A double close is two transactions on the same property, usually hours apart. You buy from the seller, then you sell to your end buyer. Title passes twice.
The alternative, assigning the contract, is simpler and cheaper. The double close exists because there are several situations where assigning is not available or not advisable, and knowing which situation you are in is most of the skill.
The two legs
A to B. The seller conveys to you. This closing needs actual funds, which is what transactional funding provides.
B to C. You convey to your end buyer, whose money pays off the A to B funding and leaves your spread.
The lender's money is outstanding for the gap between them, commonly an hour or two on the same day. That short duration is why transactional funding is priced as a flat fee for the transaction rather than as an interest rate. What it costs and how to price it into a deal is covered in transactional funding for wholesalers.
When to double close instead of assigning
The spread is large. An assignment shows the fee on the settlement statement. A seller who agreed to $140,000 and sees a $45,000 assignment fee frequently becomes an unhappy seller, and unhappy sellers find reasons not to close.
The contract prohibits assignment. Common on bank-owned property, on some estate sales, and increasingly on ordinary listings.
The end buyer's lender will not accept an assignment. Many institutional lenders will not lend to a buyer taking an assigned contract, particularly on government-backed financing. The double close gives them a clean seller with recorded title.
Your state or your title company will not do it. Some markets have become restrictive about assignments, and some title companies simply will not handle them. The double close is the fallback.
Where none of these apply, assign the contract. It is cheaper and there are fewer moving parts.
What has to line up
A title company that does simultaneous closings. Confirm this first, before anything else. Not every title company will, some require the two closings be genuinely separately funded, and a few refuse outright. Discovering this three days before closing is the single most common way a double close collapses.
Both contracts executed. A to B and B to C, with dates that work together.
The end buyer's funds confirmed. This is the leg that fails. If your buyer's financing is not real, you have bought a property with borrowed money and no exit, and transactional funding is not designed to be held. Verify their proof of funds with the same scepticism a seller applies to yours. See proof of funds letters.
Your funding source, arranged in advance. Same day A to B and B to C.
The order of operations
- Get the property under contract with the seller
- Confirm your title company will handle a double close, in writing
- Find your end buyer and get the B to C contract executed
- Verify the end buyer's funds properly
- Arrange transactional funding, giving the lender both contracts
- Both closings scheduled the same day, A to B first
- A to B funds, deed records, B to C closes immediately after
- The end buyer's proceeds repay the funding, your spread is disbursed
Where it goes wrong
The end buyer does not perform. Everything else in this list is a detail compared to this one. Their lender pulls out, their appraisal comes in low, or they were never as funded as they said. You are now holding a property you bought to resell within the hour. Verify the buyer.
The title company changes position late. Or is willing but has never actually done one, which surfaces as a series of increasingly urgent questions on closing day.
Timing slips between the two legs. A same-day double close where B to C moves to the following week is a different transaction with a different cost, and the funding was not priced for it.
Seasoning restrictions on the end buyer's loan. Some lenders will not finance a purchase from a seller who has held title for less than a set period, which is precisely what a double close creates. This is a real constraint on government-backed financing and it is worth asking the end buyer's lender about directly. It is not a reason to conceal the structure, and concealing it is how transactions get unwound.
Nobody told the title company what this was. Both closings should be disclosed and documented properly. A double close is an ordinary, legitimate transaction structure. It stops being one when somebody tries to hide it from a party who was entitled to know.
The honest version
The strongest double closes are the ones where every party knows what is happening. The seller knows they are selling to you. The end buyer knows they are buying from you. The title company knows there are two closings. The lenders on both sides know the structure.
Nothing about that transparency costs you the spread. What costs you the spread is a transaction that unwinds because somebody discovered a structure they were not told about and decided they did not like being managed.
Getting the A to B funded
Send both contracts over with your closing date and the title company's details. Transactional funding runs A to B and B to C, same day, and if you need a proof of funds letter for the seller ahead of it, that goes out first.