The real estate industry has been undergoing some drastic changes over the past few years, and it can be a bit dizzying trying to understand what’s going on when you’re approached by professional buyers. Let’s demystify some terminology of real estate wholesalers by learning what a double closing is, and how it impacts home sellers in Chicago.
What Is a Real Estate Wholesaler?
Before we get straight into what a double close is, we first need to understand what a real estate wholesaler actually is.
The online real estate marketplace has grown substantially over the past decade, with companies slowly gaining household recognition over time. These wholesalers seek out for sale properties in hot markets to quickly buy them up and then sell them off to a new owner.
Effectively, the real estate wholesaler acts as a middleman to facilitate a transaction that otherwise might not take place. From there we can begin to have a better understanding of what a double close is and why it is gaining in popularity.
Explaining the Double Close
So, let’s keep in mind the quick and dirty explanation of what the wholesaler does from our previous point: they buy up your property and then turn around to sell it to a buyer.
A wholesaler is looking to do this as quickly as possible while keeping their profit margin as wide as possible. More often than not, the wholesaler has already lined up a buyer when they purchase the property from you.
They close on the property with you and then immediately transition to closing on the property with the new buyer at the same time – this is the double close.
The Impact on Sellers
You may be thinking to yourself that this just sounds like a company moving in and doing everything to make a quick buck, and that’s true to an extent. Often, the wholesaler will sell your property for a profit, but what you may lose out on in extra profit you’ll likely make up for in the speed of the sale.
The key here is that the wholesaler does all of the groundwork you would otherwise need to do or just sit around waiting for the right buyer to meander along. The wholesaler provides the seller with a fast and simple way of selling their home and the wholesaler lines up a buyer ahead of time in order to make the entire transaction profitable for them, and therefore worth their time and effort.
Wholesaler vs Flipper
We have a concept in our heads that house flippers function in this exact same fashion, but there’s a distinct difference between these two classifications of real estate professionals.
More commonly referred to in the real estate industry as investors, what we are calling house flippers purchase a property, repair the property, make changes to appeal to trends or a target demographic, and then sell that property for a profit. An investor is often looking for less-than-ideal starter homes or even major fixer-upper homes that become projects prior to sales opportunities.
On the other hand, a wholesaler is doing everything they can to bridge the divide between the seller and buyer. Selling to a wholesaler means bypassing a lot of the typical negotiation nitty-gritty over repair and inspection contingencies in favor of settling on a final price and considering the offer.
Ultimately, selling to a wholesaler is a decision that will work for some and not for others, and it’s up to you as the home seller to determine if their price is right.
Your Guidance to the Double Close in Chicago Real Estate
If you have questions about the double close process or anything else related to the Chicago real estate market, contact our knowledgeable team today at (773) 303-4303!