[Rafael Vazquez]

Rafael Vazquez

Hi all –

When a double closing is done, what shows in the HUD-1? I am assuming only one transaction, is that correct?

When marketing a wholesale deal and you know that you will do a double closing, do you just add your profit to the amount you have the property under contract and that’s the amount the end buyer pays when closing?

example
————–

Contract with sellers $100K cash
You profit is $10K
You market the property for $110K to your buyers?

Thanks in advance.
Rafael

[Ben Souchek]

Ben Souchek

Hi Rafael,

The type of closing will depend on what you want the other parties to see or not see.

When you refer to “double closing” that would tell me that you will do one closing with your price and you as the buyer. Then the next closing would be from you to your buyer at the $110k as per your example. In your example, the $10k has to show up on the closing statement somewhere.

If I do a single closing and have my seller transfer the property directly to my buyer, then my “profit” will show up as a “marketing fee” or lien release (or whatever may be appropriate for your location) on the closing statement.

If the amount if smaller in general (for me, less than $7k to $10k) I will do one closing. If the amounts are more and/or there’s any chance that the seller will think my profit it too big, I will do two closings.

Hope that helps,
Ben

[Rafael Vazquez]

Rafael Vazquez

Hi Ben,

Thanks for the feedback.

I guess I am getting confused a bit here. I guess that a single closing would be the case when I just assign the contract to the end buyer for my $10K fee as in the above example, and this is all done at the same time in one closing. In that case it will show as some type of fee in the HUD-1 and all parties know how much I made. Is that correct?

Now, are “double closings”, “simultaneous closings” and the “A to B to C” transaction all the same thing?

What about the case when I get a property under contract but I also buy a short-term option from the seller that attaches to the contract to allow me time to find an end-buyer? Then when I find the end buyer, I sell the option and the end-buyer assumes the contract with the seller? How is this type of tracsaction closed? I did one like that like this like 7 years ago and to be honest I don’t remember how it was entered in the HUD-1.

Sorry for all the questions but trying to get a clear understanding of how these transactions work when is time to close.

Any feedback will be appreacited. 🙂

Thanks,
Rafael

[Ben Souchek]

Ben Souchek

Hi Rafael,

With your “single closing” reference, you are correct. The option fee would just show up as some type of fee on the closing statement and all parties know how much you made.

I would call “double closings,” “simultaneous closings,” and the other the same thing.

For the last item, I think the mechanics of the closing would be the same as a single or double closing, depending on who you did or did not want to see the numbers.

Some of the mechanics of the closing will just depend on the local title company or attorney also.

Hopefully that clears things up a little. The main thing to remember is to not let the paperwork and mechanics of the transaction stop you from doing deals.

Let me know if you have additional questions.
Ben

[Rafael Vazquez]

Rafael Vazquez

Thanks Ben! That did clear things up. I am getting in touch with a Title Co and ask these questions too.

Rafael