward, he’ll wire his funds to escrow.

4.  Transfer of ownership (A-B): Once the title company has confirmed that the funds have been wired to escrow, and the title of the property is clear, the seller (A) will transfer ownership to the wholesaler (B) and you (the wholesaler) will own the property for a few minutes/hours.

5. Secondary transaction (B-C): Now with the property in your brief possession, the property will transfer ownership from you (B), to the end buyer (C).

NOTE: if there is any money due, the end buyer will have to come up with the rest of the funding before this phase takes place. The initial funding (wire), doesn’t have to be the full amount in most cases but get with your escrow company beforehand and find out.

6. Funds dispersed: Now everyone must get paid. The money that party C wired (the end buyer) will be sent to the seller, and you will get the remaining after all closing costs are accounted for.

Example of a double close: 

Let’s look at an example to show you how the numbers work:

1. You market to your area and find motivated sellers.. . (we have lots of articles on how to find off-market deals from motivated sellers, but usually these types of double close deals happen because you went direct to the seller and stroke a deal with them and agreed to buy a property from them at a discount for all cash.

2. You agree to buy a property for $200,000.. . (after you did your due diligence and analysis you determine that the ARV (after repair value), is $320,000 and the property has an estimated $30,000 in repairs — if you need a primer on how to estimate repair costs check this article out ).

3. You open up escrow for a purchase of $200,000… (letting your escrow know that you’ll be double closing and the end buyer will deposit soon)

4. Your end buyer agrees to buy for $250,000… (you find a buyer that sees this as a good deal. And he’ll be happy to make his deposit and start the transaction to buy the property at $250,000

5. Once the money is wired, start A-B transfer… (once escrow sees that the buyer wired the money, they start the transfer from the seller to you.)

6. Start B-C transfer… (Once the property is in your possession, they then immediately transfer the property from you to the end buyer)

7. Closing costs paid for… (escrow takes the fees due from the end buyers deposit; in this example, it’s $10,000)

8. $200,000 dispersed to the seller… (the seller takes what’s due to him from the buyer’s deposit)

9. $40,000 dispersed to you… (now what’s left over is $40k ($250,000-$200,000-10,000), which is your payday).

Difference between an assignment and a double close?

When it comes to real estate transactions, there are two popular methods of closing deals; the assignment fee and double close.|

An assignment fee allows wholesalers to release their contract for purchase to another party, known as the assignee, with a fee attached for the transfer. This method is cleaner than a double close however the drawback is that what you get paid will show up in the HUD-1 statement for everyone to see. This method is also slighter less expensive than a double close since it’s only 1 closing as opposed to 2.

In a double close… there are 2 contracts and 2 closings (unlike an assignment where it’s one closing).

Although an assignment fee is a simpler, less rigorous procedure compared to double close, it can be risky, given that the assignee has the option to complete or break the contract.

A double close, on the other hand, eliminates that problem by closing the property twice, requiring the first buyer to acquire and resell the property under a new contract.

Although the double closing method is more complicated than an assignment fee, it can offer investment protection, particularly when there is more significant profit at stake.

NOTE: We have an article on h ow to INCREASE your assignment fee as a wholesaler.

Legal contracts

First off, consult with your real estate attorney in your state before attempting this. We are not real estate attorneys, nor should you take anything we say or show as legal advice…

So, I’ll revert to a video on somone (not affiliated with us and NOT giving you legal advice), and what he uses for his contracts:

How to find a buyer

If you’re doing wholesaling as a career, you’ll need the ability or the network to quickly sell your contracts to your list so that you can easily and effortlessly perform a double close — we also have this article on finding cash buyers! :

So here’s a list of ways to find buyers: 

1. Reverse wholesale

2. Go on local cash buyer Facebook groups

3. Post the deal on Craigslist, Zillow, and Facebook (just make sure you abide by the state laws (contact an attorney before doing this).

4. Pull a list from Propstream of all the flippers and cash buyers and contact them.

6. Network at your local REIA group.

Double-close real estate transactions can be a powerful tool for wholesalers everyone should at least know how it’s done.

