You don’t all sit at the same table. Your seller is in one room and your buyer you’re flipping to is in another room.
You would close in one room with the seller and separately in the other room with your buyer.
The title company will take the proceeds from your buyer, then cut a check from those proceeds to pay your seller, then cut another check to you for the difference.
The seller and your buyer never see each other.
In fact, you can close without both parties having to be there at the same time or even at the same place. Closing can happen on different days and/or different places. Your title company should know how to handle everything if they’ve done double closings before.
I’ve yet to have my first transaction but I’m feeling better about it happening soon! Well, here is where my sight gets blurry: As I see it, “flipping” mandates a “double closing,” all the principals are at the table at the same time, right? What happens when my seller gets upset that I made a chunk of change from his property by assigning/selling it to a guy across the table from him? What if he wants more money? What about the Re-hab guy who now sees that the property was sold for say, 40k and then sold to him for 42k? As I see it, this kind of thing can happen when everyone sees everyone else’s hand. Do I run the risk of being “cut-out” at the closing table? Does this happen, or am I not seeing things correctly? Looking for guidance.
Lamarr,
First of all, you do not have to do a double closing if your wholesale flipping. There are times when you may want to if it is a larger sum, that you may not want to disclose, or if you are dealing with a seller that won’t let you assign contracts ( but there are ways around that).For the most part you should be trying to assign your contracts. For one reason you will only have one closing cost instead of two.
For Someone who hasen’t been through a double close there is always this big anxiety thinking that everyone is sitting at the closing table together thinking that everyone is going to find out what is going on.
That is not a problem or the case. Because of the fact that it is two seperate closings, you can close at seperarate times. What you do is time them far enough apart ( maybe an hour) that way your buyer and the seller never see each other, the contracts or the hud 1 settlement statements from the seperate closings.
There is something else you have to understand. If you are dealing with people that will under cut you, you are dealing with the wrong people. Plus the fact that if you have a contract on the property, they can’t go around you anyway, they have to buy it from you.
Once you get into this you will find that most Wholsale Buyers will have no problem at all paying your assignment fee. As long as the numbers are right they will be happy to get the deal from you and pay the assignment fee. I know that may be hard to understand but these wholesale buyers are looking for deals to be thrown at them and they will gladly pay the fee to get them if it fits their needs.
I had this same discussion with my Realtor the other day. She knows what I am doing and has seen me wholesale a few properties through the offers I have made with her.
She asked me why wouldn’t wholesale buyers come to her instead of buying through me and paying an extra fee? My reply was It’s not an extra fee at all. You have to understand these people are busy doing the rehab or what ever it is they may doing, they know what they want but don’t have the time to get out there and pound the pavement to negotiate and find these deals. That’s what I do for them and that’s why they will gladly pay me an assignment fee it’s just part of the purchase price for them. Just being curious She then asked if she could sell to wholesale buyers the same as I am? I said, sure anybody can but if you present properties to them at the retail list price you are wasting your time and theirs. It has to already be negotiated to fit their criteria before they will even consider looking at it and if you are willing to do that you can sell to them too.