Keeping Wholesaling Profits Concealed
If you double close, the seller and end buyer should not know what profit you made, well maybe.
I say “maybe” because you need to understand the working of a double closing so you can “head off” any issues you may encounter.
Ideally, what happens in a double closing is the same closing agent will close the A-B and B-C legs in separate rooms or at different times on the same day.
Then the closing agent will record the required closing documents in the sequence of the first set (A-B) and the second set (B-C) shortly thereafter.
Ideally, before the document’s recordings, neither the original seller (“A”) nor the end buyer (“C”) should know what your profit was on the transaction.
Most of the time this is the case and if either or both seller and end buyer check the public record in the following days, they will know your purchase and sale prices, but it doesn’t matter, it is done.
Now, let’s discuss what can go wrong:
1. While the closing agent has a fiduciary obligation to you that may not mean much if the seller or end buyer chooses the agent/attorney.
Therefore, it is imperative that you choose the closing agent you know is investor friendly and understands double closings.
2. If the end buyer is an investor, he may push you to see the original contract with the seller to determine how much your profit will be.
If he pushes so hard that you think he may not sign your contract or even close, give him a redacted (blacked-out) copy of the original contract with your seller.
3. If your end buyer asks to speak to the seller directly, you are possibly working with a “Black Hat” wholesaler, A/K/A a deal thief.
There should never be a reason for him to talk to your seller so don’t let it happen.
In summary, the main purpose of a double closing is to “mask” your profit from the original seller and the end buyer.
For a list of investor friendly closing agents by state, go to besttransactionalfunding.com/investor-friendly-agents/