It can be a great tool to conceal the amount of profit you’re actually gaining but you do need to have the proper docs in place and understand the method in general.

And get with an escrow company (or closing attorney) that understands what you’re doing.

Get with a real estate attorney for the correct contracts.

In conclusion, if executed correctly, your double close will provide you with the opportunity to buy and sell properties quickly for a profit, and it can be a highly valuable tool for your business, granting you optimal financial flexibility.

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Double Closings: A Valuable Tool for Real Estate Investors

Most of us are familiar with Contract Assignments wherein the original buyer on the Purchase and Sale Agreement “assigns” his interest to a third party, but what is a Double Closing and why is it considered a valuable tool?

A Double Closing is the simultaneous closing of two separate Purchase and Sale Agreements involving three parties – a seller, a real estate investor, and an end buyer.   The sale of the property to a third-party investor is referred to as the Acquisition Escrow .  The investor then sells the property to the end buyer; this transaction is referred to as the Resale Escrow .  Both contracts will include language stating that closing is contingent on the simultaneous closing of the other.

Advantages of a Double Closing

Sellers working with investors are often sellers in dire circumstances. They want to close their home quickly but aren’t thrilled about the idea of entering a contract with one buyer who then assigns their interest to someone else who could then come back and start trying to renegotiate the terms. Utilizing a Double Closing allows the investor to remain in control of both transactions until closing occurs and keeps the seller content.

Investors completing a Double Closing do not have to disclose the amount of profit they are making to their end buyer like they do on an assignment. Because they are completing two closings, the sales price on the Acquisition Escrow is not disclosed to the buyer on the Resale Escrow nor is the sales price on the Resale Escrow disclosed to the seller of the Acquisition Escrow .

Funding for Double Closing

• Transactional Financing

Oftentimes investors will secure a very short-term loan referred to as a Transactional Loan or Flash Cash Loan . This type of financing is normally only secured for a few days and is paid back when both transactions close.

• Single-Source Funding

Using the proceeds from the Resale Escrow to complete the Acquisition Escrow closing is referred to as Single Source Funding . Although this type of closing was more common before the 2008 housing crisis, this type of funding can still be done today. The investor/seller of the Resale Escrow must disclose to the buyer that sellers’ proceeds are being used to purchase the property subject property.

Disadvantages of a Double Closing

The biggest disadvantage of a Double Closing is timing and the reliance of three parties to perform rather than just two. If the buyer or original seller backs out list minute, it affects both transactions.

Trying to record and fund on both transactions on the same day can be a challenge especially if the end buyer has a conventional lender.

To learn more about Double Closings reach out to one of our specialists now!

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Double Closing: Breaking Down A Unique Wholesale Strategy

Truly great wholesalers are smart enough not to entertain a deal without a proper exit strategy in place. To that end, the most prolific wholesalers of our time are always one step ahead; they know impending wholesale deals require not only one exit strategy but two. The ability to exercise multiple closing options at any given close is a credit to any investor and can easily tip the scales in their favor. Of particular importance to today’s wholesalers are the two most common methods for closing a deal: selling a contract and double closing .

Whereas most wholesalers favor the contract assignment method, it’s in their best interest to have a backup plan: the double closing. Otherwise referred to as a double escrow, a double closing is intended to facilitate a wholesale deal if a contract can’t be assigned; it’s a Plan B and a valuable one at that. Acquainting yourself with the double close real estate strategy could mean the difference between a good career and a great career.

What Is A Double Closing?

A double closing is an alternative wholesaling strategy to the wildly popular contract selling method. More specifically, however, double closings will witness an investor actually purchase a subject property, only to turn around and sell it fairly quickly—hence the name double closing. A double closing will literally have an investor close two independent deals (one with the original seller and one with the final buyer). A double close isn’t all that different from how you would typically buy and sell a property; it just happens in a much shorter period. It is not uncommon for double closings to occur over hours, days, or weeks.

To put things into perspective, a double closing will have two separate transactions. The first transaction will occur between the home’s original seller and the investor that intends to wholesale the property. Therefore, the second transaction is between none other than the wholesaler and the new buyer. That’s an important distinction to make, as a double close must consist of two individual transactions, each of which has its own settlement statements.

