By AL Innovative Services Team
If you’ve spent any time around wholesaling, you’ve heard “double close” and “transactional funding” used as if they mean the same thing. Funders, title companies and other investors often swap the terms.
They’re closely related, but they aren’t the same. Knowing the difference helps you ask the right questions, plan your costs, and avoid surprises on closing day.
The Short Answer
- A double close is the deal structure: two back-to-back sales of the same property.
- Transactional funding is the money: short-term capital that pays for the first of those two sales.
Think of it this way: the double close is the road, and transactional funding is the vehicle that gets you across it without tying up your own cash for the purchase. You can do a double close without transactional funding, but transactional funding exists to make double closes work.
What Is a Double Close?
A double close involves three parties. A is the seller, B is you (the wholesaler, usually through a business entity), and C is your end buyer.
There are two separate transactions:
- A-B: You buy the property from the seller.
- B-C: You sell the property to your end buyer, usually the same day.
Each side has its own contract, closing statement and deed. Your profit is the difference between the two prices, minus costs. For the full walkthrough, see our guide on how double closing works.
What Is Transactional Funding?
Transactional funding is short-term capital that covers the A-B purchase in a double close. It’s typically in place for a very short time, often just hours, and it’s repaid from the proceeds of the B-C sale.
Because the exit is already lined up, transactional funding partners generally focus on the deal itself rather than a long-term repayment plan. What they typically look for:
- A signed A-B purchase contract
- A signed B-C contract with an end buyer
- The end buyer’s funds received in escrow (and held for the B-C closing) before the A-B side is funded
- All documents and title paperwork fully signed
- A title or escrow company that’s set up to handle the double close
Each funding partner sets its own requirements and pricing and confirms them for each deal.
You’ll also see transactional funding called double close funding. In that phrase, “double close” describes what the money is for.
Double Close vs. Transactional Funding at a Glance
| Double close | Transactional funding | |
|---|---|---|
| What it is | A way of structuring the deal | A way of paying for the first closing |
| Purpose | Buy from the seller, then resell to your end buyer | Cover the A-B purchase price |
| Who’s involved | Seller, wholesaler, end buyer, title company | Wholesaler, funding partner, title company |
| Timeline | Usually two closings on the same day | Usually repaid the same day |
| Cost | Two sets of closing costs, title and escrow fees | A fee quoted by the funding partner |
| Always needed? | Only if you’re not assigning | Only if you’re not using your own cash |
How They Work Together: A Hypothetical Example
These numbers are made up and rounded for illustration. They aren’t quotes, typical rates or a real deal.
Say you have a property under contract at $150,000 and an end buyer at $180,000, a gross spread of $30,000.
- The structure: You choose a double close because the contract can’t be assigned.
- The money: You don’t want to tie up $150,000 of your own cash, so you line up transactional funding for the A-B side.
- The order: The end buyer’s $180,000 is received in escrow. The funding partner provides $150,000, and the A-B side closes.
- The repayment: The B-C side closes. The $150,000 in funding is repaid from the $180,000.
- The result: Suppose the funding fee is $2,500 and your share of closing costs on both sides is $4,500. Your net before taxes: $30,000 – $2,500 – $4,500 = $23,000.
Without transactional funding, the structure is exactly the same, but you’d need $150,000 of your own money for the A-B purchase, plus your closing costs.
When You Might Not Need Transactional Funding
Transactional funding is useful, but it’s not always required:
- You assign the contract. In an assignment, you never take title, so there’s no A-B purchase to fund. If the contract allows assignment and your state’s rules permit it, this is usually the simpler path.
- You use your own cash. If you have the capital, you can fund the A-B side yourself and skip the funding fee.
What about using the end buyer’s money to pay for the A-B side? Some wholesalers have tried it, but many title insurers, title companies and lenders prohibit it, and some states restrict it by rule. Don’t plan a deal around it. Ask your title company how each side must be funded.
