Back-to-Back Dry Closing VS Transactional Funding

I thought about this the other day and wanted to call up my title agent to see if she does dry closing. From my own perspective your definition of dry closing is how I have been thinking it works.

I haven't tried to do a dry closing before but I would like to know how it works. I'm currently using www.besttransactionfunding.com to get my proof of funds and when I get an offer accepted I will then assign it to my end buyer.

Also, I'm curious and I would like to know if dry closing can also work when a buyer has been approved for a loan by a bank?
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TC
Miami, FL
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I just asked my title person about this the other day and she said the end buyer had to acknowledge that his funds were being used for the AB closing.

Yes, I have been told that all the parties need to know and I have no problem with that. It is just that so many go so quickly to "Ohh, we don't do that in "insert state/city/county here"

Thank you for your input

TC,
I hear you in the POF's, Turns out there is actually a lot of sites that will provide that so I have that covered. Even have a mortgage broker that will provide the pre-approval letter if I need it.

It is funny you brought up:
"Also, I'm curious and I would like to know if dry closing can also work when a buyer has been approved for a loan by a bank?"

I was wondering the same thing but was going to work on that research next.

Hopefully one of the superstar or coach's will be able to share a little expertise on this subject.

Take care
JIm

It has been quite, any knowledge to be shared out there?
JIm

In my opinion a bank will not do a conventional loan(to a owner/occupant) in a double close situation. Technically the buyer will have a contract with you and you do not own the property, therefore the lender will not lend to purchase a property from some one that does not own it and at best has equitable interest until closing takes place.

In my opinion in order to sell to a person (owner/occupant) using financing you would need to close on the property using PM or HM and then sell it to the buyer.

Now if you are dealing with an investor that has bank financing lined up then you could do a double close. I would make the offer in a sole purpose entity and then sell the entity to the buyer, single closing. (Trust or LLC)

Hope that helps,
Michael

Michael,
Thanks for your input. Regarding the use of sole purpose entity we have been working on a couple short sales recently and Equator (Bank of Americas source) will not long accept offers from trusts which has complected things a bit.

Have you done many double closings?

Thank you again.
Jim

In a double closing (or back to back closing) there are two closings: 1st is from A(seller) to B(investor), and 2nd is from B(investor) to C (end buyer); you do not put contract from A to C in escrow- you do that for an assignment of contract.
For REOs and short sales you cannot do assignment of contract (A to C); therefore you need to do a double closing. Double closings can be dry (use end buyers funds to close A to B, and from B to C) or wet (investor needs to bring in his own funds - or transactional funding if he doesn't have funds to close from A to B).
Dry double closing is legal, however, most title companies won't do them; that is the reason an investor would need transactional funding.
So, if you're doing a double closing, either you look for a real estate attorney or a title company that will do dry double closing, or you need to use transactional funding (if you don't have your own funds) for a wet double closing.

Up until last year double closings and assignments were all we did. So I have done many double closings. I was bummed out when every title company in Denver stopped doing dry double closings. That forced me to do start doing the offers in LLCs and Trusts if the contracts were not assignable. It turned out to be easier! I wished I had done them all along. I don't offer on short sales in a Trust, I use an LLC for that.

Michael

You also cannot use TF unless you are buying in the name of a business entity. There may be a very rare TF company (I never say never) that you will find that will fund to a purchaser buying in their personal but most will only fund to an entity.

Michael is correct that a bank will not usually ever release their funds for the second half of the close until the deed is actually recorded in the B party's name. Dry Closings can not be done when a bank is one (or funding) of the A or C parties.

Dry closes can be used ONLY with cash buyers. As both Michael and Valerie have stated, they are more difficult to do now, as again another investor "trick" has been too widely exposed and squelched. The few that will still do it, do usually require full disclosure.

I love Michael's newer way of offering, too.

Karen

Thank everyone for the Double closing responses.
So if I am hearing everyone correctly it is not that dry-double closing have become illegal, it is just that the title companies have decided that they don't want to do them anymore (probably due to some litigious risk).
Well, that answers what I was feeling was contraditary anwers I was recieving.
Again, thank you all.
Jim

Very nice posts in this one .....

Thanks to all who shared in this forum.

Tons of useful info .

Randy Sherman
Elkton MD