My funding quote is priced for 10 days. His lender wants 90.

Before you choose, read the transactional funding docs again on two points. First, what happens on day 11 if the payoff hasn't landed. Most of the short term paper I've read has a default rate or a daily extension fee that starts immediately, and some of it has no mechanism at all for converting to a term loan, which means you are refinancing into a different lender under time pressure with a house already in your name. Second, check whether the funder has a 30 day product and what it costs, because you may be comparing a 10 day price against a 90 day price when the real question is whether 30 days satisfies that underwriter.

Also get the seasoning requirement in writing from the end buyer's lender, in the underwriter's own words. Seasoning is an underwriting rule that a lender sets and can sometimes waive with a supporting appraisal. It is not a rule of law. People treat those two as the same thing and then reprice a whole deal around a loan officer's guess.

If you hold it 90 days you own a vacant house, and I say this as the person who gets called when nobody thought about that part. Standard homeowner coverage generally will not cover a vacant property, so you're into a vacancy or builder's risk policy, and pricing on those is meaningfully higher. Add utilities on so the plumbing can be checked, someone cutting the grass every two weeks, and a lockbox someone actually monitors.

I'd budget 300 to 400 a month all in on a house that price, plus the policy. Not enormous against 38k. But it is 90 days of you being a landlord with no tenant and full liability if a kid gets into the back yard.

Which state? Transfer tax is the thing that decides a lot of double close math and it varies hugely. Some states charge nothing at the state level, some charge on both transfers, and a few counties stack their own on top. If you're paying a percentage twice on 214k and then 252k, that is real money and it belongs in the comparison before you decide holding is expensive.

We had close to this last year, buyer switched from cash to financing three weeks in and the lender wanted seasoning. We went to the second cash buyer and gave up about 6k of price. I don't regret it. What I'd tell you is the 8k you'd lose in your option 3 is a known number today, and the cost of option 1 is a range that only goes one direction once you own the thing.

The part I'd check hard is whether your 244k buyer is actually a 12 day buyer or a buyer who says 12 days. Ask for the last two HUDs where they closed in that window.

There's a fourth path you didn't list. Order the appraisal yourself and see if it supports 252. If it does, the underwriter's objection may go away, and you've spent 600 to find out instead of restructuring the deal. If it comes in at 238, you've learned that your 252 buyer was your best outcome and your 244 backup is close to market, which changes how you feel about giving up the 8k.

Separately, on the seller extension. 1k of nonrefundable earnest money to buy 30 days of optionality on a 38k spread is cheap. I'd do that regardless of which path you pick, just so the clock stops being the thing making the decision.

Genuine question because I'm still working out which of these strategies I could actually run. If assignment gets you the same 38k with none of the funding cost and none of the seasoning problem, why is it the last option instead of the first?

@kestrel because in a growing number of states the act of marketing somebody else's contract is what gets treated as brokering without a license, and taking title makes you an owner selling your own property. Whether that actually works depends on how that state's statute is written and it is an attorney question, which is why keystone put it on an attorney and not on us.

@keystone one more thing on the privacy argument. Roughly a dozen states don't make sale prices public at all, and Oklahoma requires the profit to be disclosed even on a double close, so the hidden spread benefit is worth different amounts depending on where you are. If you're in a non-disclosure state your buyer wasn't going to look up your purchase price anyway, and then the whole 38k privacy motive is worth less than you've been pricing it at.

What does seasoning mean here? I assumed it was about the property, but from the replies it sounds like it's about how long you personally have owned it.

I'd take the 244 and go home. Eight thousand dollars is a lot of money to me too, but owning a vacant house for three months while waiting on someone else's underwriter is the kind of thing that turns a good month into a bad year.

I ran both because I'm trying to learn what these actually cost. Rough, using your numbers.

Hold 90 days: 2 points on 214k is 4,280, interest at 11% for 90 days is about 5,885, closing costs on the A leg call it 4,200, on the B leg 3,500, carrying and insurance say 1,500. That's about 19,365 against a 38k spread, so roughly 18,600 left.

Second cash buyer at 244k: spread 30k, funding 4,280 plus the 2,500 minimum only if it applies on top, closing costs both legs 7,700, no carry. Call it 12,000 to 14,500 of cost, so roughly 15,500 to 18,000 left.

So they're nearly the same, and the hold version pays a bit more only if nothing goes wrong for 90 days. @rigging yes, it's how long the seller (in this case keystone) has held title before reselling.