Funding a one-day double close for a wholesaler you barely know: what actually needs verifying

@sonia_alvarez a transactional funding request structured as A to B at $118,000, B to C at $139,000, same day, same title company, with the wholesaler requesting $121,500 to cover purchase plus closing costs, is a common shape for this kind of ask. Terms of 2.5 points plus a $1,500 doc fee, roughly $4,540 on money out for under 24 hours, are standard for the risk being taken. What should be verified before wiring: the A contract, the B to C contract, the title commitment showing exactly what liens exist, and the wholesaler's track record with other funders. What typically isn't verified, and matters most, is the physical condition of the property, especially in an out-of-state market where sale prices aren't public and the only comp support is whatever the wholesaler provides. The real exposure in this structure is simple: if the C buyer doesn't close, the funder owns a property sight unseen in a market they can't underwrite from a distance. Condition only matters in that scenario, but in that scenario it matters completely. The decision worth making deliberately is whether to require an independent walkthrough before wiring, which typically adds two or three days and may strain the timeline, or to price that unknown into the fee instead. Written confirmation from the title company that they will actually execute a same-day double close in that particular state is also worth insisting on before funds move, since not every state and every title company handles back-to-back closings the same way.

sonia_alvarez CB4APRO 17

Answer

nicole_adeyemi SS3APRO 13

Insist on the title confirmation. That's not optional and it's the cheapest thing on the list. Back-to-back closings depend on the title company's underwriting counsel being willing to insure the second deed when the first was funded minutes earlier, and whether they'll do it varies by state and by underwriter, sometimes by the individual office. Recording practice differs too, and in some places the gap between funding and recording is where money sits exposed. Get an email from the closer saying they've done this structure in that office, that they'll disburse in the order the two contracts require, and what they need from the funder. If that email is hard to get, that's the real answer. On condition, this is a case of pricing a tail risk, so size it rather than trying to eliminate it. If C fails, the funder owns a house nobody has seen. Weigh what a $150 local walkthrough plus a $450 inspector costs in delay against the loss from inheriting a property with $25,000 of deferred work nobody knew about. Two days of delay is almost always the cheaper side of that trade. One more thing that matters more than the photos. Verify C's funds directly with the closer, never through the wholesaler. "Allegedly at the title company" is doing enormous work in a post like this. Everything else in the deal is fine if C closes and nothing else in the deal matters if C doesn't.

nicole_adeyemi SS3APRO 13

6 replies

mikeoconnell7 SO3CPRO 12

@nicole_adeyemi's point about getting it from the closer rather than the borrower is the one I'd tattoo on something. Every deal I've watched go wrong had one fact that traveled only through the person who benefited from it.

mikeoconnell7 SO3CPRO 12

tashaford30 SG2CPRO 16

$4,540 for under 24 hours reads like a lot until you write down the downside, which is owning a house sight unseen 1,000 miles away. Then it reads thin. Would you fund this at 4 points? If yes, the fee isn't the issue and you should ask for the walkthrough. If no, you don't want the deal.

tashaford30 SG2CPRO 16

tonyv88 PU4APRO 10

Worth knowing if it's occupied. Nobody's said. If there's a tenant or a holdover occupant in there, the worst case isn't a house with unknown condition, it's a house with an unknown person in it and eviction rules that haven't been read in a state that hasn't been worked. That changes the price of the tail risk by a lot.

tonyv88 PU4APRO 10

jessreyes12ActivePRO

Basic question because I don't understand this structure yet. If C already has cash sitting at the title company, why does the wholesaler need your $121,500 at all? Is it just that A won't accept an assignment, so he has to actually buy it first?

jessreyes12ActivePRO

bmoreno23ActivePRO

@jessreyes12 I had to look this up last month. That's usually it, some sellers or their lenders won't allow the contract to be assigned, and some wholesalers do the double close so the seller never sees what the end buyer paid. It costs them the funding fee and two sets of closing costs to keep that private.

Tender, the thing I'd be nervous about in your seat is that the video came from someone the wholesaler hired and pays. @tonyv88's occupancy question too, that seems like it should be answerable in one text message.

bmoreno23ActivePRO

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