Transactional Funding vs. Hard Money vs. EMD Funding
These three often get lumped together, but they solve different problems:
- Transactional funding covers the A-B purchase in a same-day double close, and is repaid when the B-C sale closes.
- Hard money is a different product, generally used when an investor plans to hold a property for a while, such as for a rehab. It typically runs over months, not hours. (We don’t offer introductions for hard money or private money loans.)
- EMD funding covers the earnest money deposit when you first put a property under contract, so you don’t have to tie up your own cash. It comes earlier in the deal, before closing. Learn more about EMD funding introductions.
A single wholesale deal can involve both: EMD funding to lock up the contract, then transactional funding to close the double close.
Questions to Ask Before You Commit
Before you choose a funding partner, get clear answers to these:
- What’s the total fee, and when is it due? Ask for the full cost in writing.
- Is anything due upfront? Know before you sign.
- What do you need, and by when? Contracts, entity documents, title commitment and proof of the end buyer’s funds are common requests.
- Does my title company work for you? Some funders have approved title companies or specific requirements.
- Which states do you fund in? Coverage varies by partner.
- What happens if the B-C closing is delayed? Know the plan, and any extra charges, before closing day.
- Will my end buyer’s financing allow a same-day resale? Under federal rules, a property generally isn’t eligible for an FHA-insured loan if it’s resold within 90 days of the seller acquiring it (there are limited exceptions), and other lenders may have their own policies. Confirm with the end buyer’s lender early.
Where We Fit
AL Innovative Services LLC is not a lender. We connect wholesalers and investors with independent funding partners for double closes and earnest money deposits.
If you have both contracts signed, we can introduce you to an independent funding partner that provides double close funding for the A-B side, so both closings can be funded the same day once they’re scheduled, subject to its approval. Under the partner’s current terms, there’s nothing upfront, and pricing is quoted per deal.
The process is simple:
- Submit your deal. The short form takes about 3 minutes. No documents needed to start. Signed A-to-B and B-to-C contracts are needed before funding.
- Get introduced. We usually review submissions within 1 business day. If it fits, we send one introduction email to you and the partner.
- Work with the partner directly. The partner quotes terms, collects documents, works with your title or escrow company, and, if it approves the deal, provides the funding.
Have a deal under contract? Submit your deal and we’ll let you know if it’s a fit for an introduction.
This article is general information, not legal or tax advice. Rules for double closings and transactional funding vary by state and title company, and some states regulate wholesaling or how back-to-back closings can be funded. Check with your title company (and an attorney or tax professional if needed) before you close.
FAQ: Double Close vs. Transactional Funding
Are double close funding and transactional funding the same thing?
In practice, yes. Both terms usually describe short-term capital that covers the A-B side of a double close. “Double close” on its own refers to the deal structure.
Can I do a double close without transactional funding?
Yes, if you use your own cash for the A-B purchase. Don’t count on using the end buyer’s money for the A-B side. Many title companies and lenders prohibit it, and some states restrict it. Many wholesalers use transactional funding so they don’t have to tie up their own money.
Is transactional funding a loan in my name?
It depends on the funder. The funding partners we introduce work with business entities and investment properties only, not loans in your personal name or owner-occupied homes. The funding partner sets its own terms and requirements.
How soon should I line up transactional funding?
Give us at least 72 hours’ notice before closing. A week, or as soon as escrow opens, is ideal. Transactional funding is built for same-day closings, but the funding partner needs advance notice to schedule it. It funds only with the partner’s approval and once its requirements are met, such as the end buyer’s funds being in escrow and all documents signed. Exact timing depends on the partner and your title company.
How much does transactional funding cost?
Each funding partner sets its own pricing and quotes it per deal. Ask for the full cost in writing before you commit.
Does AL Innovative Services LLC provide the funding?
No. We introduce you to an independent funding partner, who provides the funding and makes all funding decisions.
AL Innovative Services LLC is not a lender. We introduce investors to independent funding partners, who make all funding decisions. Funding is for business entities and investment properties only, not owner-occupied homes, and nothing on this site is a commitment to fund.