The first set of settlement statements, referred to as the HUD-1, will outline the deals agreed upon numbers—how much you have negotiated to buy the property for. Not surprisingly, the second statement will identify how much you have agreed to sell the same property to a final buyer.

When it comes time to sell the deal to another buyer, you will enter into a second purchase and sale agreement , only this time, it’ll be contingent on the first closing (the one that had you buy the property from the original owner). As a result, you must disclose that there is another agreement that must close before the subsequent agreement can move forward. To be clear, you must disclose everything about the first transaction to the parties involved in the second transaction.

If you have yet to sign any double closing contracts of your own, I highly recommend seeking legal advice . Don’t make any moves until a legal professional has made sure everything is on the up and up. A double closing real estate transaction isn’t rocket science, but many rules need to be followed. With a legal representative in your corner, there’s no reason you shouldn’t know how to do a double closing within the confines of the law.

Throughout a double closing, investors will incur the standard fees associated with a real estate closing, which are directly correlated to the state in which the transaction takes place. What’s more, the investor will be added to the chain of title, as they briefly owned the property at one point.

Double Close Vs Contract Assignment

As I already alluded to, there are two primary wholesaling strategies: contract assigning and double closing. The latter I went over in-depth already, but the former has several differences that warrant your attention: the transfer of ownership or lack thereof. Whereas a double closing will have a wholesaler purchase the property (therefore being committed to the chain of title), assigning a contract will not require the wholesaler to purchase it. Instead, contract assignment (otherwise known as selling a contract) wholesale strategies will witness wholesalers sell their rights to purchase the subject property—not the property itself. That’s worth repeating: when you sell a contract, you are not selling the property—you are selling your right to buy the property to another investor.

Over the course of a contract assignment wholesale deal, the investor will sign a contract with the seller that gives them the right to buy the property. The contract legally gives the investor “equitable interest” in the subject home; they do not have a claim to the title. Therefore, when the contract assignment occurs, the investor is selling their rights within the terms already agreed upon with the original seller.

Unlike a double closing, contract assignment will never have an investor take title to the home, nor will they show up on the chain of title. Perhaps even more importantly, a contract assignment typically won’t require any funding on behalf of the investor. Instead, the new buyer will be paying the investor for the rights to buy the home.

Does A Buyer Need Cash In A Double Close Deal?

Cash is the single most impactful form of capital when conducting a double closing. If for nothing else, cash facilitates the speed necessary to make a double close possible. Sources of cash may include, but are not limited to:

Home Equity Lines of Credit (HELOCs)

Private Money

Self-Directed IRAs

While cash is inherently the single greatest way to conduct a double close, it isn’t necessary. Wholesalers who don’t have their own cash may try to seek approval for short-term transactional funding (otherwise known as “flash cash” or same-day funding) to secure the deal. Again, cash is ideal, but it’s not the only way to conduct a double close.

When To Use A Double Close

The double close real estate wholesaling strategy is typically best relegated to a reserve role. That’s not to say double closing in real estate isn’t a viable option, but rather that it’s usually better to assign contracts when possible. The best time to conduct a back-to-back closing is when selling a contract isn’t an option.

There are two primary reasons a double close should serve as an alternative to selling contracts: funding and fees. For starters, selling a contract can be completed in as little as a few hours without needing any funding of your own. Thus, the final buyer is actually the one paying you for the opportunity to buy the home. Perhaps even more importantly, however, selling a contract isn’t saddled with the fees that have become synonymous with real estate transactions. As I already mentioned, a double close will require investors to pay all the fees and costs that typically accompany transactions in the real estate industry. Therefore, if you want to avoid paying additional fees, assigning a contract will be a better alternative.

Pros And Cons Of Double Closing

The ability to conduct a double close is invaluable to investors. However, not unlike any other strategy, a double close has both pros and cons that must be weighed against each other. Let’s take a look at some of the reasons investors may want to consider conducting a double close and some of the reasons they may not want to.

