How Long Is Transitional Funding

About the author : Dave Dinkel

Transactional funding is sometimes referred to as transitional funding.


• This implies the property “transitions” from one owner to another over an indefinite time period.

• While this is the process, transactional funding more precisely means that there are two distinct transactions – an A to B and B to C closing that occurred nearly simultaneously.

• In most cases, the first closing takes place on the morning of the prescribed day of closing or the day before, and no funds are paid to the seller – this is called an “Escrow Closing”.

• Later that same day, the second closing (B-C) takes place, and the end buyer’s funds are already in the closing agent’s escrow account.

• These funds are later dispersed, less any closing and loan payoff amounts to the investor.

• At the same time the funds from the transactional fund are likewise dispersed to the original seller and the closings are complete.

• But what happens if the seller requires the investor to close on a specific day in the end-buyer can’t close for another one to 10 days?

• This double closing is now considered an “Extended Transactional Funding” and exposes the transactional lender to possible loss of his capital.

• Based on over 10,000 actual closings that I’ve been involved in personally, I can say positively that at least one third of all investor transactions do not close.

• There are 20 reasons for not closing and they’re not all the “fault” of the investor.

• The risk to the transactional lender is that once he funds 100% of the A to B closing if the end buyer doesn’t close he may have to foreclose to get his funds back.

• Because of this risk of capital loss, transactional lenders do not extend transactional loans for more than one day.

• There may be a few who do “extended closings”, but they charge very high rates to cover their potential loss.

• If you know this issue may occur, get the seller to give you an extension or the end-buyer to close sooner.

• If the seller won’t extend, offer them some money for their “inconvenience” and blame the problem on your Funding Partner (that’s me, Dave Dinkel) who can’t close until, coincidentally, the same day as the end-buyer.

If you have any additional questions, contact me directly at

If you need hard money instead of transactional funding, contact me for referrals to private hard money lenders.

Be sure to check out for all your same-day double closing needs, including a list of Investor-Friendly Closing Agents in various states.

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About the author : Dave Dinkel