Double close eats $3,800 of a $14,000 spread. Worth it to hide the fee?

Question

Deal I'm working: contract with the seller at $186,000, cash buyer verbally at $200,000. So $14,000 of spread.

Seller is an heir who inherited the house from her mother. She thinks I'm the buyer, and I haven't corrected that because nobody told me I had to. My title company quoted me about $3,800 for the two sets of closing costs on a back-to-back, and a transactional funder quoted 2 points on the $186,000 for a one-day loan, so call it another $3,700. That's over half my spread gone to keep the number private.

The alternative is assigning with a written disclosure and the fee printed on the settlement statement, where she can see $14,000 going to me on a $186,000 house.

So which one actually carries more risk? Paying $7,500 to conceal a fee, or showing the fee and hoping she signs anyway?

Rena Expert · Accepted Answer

Run the math you already have. Assigning nets you about $14,000 less whatever your marketing cost was. The back-to-back nets roughly $6,500 after $3,800 in doubled closing costs and $3,700 in points, and transactional funders often carry a minimum fee that makes small deals worse than the percentage suggests. You're paying $7,500 for privacy about a number that a written disclosure would make a non-issue.

Disclosure isn't what creates exposure. Concealment is. Whether your contract can even be assigned depends on its own language and on your state's rules, and some states now require specific written notice to the seller that you may assign, so have a real estate attorney in your state read the actual document before you commit to either path.

The bigger problem in your post is the seller. An heir who "inherited the house from her mother" may not have authority to convey yet. If the estate hasn't been through probate, or if a personal representative has been appointed without power of sale, or if there are other heirs on title, your contract may be signed by someone who can't deliver a deed. That varies by state and by whether there was a will. A title search and a call to the probate attorney costs you a few hundred dollars and tells you whether the $14,000 exists at all. I've seen more deals die there than die on fee objections.

Also check your closing date. Connecticut's Public Act 25-168 bars closings scheduled more than 90 days out and gives sellers a three-day cancellation right once it takes effect, and other states are copying pieces of that. Probate timelines and 90-day caps don't get along.

samantha_ruiz · Answer

$14k on a $186k contract is 7.5%, and that's the number sellers react to. Worth knowing that in roughly a dozen states sale prices never become public record at all, so "she'll find out later" depends entirely on where you are. In my market she'd see it on a listing site within a month either way, so I stopped trying to keep it quiet and started explaining it up front.

devon_pierce · Answer

I buy the kind of contract you'd be assigning: if I saw the seller signed at $186k and you were taking $14k, I'd ask for $5k of it back before closing. Not out of principle, just because the number tells me there was room. Concealing it protects your fee from me as much as from her.

jordan_ellis2 · Answer

What does transactional funding actually cost on a small deal? Everyone quotes points and nobody mentions the minimum.

aliyah_b · Answer

Adding up what rigging listed: two title fees, two sets of recording and transfer charges, the funder's points, plus whatever minimum pike is asking about, plus the extra wire fees. I get to something like $8,000 of friction on a $14,000 spread, and transfer taxes are different in every state so my number's probably wrong for wherever he is. I came into this thread assuming double closing was the professional way to do it and now I'm not sure why anyone does it at all...

Double close eats $3,800 of a $14,000 spread. Worth it to hide the fee?

5 replies