Pros Of Double Closing

Double closings are an important tool for investors to have at their disposal. Here are some of the most important reasons it’s good to know how to conduct a double close

A double closing gives real estate investors optionality. If assigning a contract won’t work, the ability to facilitate a double closing makes the possibility of a deal transpiring much more likely.

In most states, a double close is treated just like a traditional close, which doesn’t require a licensed real estate agent.

Wholesalers do not need to disclose prices to the end buyer because it is an entirely different transaction.

Cons Of Double Closing

Double closings aren’t without their drawbacks, not the least of which include:

As their names suggest, double closings represent twice as much work. Investors will, quite literally, close two separate deals, calling for twice as much work.

Double closings can be stressful, as there are multiple chances for indecisive parties to back out of a deal.

Double closings are illegal in some states, so it’s important to check with local laws before moving forward with this strategy.

Since double closings aren’t common, investors will come across closing agents who either don’t know how to do them or simply won’t do them at all.

Since double closings have a lot of moving parts, it can be hard to align schedules for everyone involved in a deal.

Selling a contract has proven to be a viable exit strategy for today’s wholesalers. However, a contract assignment may not be in the cards for many reasons. Therefore, investors need to know how to conduct a double closing ; that way, they can increase their odds of realizing a successful deal. At the very least, access to each strategy will see to it that you can follow through with more deals.

• While a double closing is most certainly a viable wholesaling strategy, it’s usually an alternative to the contract assignment method.
• To double close real estate deals, investors will need to actually complete two independent transactions.
• Real estate double close strategies are often misunderstood, but that doesn’t make them any less viable.

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What Is an Assignment of Contract? [How It Works In Real Estate]

What Is an Assignment of Contract?

One intriguing strategy in real estate investing that often stirs interest among newbie investors is the assignment of contracts. This approach, which allows an investor to pass the contractual rights and obligations of a property purchase contract to another buyer, is seen to provide highly profitable opportunities.  

If you are an investor who wants to try this technique to achieve financial freedom, this blog is for you! Here, we'll delve into the nitty-gritty of contract assignment, explaining its mechanism, benefits, potential pitfalls, and the crucial steps involved. We hope that after reading this blog, you can navigate the real estate market with confidence!

What Is an Assignment of a Contract in Real Estate?

In real estate wholesaling, an investor agrees to buy a personal property, often at a below-market price, then assigns the contract to a different buyer, often another investor, for a higher price. 

The difference between the contracted price and the price paid by the end buyer represents the wholesaler's profit, known as the assignment fee. 

For example, an investor might secure a contract to purchase a personal property for $100,000, then find an end buyer or new party willing to pay $120,000 for the same property. By assigning the contract to the end buyer, the investor earns a $20,000 assignment fee. 

However, it's crucial to note that not all real estate contracts can be freely assigned. Some contracts may include a "no assignment" clause that prevents the transfer of the contract to another party. 

Thus, an investor needs to ensure that assigning contractual rights is allowed before proceeding with this strategy. If an assignment clause is not present in the contract, the investor may need to negotiate with the original party or owner to include in the contract rights it or find an alternate method to transfer the property to a new party.

In essence, an assignment contract is a way for real estate investors to connect sellers and buyers, while generating a profit from the transaction without needing to purchase, own, or manage the property themselves. It's a strategy that requires careful planning, thorough due diligence, and an understanding of real estate laws and market conditions.

Assignment Contract vs. Double Closing

Both assignment contracts and double closings are strategies used in real estate investing, particularly wholesaling, but they function differently.

As previously discussed, an assignment of contract involves the wholesaler (assignor) transferring their contractual rights in a property purchase agreement to another party (assignee), typically another investor. 

The wholesaler never actually purchases the property . Instead, they sell their contract to buy the property. The assignee pays an assignment fee to the wholesaler, then proceeds to close the deal with the original seller. In this arrangement, the end buyer is aware of the wholesaler's profit.

Meanwhile, double closing , also known as a "simultaneous close," involves the wholesaler actually purchasing the property before quickly reselling it to the end buyer. This is perhaps the main difference between the two.

