🏠 The Truth About Real Estate Double Close in Texas 🔍 [What No One Tells You]

*updated 1-28-2025

A real estate double close in Texas isn’t some secret cowboy card trick—it’s a proven real estate strategy that investors with years of experience in the industry use to generate quick profits. This method involves purchasing a property and reselling it to a cash buyer, often on the same day.

For new wholesalers or seasoned professionals, mastering this approach can sharpen your edge in the competitive real estate industry.

In this guide, we’ll break down the double closing process, how it works specifically in Texas, and why it’s a strategy worth considering for your next deal.

Understanding Double Closing in Real Estate

A double close in real estate—also known as a simultaneous closing or back-to-back closing—is a real estate transaction where an investor purchases a property and then quickly resells it to a third party, often within the same day. This strategy involves two separate transactions: the first transaction (A to B) where you purchase the property from the original seller, and the second transaction (B to C) where you sell it to the potential buyer or end buyer.

The Texas Real Estate Research Center’s latest market analysis shows that double closing transactions have increased by 15% in major Texas metropolitan areas over the past year, particularly in distressed property markets

Double Closing vs Contract Assignment in Texas

Before diving deeper, it’s essential to distinguish between a double close and an assignment of contract. In an assignment, a real estate wholesaler transfers their purchase agreement rights to a potential buyer, earning an assignment fee without ever taking ownership of the property. This method is common in the wholesaling business but may require a real estate license in Texas due to state regulations.

In contrast, a double close involves the wholesaler actually buying the property (the A to B transaction) and then selling it to an end buyer (the B to C transaction). This allows the wholesaler to keep their profit margin confidential, as Texas law does not mandate disclosure of profits in a double closing, unlike some other states.

Pros of Double Closing:

• Protects profit margin by keeping it confidential.
• Attracts sellers who prefer dealing with buyers intending to purchase outright.
• Helps in handling more complex real estate deals and investment properties.

Cons of Double Closing:

• Incurs double closing costs due to two separate transactions.
• Requires securing own funds or financing for the initial purchase.
• Involves more complex coordination and legal considerations.

How Does a Double Closing Work in Texas?

Grasping the mechanics of a double close in Texas is essential for a successful transaction. Here’s a step-by-step breakdown of the double closing process:

The First Transaction (A to B)

• Parties Involved: The original seller (Party A) and you, the wholesaler/investor (Party B).
• Actions Taken:
  • Enter into a purchase contract with the seller for the subject property at an agreed purchase price.
  • Secure financing through transactional funding lenders or hard money lenders.
• Funding: Obtain a short-term loan or same-day funding to finance the initial purchase without using your own money.
• Closing: Complete the first closing, where you take ownership of the property.

The Second Transaction (B to C)

• Parties Involved: You (Party B) and the end buyer or potential buyer (Party C), often a cash buyer or another investor.
• Actions Taken:
  • Enter into a new purchase agreement to sell the property at a higher price.
  • Ensure all necessary documentation is prepared for the second closing.
• Closing: Complete the second transaction, transferring ownership to the end buyer.
• Profit Realized: Your profit is the difference between the selling price and your original purchase price, minus any closing costs and fees.

Timing Is Crucial

The double closing typically occurs within a short period, sometimes on the same day or within 24 to 48 hours. This minimizes your exposure and reduces the risk of market fluctuations affecting your deal. Efficient coordination ensures both transactions align seamlessly, and the deal closes successfully.

Transactional Funding in Texas: The Key to Double Closing

One of the challenges in a double close is funding the initial purchase. This is where transactional funding comes into play.

What Is Transactional Funding?

Transactional funding is a short-term loan designed specifically for double closings. It provides the necessary capital to complete the first transaction without tying up your own funds. The loan is typically repaid within 1-3 days, immediately after the second closing.

