What is a simultaneous closure?
If you are sell a property is buy one during the same period, you may be able to opt for so-called simultaneous closing. In its simplest form, this means only two closures performed one after the other, or at least in quick succession.
These closures they are a way to streamline the typically difficult task of buying a new property and selling the old one at the same time. They can also help you make sure you have the funds to buy your new property (as long as the property you are selling closes first).
How simultaneous closure works
Simultaneous closings usually go like this: You will attend your closing appointment for Transaction A, ideally the home you are selling. You and the buyer will both sign your documents, the funds will be transferred, and the sale will be completed.
Once this is done, you turn around (with the same title as the company) and close the property you are buying – Transaction B. Both closings can take place on the same day or may be several days apart, depending on the duration of financing.
Simultaneous locking versus double locking
Simultaneous closures should not be confused with double closures. Double closures are a strategy used in wholesale of real estate, and they are much harder to find. In these situations, the investor essentially uses the final buyer’s funds to finance the purchase of the property.
It works like this:
- The final buyer’s money goes into an escrow account or al lawyer manage the transaction.
- The investor uses that money to finance the purchase of the property and pay the seller.
- The investor, now the owner of the property, then sells it to the final buyer, obtaining the difference between the two prices in cash.
It is essentially a way for a wholesaler of flip a property without saving your money.
Pros of simultaneous closings
The biggest benefit of a simultaneous closure is that it ensures you have the money you need to fund your new purchase. Since you will close your old property first, you will have the proceeds from that sale to use for yours down payment is closing costs. You will also have repaid that old man mortgage loan, which will likely help you qualify for the new one financing, mashed potato.
These closures also remove much of the hassle from the transaction. There is no need to go to two different securities companies, and in many cases, both the sale and the purchase can be completed in one day. It’s a nice way to simplify a typically complicated process for everyone involved.
Finally, if you physically move from one property to another, a simultaneous closure can prevent you from being moved or having to rent storage space. You can move from one house to another almost at the same time.