Essentially, there are two separate transactions: one where the wholesaler buys from the original seller and another where the wholesaler sells to the end buyer. 

Both transactions of the contract occurs back-to-back, even on the same day. The wholesaler uses the funds from the end buyer to pay the original seller and keeps the difference as profit. This approach allows the wholesaler's profit to remain hidden from all parties.

Is an Assignment Contract Considered Legal?

Yes, an assignment contract is generally considered legal in real estate transactions. It is a common practice, especially in real estate investing and wholesaling.

However, the legality can depend on several factors, including the terms of the original contract and the laws in a particular area.

Some contracts may disallow assignment through a clause that "prohibits the assignment of the contract without the consent of the other party." In such cases, assignment of the written contract without consent would violate public policy and could potentially lead to legal repercussions. This may also encourage litigation.

Additionally, while an assignment contract is generally legal, some states in the U.S. have specific rules and regulations about how real estate contract assignments and wholesaling, more generally, should be conducted. 

Some require specific disclosures to be given to the other party to the contract or have particular rules about how the transaction can be advertised. Some do not also allow material alteration, In some jurisdictions, regular wholesaling activity might require a real estate license, contract expiration date for commercial contracts, etc.

Pros and Cons of Assignment of Contract in Real Estate

The assignment of contracts in real estate comes with its own set of advantages and disadvantages, which investors need to consider carefully before entering any deal.

To help you decide if this real estate investing strategy is indeed for you, read the following pros and cons.

Pros of Assignment of Contract

• Less Capital Required: Because the wholesaler is simply assigning the contract and not actually purchasing the property, less capital is required compared to traditional real estate transactions.
• Profit Potential: Assigning a contract can be profitable, especially when properties are secured under market value and the seller and buyer guarantees performance. The difference between the contract agreement price from the assignee and the purchase price the end buyer pays can result in significant earnings.
• Faster Transactions: Assignments often lead to faster transactions as the assignor is not taking possession of the property. They don't have to do heavy obligations such as a title search, contact a company to make repairs, etc. Once a suitable assignee is found, the existing contract can be assigned and the transaction completed.

Cons of Assignment of Contract

• Dependent on Buyers: Wholesalers are reliant on finding end buyers and getting a closing date. If an assignee can't be found in time, the wholesaler may be forced to back out of the deal or risk legal consequences.
• Limited Control: The wholesaler doesn't own the property and therefore has limited control over it. They can't make improvements or changes to increase its value since it isn't part of their obligations.
• Transparency of Profit: In an assignment, the assignee can see how much profit the assignor is making, which could potentially lead to negotiations or dissatisfaction in the obligations. But, of course, the assignor warrants that the fee is fair.
• Legal Considerations: You cannot assign rights to all types of contracts, and the federal government law may have specific regulations around how assignments work. Wholesalers must be aware of the legal landscape to ensure they conduct business following the law and that the two parties they will involve know the legal term of transfer.

Steps in Contract Assignment in Real Estate

Contract assignment in real estate can be a profitable strategy when done correctly. Each step in this process requires careful attention to detail and due diligence so as not to break the law. It is ideal to consult with a real estate attorney or other professionals before doing any transfer of property.

Nevertheless, here are the steps typically involved in a contract assignment in real estate.

Step 1. Find the Right Investment Property

The first step in contract assignment is identifying a suitable investment property. You need to find a property that can be purchased under market value and resold at a profit. 

This could be a distressed property, a foreclosed property, or simply a property that a seller needs to unload quickly. Market research and property analysis are critical at this stage.

Step 2. Prepare the Real Estate Contract 

Once a property has been identified, you need to prepare a real estate purchase agreement. This is the contract agreement that you will eventually assign to another buyer. It's crucial that this original contract either expressly allows for assignment or at least does not prohibit it.

If you are using a template from others or it has a trade name, make sure you are not going against the intellectual property law. There are already certain claims in the past about this, so be cautious.

Step 3. Submit the Contract

After preparing the original contract, it needs to be submitted to the seller. The seller may accept the contract as is, reject it outright, or propose changes. If changes are proposed, negotiations will take place until an agreement is reached. 

