On a first double close the transactional funding fee takes more of the spread than expected

Before you compare fees, get clear on the one thing that makes this loan cheap. The funder's money is out for hours, and it gets repaid from the end buyer's closing. That means the repayment source has to be real and committed before anyone wires anything. So: is the end buyer's hard money lender approved, appraised, and clear to fund on that date, in writing? Do you have their loan approval and their closer's name?

If the answer is "the buyer says he's good," you don't have a same-day exit, you have a hope. The funder will ask for the same paperwork you should be asking for, and that's the actual value in their underwriting.

The line to chase first is the end buyer's lender, ahead of the funder. The common failure looks like this. The C side lender gets to underwriting, sees that the seller has owned the property for zero days, and refuses to fund without a seasoning exception their credit committee never gave. That is the lender's own rule rather than anything in state law. The news tends to arrive at 3pm on a Thursday with a funder already committed, and the cost is a re-lock and a very awkward phone call. Get the end buyer's lender to say in writing that they will fund on a property their borrower's seller acquired that same day. Some do it constantly. Some will not. You cannot tell from the outside.

Slow one for me. Double close means she actually buys it and owns it for a few minutes, and assignment means she sells her contract and never owns it? Is that the whole difference?

@mitchell_ray4 that is the difference in one line, yes. She takes title, and there are two deeds instead of one contract handed over. @mikeoconnell7 the sentence to hunt for in the funder's paperwork is the one that ends the flat fee. Almost every one of these says something like "repayment by 5pm on the funding date," and then a second sentence sets a daily rate or an extension fee for what happens after. Also find out whether they record a mortgage in their name and release it, or whether they fund into escrow unsecured on the closer's instructions. That changes recording costs and, in some states, what shows up in the chain of title. Both are normal. You want to know which one you signed.

Ask the closer for the order of operations in plain words. Which deed records first, whether both record the same day, and whether the funder's payoff happens before or after recording. Recording practice is state specific, and two counties in the same state can handle a same day pair differently. It is unglamorous, and it is the thing that stalls files.

Genuine question, why not just assign the contract and skip all of this? Assignment fee, no funder, no double transfer tax. 3,640 plus a second set of closing costs is a lot of money to avoid one piece of paper.

@jordan_ellis2 because in a growing number of states, marketing a property you do not own and assigning the contract on it is exactly what gets called unlicensed brokerage, and the rules differ state by state and keep moving. Taking real title is the way around that objection, which is why double closing keeps gaining ground and why funders like this one exist at all. Whether it applies to her specific facts is a question for a licensed attorney in her state. Some end buyers also simply refuse to look at an assignment. That alone pushes plenty of deals into a double close.

Running it the way an underwriter would. Gross spread 25,500. Funder fee 3,640. Buy side closing 1,900. Sell side closing 2,300. Transfer tax 910 plus 1,037. That is 9,787 out and 15,713 left, which matches your number. Missing from the list: two owner's title policies unless the closer will issue the second at a reissue or short term rate, wire fees on three or four legs, and whatever she spent finding the deal. Marketing cost is real even when it never appears on a settlement statement. The assumption the whole thing rests on is the 207,500. If the end buyer's appraisal comes in at 198 and the lender sizes off that, the buyer either brings more cash or renegotiates, and your 15,713 becomes 6,000 while the funder's fee does not move. What supports the 207,500?

2 percent flat sits inside the normal range for transactional funding, and it is one quote among several. Pricing commonly runs 1 percent to 2.5 percent flat on the funded amount, sometimes with a dollar floor, sometimes with a separate document fee, and the number moves with how much repeat volume a coordinator sends. Get three quotes and ask each funder specifically what the flat fee excludes. @dpatel_re is right about the second title policy. Ask directly whether the second one qualifies for a short-term rate. In some states that discount exists on a resale inside a set window, and on a 207,500 policy it is meaningful money. Whether it applies here depends on the state's rate rules, so ask the closer to quote both legs on one sheet.

Worth placing this next to how note lending normally works. Is the funder a lender in the ordinary sense, with a recorded lien, or is it closer to escrow parking money for an afternoon? If there is no lien and no time on the clock, what are they actually secured by?

@raj_mehta14 they're secured mostly by the fact that the money to repay them is already sitting on the other side of the table. That's the design. Short window, repayment source lined up before the advance, flat fee for the service.

Which is why I keep looking at this side of the business. 3,640 for a few hours of exposure looks enormous as an annualized number, and annualizing it is meaningless, because the money isn't deployed the other 364 days unless there's constant deal flow. The whole return depends on volume and on the double close staying popular.

Nothing useful to add on the funding, but the double transfer tax line is the one people forget and it varies a lot by state.

Where the funder's money comes from is worth pinning down before relying on it. It could be one wealthy individual, a pool of investors, or a warehouse line, and the marketing language alone often does not make clear whether the party is a lender or a broker who has found someone else's cash.

@chriswalton8 both exist and the marketing looks identical, which is why the funding agreement is worth reading before caring who they are. @mikeoconnell7 the two documents that matter here are the funder's agreement and the closer's escrow instructions, and they have to agree with each other. The instruction worth having in writing is that the funder's advance goes out only against a fully executed and funded B to C, or that the closer holds and returns it if the second leg doesn't fund. If those two papers disagree, the failure case gets decided by whoever's lawyer is louder. Recording sequence and what a same day pair looks like in the public record are state specific, so that question goes to the closer, not the internet.

One thing to warn a wholesaler about: in a lot of states the first closing price becomes public record and the end buyer or their agent can see what was paid that morning. Roughly a dozen states don't publish sale prices at all, so it depends entirely on where the property is. It doesn't stop the deal, it changes the conversation if the buyer finds out mid-file. Better to decide in advance how that question gets handled.

When you say flat fee, does that mean the same 3,640 whether it repays in one hour or six?

@megan_doyle15 yes, that is what flat means here, and the boundary is the end of the funding day rather than the hour. Pricing this out as a business worth being in keeps landing on the same problem. The risk per deal is genuinely small when the repayment source is committed, and the fee is decent, so the constraint is deal count. It only works when the funder is who three or four wholesalers call every week, and that is a relationship business, not a capital business.

Write down the failure case before choosing between the funder and hunting for a different closer. If the B to C leg doesn't fund at 4pm, who owns the house at 182,000, on what terms, and for how long? Ask the funder that exact question and see whether the answer is a number or a paragraph.

15,700 on a day's work is fine. 15,700 with a hard money lender on the other side who hasn't confirmed they'll fund a same-day resale is a coin toss with extra steps.

Reading this from the other side, since I'm the boring end buyer type. Does the end buyer normally know any of this is happening? I'd want to know if the person on my contract didn't own the house yet, and I'm not sure I'd know where to look.