Can I double close and use my buyer’s money to buy the house? Yes, but here’s why you shouldn’t.

by | Real Estate Investing, Indy Anna, Uncategorized

Can I double close and use my buyer’s money to buy the house? Yes, but here’s why you shouldn’t.

First of all, THANK YOU again for making this channel the number one channel for Indiana real estate on YouTube according google analytics and SocialBlade info for BigReia.com.

This is a quick video I made about  a Hero’s experiment…

Can I double close and use the buyer’s money for both closings? Indy real estate wholesaling basics.

Indy Anna Explains…

Are double closing illegal?
Can I use my buyer’s money to close both transactions?
Why does everybody saying that double closings are fraud?

First let me say that as a real estate investor or wholesaler you NEVER need to do a double closing, there are two main reasons investors think they need to do double closings:
– The “no assignment” clause: I’ve explained how to get around “no assignment” clauses in another video and you can see that in the description below
– You don’t want the investor to know how much you’re making: this is an LC excuse and all property records are available so if they really want to know they’ll know much you made, instead focus on building a great relationship so it doesn’t matter. I’m pretty new at this and routinely assign deals for over $30,000 and I never have any issues. Why? I love on my peeps.

With that said, here is how a double closing works:
– We have three parties A, B and C
– You are the buyer in the A to B transaction and then you are the seller in the B to C transaction
– Let’s say you are buying the property for $50,000 from the seller and the investors wants to pay $70,000 to buy it from you (elsewhere we cover how to find and do deals like this so right now we are just talking about the double closing)

Are double closings legal?
– Absolutely YES but do not take my word (or anybody else’s) on this because you need your title company attorneys to deal with all of this
– The reason people run into problems is because they don’t get properly and trained and most important they don’t communicate the whole situation to everybody
– Again this all comes down to your DIALOG, you want to screen your title company, escrow group and/or closing attorneys and make sure they understand exactly what you’re going to do and that they explain it to ALL parties involved

The main question today is this, on a deal where I’m paying the seller $50k and the buy is paying me $70k, can I use the $70k from the buyer to pay the seller the $50k?
– In some places this is outright illegal because it is a requirement that all transactions of any kind are independently funded
– That’s what I thought but then my legal team and title company said they could still do them in the Midwest, and I was curious to test them so I have done a few and here’s how it works
– First know that if you have to come up with the $50k to pay the seller one common option is to use “transactional funding” which is very short term funding made for double closings and I’m a transactional funding lender so just email with the details if you need help on that

How can you use the buyer’s money, I don’t recommend this because a LOT of people think it is illegal and I honestly don’t know I just know that my title company did it and I made sure everybody knew what was happening here’s how it works:
– This is called “Solo funded” or “One source funded” closings and in order to do this I had to make sure my investor put down at least $5,000 – $10,000 with my title company as a non-refundable deposit, I also told him and had him sign a document so that he understood his money would be used to buy
– In other cases I also made sure that the private money or hard money lender knew what was happening as well, and so did the seller
– The closing happens “in escrow” or a “dry closing” or “escrow funded closing”
– The seller signs documents at 9 AM for example and then at 10 AM I sign my my documents as the buyer in the A to B AND as the seller in the B to C and no money has moved yet
– Then at 11 AM the investor comes in and BUYS from me in the B to C transaction and they bring the money and fund the $70k
– Then the title company follows the instructions and distributes money and records the closing, they pay the seller $50k and me $20k and both closing closing costs are paid by either the buyer or the seller or the $70k
– So that is one way that it can be done, but again please don’t do this

Why double closings are looked down upon:
– FHA and VA often do NOT allow for double closings
– Many other traditional and retail lenders want to see title being held for 90 days
– On top of that many banks/lenders don’t want to see a second transaction immediately after the first when no value is added to the property but the price is much higher
– Also REO banks, short sale lenders and many others will put many restrictions and ruled that are specifically designed to disallow double closings
– Many realtors and title companies are LCs as well and they will try to shut down a double closing just because they think it is “illegal” or “fraud”

I will cover better ways of doing double closings later:
– Remember you do NOT need to do this and it may be illegal
– Any time you wonder just make sure your attorneys are doing it and that you make sure EVERYBODY knows what’s up
– The most important skill to develop is the bonding and nurturing so that you never to fool with double closings in the first place, so please don’t do it this way I only made this video because I’ve gotten this question a lot and the only reason I did these was kind of like a challenge or a dare but just do it the normal way please.

There is a great post and class on the 38 Ways to Buy Apartment Buildings Zero Down with Pet Policies

The post is HERE.  There’s also another great class on how to buy apartment buildings zero down that you can check out as well.

Also here is a post on how I did this and I flipped a house off Zillow for 30.  Also you can check out the post on five steps to flip a house right off Zillow for 40.  You can also check out our other epic post on 57 ways to make money with vacant land.

Here’s another post on how a Hero flipped a house off Zillow and made 40k in a few weeks while he was learning to read.

And don’t forget our EPIC page on 100 FREE ways to find motivated sellers, we are making the number one page in the world on FREE ways of finding motivated sellers.

Go to BigReia.com and you’ll become allergic to being an LC and addicted to improving the world and creating Social Mobility for you and yours…

Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
(317)969-5619 (that’s my cell phone and yes I actually answer lol)

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