Step 4. Find an End Buyer Who Will Accept the Contractual Obligations

With an accepted contract in hand, you can now seek an end buyer to whom the contract will be assigned.

This could be another investor or a traditional homebuyer. Marketing the original contract can involve networking, advertising on real estate platforms, or working with a real estate agent.

Step 5. Assign the Contract to an End Buyer

After identifying an end buyer, you will assign or transfer the existing contract agreement to them (this may be an individual or a real estate company).

This involves an assignment agreement, which transfers your contractual rights and obligations under the original purchase contract agreement to one party or the end buyer (real estate company or investor).

The assignment agreement should clearly outline the original terms of the assignment, including the assignment fee that you, as the assignor, will receive.

Step 6. Collect the Fee

After the assignment agreement has been signed and transferred on the closing date, you can collect the assignment fee from one party. This is your profit from the assignment contract transaction.

The closing process then proceeds between the original seller and the end buyer, without any further involvement on your part. The property ownership will be transferred to the end buyer and you would no longer have any responsibilities or duties with them.

Final Thoughts: What are Assignment Contracts? [How Does Assignment of Contract Work in Real Estate]

Whether you're a seasoned real estate wholesaler or just starting, it's clear that understanding assignment contracts and how they function within the real estate sector can open doors to new opportunities and potentially profitable ventures. 

With the right approach, a keen understanding of the property market, negotiation skills, thorough due diligence, and creativity, these contracts can be your main income stream.

If you want to find leads on properties that you can assign to another buyer, reach out to us at Property Leads . We offer highly motivated seller leads in your target area for a very reasonable price. We guarantee a high conversion rate since we generate our leads through SEO.

Fill out our form below to start finding the best contract reassignment deals!

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Assignment of Contract Or Double Closing For Wholesaling

Assignment of Contract vs. Double Closing

In this video, I talk about the assignment of contract versus double closing and the advantages and disadvantages of each method. If you are a new real estate investor who is just starting to learn about wholesaling and flipping properties, then you should learn how to utilize both strategies.

Assigning a contract for a fee allows wholesalers to “flip” properties without ever closing on them. Assigning a contract to someone else in exchange for an assignment fee allows the wholesaler to profit from flipping the contract to another buyer. That buyer then closes on the property and the wholesaler gets paid their assignment fee at the closing.

In order to make a purchase contract assignable, you need to put the words “and or assigns” on the purchase contract after the buyer’s name. For example, if the buyer is Jack Smith then on the purchase contract you would put “Jack Smith and or Assigns”. This makes the contract assignable.

If you are using a standard purchase contract for your State, then there is also a check box on the contract that you will need to check off that says “this contract may be assigned”.

The 3 main advantages of using the assignment of contract strategy when wholesaling are:

1. You do not need to pay any closing costs

2. You do not need to show up at the closing

3. You do not need to put up any money

The only money that you will need to put up is the deposit in escrow which can be as little as $10 and which will be returned to you at closing.

Assigning contracts allows wholesalers to potentially have a “Laptop Lifestyle” since they can theoretically be anywhere in the world when the closing happens. They get paid with their assignment fee which is wired from the Title Company to their bank account. This is a huge benefit because if a closing is delayed and the wholesaler is planning on traveling their plans are not delayed. If the wholesaler works remotely or even out of the country it makes no difference since they are not required to be at the closing.

When would you not want to use an assignment of contract? If you are buying a property from a bank then you cannot use an assignable contract since the bank will not allow this. That means you cannot use the assignment of contract with any foreclosure, short sale, or bank-owned property (REO).

If you are buying from an online auction site like Hubzu.com or Auction.com you can also not use an assignment of contract since they will not allow it. And if you are buying from Fannie Mae, Freddie Mac, or HUD you cannot use an assignable contract either.

So if you want to wholesale or flip a property that is bank-owned, listed on an auction site, or owned by a government entity then you will have to utilize the double close strategy. This means you will need to first purchase the property, and only once you own it, will you be able to resell it for a profit.