Securing Transactional Funding in Texas

• Requirements: Lenders often require proof of the B to C transaction, such as an executed purchase agreement with the end buyer.
• Interest Rates and Fees: Rates in Texas range from 1% to 2% of the loan amount. Some lenders offer day funding or same-day funding options.
• Reputable Lenders: Consider firms like Backflip or Rain City Capital

Transactional Funding vs. Hard Money Loans

• Transactional Funding: Offers 100% financing for the initial purchase, requiring that the second transaction is scheduled and confirmed.
• Hard Money Loans: Provided by hard money lenders, these loans are based on the property’s market value rather than your credit. They come with higher interest rates and are suitable for longer-term investments, such as rental property or commercial real estate.

While both are short-term financing options, hard money loans differ significantly. For more details, refer to Understanding Hard Money Loans.

Benefits of Using Transactional Funding

• No Credit Checks: Lenders focus on the property’s value and the viability of the double closing.
• Speed: Funding can be arranged swiftly, keeping your deals moving.
• Reduced Risk: You’re not tying up personal capital, minimizing your financial exposure.

Legal Considerations and Closing Costs in Texas

Navigating the legal landscape is vital for a successful double close in Texas.

Compliance with Texas Real Estate Law

• Disclosure Requirements: According to the Texas Real Estate Commission’s Guidelines on Wholesaling, wholesalers must disclose their equitable interest and may require a real estate license under certain circumstances. Texas law mandates transparency in real estate transactions. Wholesalers must disclose their equitable interest in writing to all parties involved.
• Real Estate License Implications: Frequent wholesalers may be considered engaging in real estate brokerage activities, necessitating a real estate license under the Texas Real Estate Commission (TREC) guidelines.
• Legal Advice: Consult a real estate attorney to ensure you’re compliant with all federal, state, and local regulations.

Closing Costs

• Double Fees: You’re responsible for closing costs on both transactions. Factor this into your profit calculations.
• Title Insurance and Escrow Fees: Essential for protecting your investment and ensuring a smooth transaction.
• Negotiation: Some fees are negotiable. Comparing quotes from multiple investor-friendly title companies can save money.

Recent Legal Updates

• 2021 Amendments: Recent changes require stricter compliance with disclosure laws to prevent fraudulent activities in wholesaling.
• Penalties: Non-compliance can result in legal penalties, including fines and revocation of licenses.

Building Your Texas Double Closing Dream Team

A successful double close often depends on the real estate professionals you partner with.

Real Estate Agents

• Local Expertise: Choose agents familiar with Texas’s unique market dynamics.
• Finding Motivated Sellers: Experienced agents can help locate motivated sellers and distressed properties suitable for double closing.
• Recommendations: Utilize networks like the Texas Real Estate Investors Association for referrals.

Investor-Friendly Title Companies

• Experience with Double Closings: Opt for companies like Community National Title that specialize in investor transactions.
• Efficient Processes: A good title company will streamline the closing process, ensuring compliance with Texas laws.

Real Estate Attorneys

• Legal Guidance: Attorneys versed in Texas real estate law can help navigate contracts and disclosures.
• Due Diligence: They assist in conducting thorough due diligence on the subject property.

Networking Opportunities

• Local Meetups: Attend events hosted by groups like Doing DFW Deals to connect with professionals.
• Building a Cash Buyers List: Networking helps in creating a robust cash buyers list, essential for quick real estate deals.

Benefits of Double Closing for Real Estate Investors

Double closing can be a powerful tool in your real estate investment arsenal.

Protecting Your Profit Margin

By keeping your assignment fee confidential, you avoid potential pushback from buyers who might balk at large wholesaler profits.

Expanding Your Investment Strategy

Double closing allows you to handle more complex deals, including distressed properties and commercial real estate, broadening your investment strategy.

Leveraging Market Conditions

In a hot real estate market like Texas, properties can appreciate quickly. A double close lets you capitalize on these conditions without long-term commitments.

Include Data and Examples

According to the Texas Monthly Real Estate Market Reports, property values in major Texas cities have seen a year-over-year increase of up to 10%. This appreciation can significantly boost profits in a double closing scenario.

