Double closing

The simultaneous purchase and sale of a real estate property involving three parties: the original seller, an investor, and the final buyer.

Typically, a real estate investor enters into a contract to purchase a property. Because real estate transactions usually take several weeks to become final (see closing), the investor has some time to find another buyer. The investor will then try to find someone to purchase the property for a higher price. If the two contracts specify the same closing date, the investor can have their real estate lawyer execute a double closing, which will allow the investor to avoid having to get a mortgage or pay for the purchased house.

For example, assume an investor enters into a contract to purchase a house for $60,000. Before that deal closes, and with the agreement of the seller, he then fixes the front porch and repaints the exterior. Through these upgrades, he is able to find someone else to buy it for $75,000. Now he can instruct his lawyer to execute a double closing - both transactions will close on the same day. When the deals close, the final buyer pays $75,000 to purchase the house, the original seller receives $60,000 for selling the house, and the investor gets $15,000. (This ficticious example does not include closing fees , of course.)