The disadvantage of a double closing is you DO need to be present at the closing to sign the closing documents for both the purchase and the sale (two closings). Another disadvantage is you need to pay both closing costs for the purchase and the sale which will significantly cut into your profit.

The third disadvantage is you will need to pay cash to buy the property before you can resell it for a profit. If you don’t have the cash then you will need to use a Transactional Funding Company which will charge you a transactional funding fee which will cut further into your profits.

The decision of when to use an assignment of contract versus a double close is relatively easy. If you are buying an off-market property directly from a seller then ALWAYS use an assignable contract. If your profit is ridiculously huge, then consider double closing instead of assigning if you are concerned that your end buyer will think you are making too much.

If you are buying from a bank, online auction site, or government entity like HUD then you will always have to double close and will not be able to make the contract assignable since the banks will not allow this.

Disclaimer: The information in this video and in the text above does not, and is not intended to, constitute legal advice; instead, all information in this video is for general informational and educational purposes only. Please consult with a real estate attorney in your State to obtain advice with respect to creating and using purchase contracts. I highly recommend you have an attorney create a purchase contract and assignment contract for you specifically for your use in your State.

If you would like to see a sample Assignment of Contract please visit https://www.lexlevinrad.com/assignment/

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Double Closing Definition

Title , Investing Strategy, Jargon, Legal, Terminology

Table of Contents

• What Is a Double Closing?
• How a Double Closing Works
• Why Do A Double Closing?
• Funding a Double Closing
• Advantages of a Double Closing
• Disadvantages of a Double Closing

REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.

A double closing (also known as a simultaneous closing) works by coordinating two transactions among three different parties: a seller, a wholesaler, and a buyer.

As the name implies, double closings involve two separate transactions that occur on the same day. The initial purchase and sale between the seller and the investor is the A-to-B transaction, and the purchase and sale between the investor and the end-buyer is the B-to-C transaction.

A double closing often happens when a real estate investor (i.e., a wholesaler ) finds a motivated seller willing to sell their property at a price below market value.

• The wholesaler/investor finds a motivated seller and both parties agree to a below-market purchase price (the A-to-B transaction).
• When the wholesaler/investor finds an end-buyer, they will sign a new purchase agreement (the B-to-C transaction) to purchase the property at a higher price and close on the same day as the A-to-B transaction. 
• The wholesaler/investor secures transactional funding to buy the property from the seller.
• When both transactions are complete, the wholesaler/ investor repays the transactional funding loan from the proceeds of the B-to-C transaction and keeps the difference as their profit. 

Double closings can happen with any type of real estate, as long as the closing agent (i.e. – title company, escrow office or closing attorney) is willing to facilitate both transactions and there are no prohibitive restrictions in place from a third party lender.

Double closings can be conducted whether the real estate wholesaler (middle man) has access to their own cash to close the A-to-B transaction, access to transactional funding or flash cash , access to funding from a third party lender or the closing agent is able to close both transactions with single-source funding .

There are a few common reasons why real estate wholesalers utilize double closings.

Unlike an Assignment of Contract (where a wholesaler simply sells the rights in their original purchase agreement with the seller, and the end-buyer closes with the original seller in accordance with the contract), a double closing allows the wholesaler “middle man” to protect the identity of the original seller from the end-buyer and vice versa.

A double closing also allows the wholesaler to conceal (from both the original seller and the end-buyer) the amount of profit they are extracting from the deal. Since there are two separate closings, with two separate closing statements, the parties on both ends of the deal will not all the numbers. The original seller cannot see the final purchase price agreed to by the end-buyer, and the end-buyer cannot see the sale price agreed to by the original seller.

The structure of a double closing also allows the wholesaler/investor to keep a clear separation between the buyer and seller. It allows the wholesaler to circumvent potential accusations of trying to sell real estate on behalf of the seller without a license. Since the wholesaler is literally purchasing and taking title to the property before re-selling the property to their end-buyer, this type of transaction is functionally different from an assignment of contract (where the wholesaler doesn’t take title to the property, but simply sells their rights in the purchase agreement to another investor).