Challenges and Risks in Double Closing

While double closing offers numerous benefits, it’s not without challenges.

Financial Risks

• Market Fluctuations: Changes in the market or interest rates can affect your end buyer’s ability to close.
• Funding Failures: If your transactional funding lender backs out, it could jeopardize the entire deal.
• Mitigation: Establish relationships with multiple lenders and have backup plans.

Timing Issues

• Coordination: Aligning two separate transactions requires meticulous planning.
• Delays: Any delay in the second transaction can increase holding costs and risk.
• Tools: Use project management software to keep track of all moving parts.

Legal and Ethical Concerns

• Transparency: Failing to disclose necessary information can lead to legal repercussions.
• Regulatory Compliance: Ensure you’re up-to-date with Texas laws governing double closings.
• Ethical Practices: Maintain integrity to build a reputable wholesaling business.

Practical Tips for Successful Double Closing in Texas

Implementing effective strategies can enhance your success rate in double closings.

Building a Cash Buyers List

Building a robust cash buyers list is crucial. For strategies, see Tips on Building a Cash Buyers List

• Networking: Attend local real estate events and join online forums.
• Direct Mail and Text Messages: Use targeted marketing to reach potential cash buyers.
• Email Campaigns: Collect email addresses to keep buyers informed about new opportunities.

Finding Motivated Sellers

• Marketing Strategies: Utilize direct mail, text messages, and online ads to find sellers.
• Best Way: Offer solutions to sellers’ problems, such as quick closings or buying distressed properties.

Utilizing Same-Day Funding

• Speed Matters: Work with lenders who offer same-day funding to keep transactions moving.
• Validation Purposes: Ensure all documentation is in order for quick approval.

Closing Deals Efficiently

• Clear Understanding: Maintain open communication with all parties.
• Close Deals Quickly: Aim for a short period between transactions to reduce risks.
• Investor-Friendly Title Company: Work with professionals who understand the nuances of double closings.

Legal Advice and Due Diligence

• Consult Professionals: Regularly seek legal advice to stay compliant.
• Due Diligence: Verify all aspects of the deal to prevent unforeseen issues.

Moving Forward with Double Closing in Texas

A real estate double close in Texas can be a lucrative part of your wholesaling business and overall investment strategy. By understanding the mechanics, legal considerations, and potential risks, you can navigate this complex process with confidence.

Key Takeaways

• Double Closing Mechanics: Involves two separate transactions—buying from the seller and selling to the end buyer.
• Funding Strategies: Utilize transactional funding or hard money loans to finance the initial purchase without using your own money.
• Legal Compliance: Always consult with a real estate attorney to ensure all transactions comply with Texas laws.
• Professional Support: Work with experienced real estate agents, investor-friendly title companies, and reliable closing agents.
• Practical Strategies: Build a strong network, use effective marketing, and always have a backup plan.

By assembling the right team and staying informed, you can leverage double closing to maximize your profits and expand your real estate portfolio. Whether you’re dealing with distressed properties, looking to close wholesale deals, or aiming for a quick turnaround, double closing offers a pathway to achieving your investment goals.

About the Author:

Bright Bid Homes, led by Hilary Schultz—a licensed Texas Realtor and real estate professional — is a leading authority on DFW metroplex real estate. Hilary is a member of the executive board of her local Texas PTA and active member of the Texas community.  Along with her husband Patrick, they have combined 40 years of experience with over 2700 real estate transactions completed. Read our customer experiences and reviews to see our passion to help the Texas community and provide homeowners with valuable insights, guidance, and a personalized experience through the home selling process. Let us serve you and help to navigate the housing market on your real estate journey.

*Disclaimer:

This article is for informational purposes about the real estate industry only and does not constitute legal, financial, or professional advice. Real estate laws and regulations vary by state and may change over time. Consult with a qualified real estate attorney or professional advisor before making any investment decisions or engaging in real estate transactions.