Double Closings vs Assignment of Contract: When to Use Each

Wholesalers have two primary mechanisms to transfer a purchase contract to an end buyer: assignment of contract and double closing. Each has specific advantages, disadvantages, and use cases.

Assignment of contract is the simpler, cheaper path. The wholesaler's contract with the seller includes "and/or assigns" language. The wholesaler executes an assignment agreement with the end buyer, transferring all contractual rights and obligations. At closing, the end buyer pays the seller the contract price plus the assignment fee (often paid separately by the end buyer to the wholesaler). The wholesaler is on the HUD-1 settlement statement as the assignee of the original contract.

Assignment works well when the seller is aware of (and comfortable with) the assignment, when state law and local practice allow it, when the end buyer is aware of the assignment fee, and when the parties are comfortable with the transparency of assignment. Costs are minimal, typically just standard closing costs on the purchase side.

Double closing involves two separate closings: A to B (seller to wholesaler) and B to C (wholesaler to end buyer). Two deed transfers are recorded. The wholesaler briefly owns the property between closings, typically for minutes or hours. Transactional funding is usually required to fund the A-B closing, with the B-C proceeds immediately repaying the transactional lender plus their fee.

Double closings are preferred when the end buyer or end buyer's lender requires a warranty deed from a clear owner (many commercial lenders won't fund based on assignment), when the assignment fee is large and the wholesaler wants to avoid disclosure to the seller, or when state law prohibits or restricts assignments.

Costs differ significantly. Assignment closings involve one set of closing costs, typically $2,000–$5,000. Double closings involve two sets of closing costs (often $4,000–$10,000 total) plus transactional funding fees ($2,000–$6,000 typically).

Disclosure considerations matter too. Assignment is transparent, both parties typically see the assignment fee. Double closings hide the spread, sellers don't see what the end buyer paid. Both approaches must comply with state-specific wholesaling laws and licensure requirements, which vary significantly.

For most wholesalers in most situations, assignment is the default: cheaper, simpler, and legally cleaner. Double closings are reserved for situations where assignment won't work, specifically, larger spreads the wholesaler wants to protect, end buyers requiring a direct warranty deed, or commercial-style transactions where assignments are unusual.