One of the inherent challenges of conducting a double closing is establishing where the money is coming from , particularly for the A-to-B transaction.

Since the real estate wholesaler is taking title to the property for a very short period of time, they need to either:

• Have access to their own cash reserves to close this initial transaction
• Get approved for short-term transactional funding (“ flash cash ” or same-day funding) to cover their purchase
• Have access a separate source of financing to purchase the property outright
• Find a closing agent who can execute the double closing using single-source financing

Not all title companies are willing to close transactions like this, which underscores the importance of finding and using an investor-friendly title company that understands the timing, financing, and disclosures that real estate investors need to adhere to.

RELATED: 085: How the Modern Rules of House Wholesaling Have Changed

Double closings require a coordinated effort from the seller, the real estate wholesaler, the end buyer, the lender (if applicable) and especially the closing agent because there are multiple parties involved and time is of the essence.

Even with the extra effort required, double closings still offer some big advantages.

1. It Leaves a Cleaner Paper Trail

With a simultaneous closing, you aren’t likely to encounter the same state-specific regulations, financing regulations and even legal issues that often come up with other closing maneuvers that are designed to accomplish the same task.

A double closing is structured to avoid the communication obstacles and other “red tape” that commonly arises when a real estate wholesaler tries to assign their purchase agreement to the end-buyer, rather than purchasing it outright and then selling it to the end buyer in a separate transaction.

Even though the wholesaler may only own the property for a few minutes while they’re at the closing table, the fact is, they are becoming the actual owner during the process, which means their intent was true to what the purchase agreement says .

And of course, when the wholesaler sells the property, they’re selling a property they actually owned , so the issue of functioning as a real estate agent without a license isn’t nearly as strong of a case.

2. The Wholesaler Doesn’t Have to Disclose Their Profit to the Buyer

Unlike assignments, the wholesaler has the added benefit of never having to disclose how much they’re making make to the end-buyer .

The wholesaler can make $5,000, $10,000, or even $100,000, and the buyer will never know . This keeps things a lot cleaner and gives a neutral ground for negotiations.

Even though using a double closing has some huge benefits, there are still some drawbacks to this kind of closing maneuver.

1. Both the Seller and the End-Buyer Need to Perform

Just like with any real estate deal, the closing always has the potential to fall apart if either the buyer or the seller decide to back out and walk away at the last minute.

Normally, a real estate investor can control at least 50% of this process, because they’re either the buyer or the seller, and they can control their own actions and follow through.

However, with a double closing, there are three parties involved, not just two. Even if the wholesaler shows up to the closing as planned, the seller can still back out and ruin the deal, and the buyer can do the same thing.

When deals fall apart like, it can have a negative impact on the wholesaler’s reputation. Even if the wholesaler did nothing to cause the problem, this kind of failure can ultimately rub off on the wholesaler’s reputation.

Real estate is a people-based business, and what people think about one another, to some degree, actually does matter .

2. An Investor-Friendly Title Company Is Required

Performing a double closing requires a lot of attention to detail and extra effort in scheduling all the parties involved (not just coordinating everyone’s calendar, but also facilitating the distribution of funds to each party).

Not every closing agent is up to the task. Many closing agencies would rather focus on the “easy” deals that involve two parties, without all the complexities that come with double closings.

It might require several phone calls to local title companies or closing attorneys to find one who is willing to do the extra legwork required in these closings.

Legal Disclaimer: There are differences in the laws and statutes of each jurisdiction around the world, and double closings may not be in compliance with the laws of every market. It’s important to sit down with a local attorney to discuss the unique process and paperwork needed to do this legally and ethically where you do business.

3. Scheduling Two Back-to-Back Closings Can Be A Hassle

One of the most critical aspects of the simultaneous closing is timing the closings so they happen back-to-back.

Sometimes, the title company or closing attorney will work with you and be comfortable doing it a few hours apart, but to coordinate with three separate parties, and the availability of the title company, all in the same day. It can be a big challenge that any real estate wholesaler should be prepared to navigate through.

Related terms

Single-source funding, transactional funding.

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