Thread: How Transactional Funding is Used

As a wholesaler or real estate investor that acquires property, the use of funds is a vital part of your business. Often times, in today’s market, you find it necessary to actually take title to a property, if even for just a day, in order to complete the sales transaction to the end user. The days of “dry” settlements (a settlement where no funds are actually exchanged) are not as common as they once were, and the requirements of “wet” settlements (where funds are in escrow for the settlement) have taken their place.
Most real estate investors do not want to tie up their funds when a “wet” settlement is required, or perhaps they are wholesaling so many properties that they are not physically able to use their funds for all of them. This is where our service comes into play.
Funding for what is commonly called back-to-back closings, same day closings, or ABC closings (Party A sells to Party B that sells to Party C, all in the same day) is also called Transactional Funding.
The Transactional Funder supplies the funds needed for you (the wholesaler, better known as Party B) to be able to conduct a “wet” settlement with the seller (Party A). As long as your buyer (Party C) settles with the same title representative that same day.
The funds that supplied are 100% of what is needed for purchase and closing fees, so you do not need to bring money to the table. There is no credit check since the decision to fund is based on the transaction, not your financial position.
Upon request, the Transactional funder supplies you with a Proof of Funds letter. This is useful to prove to the party that you are buying the property from that you are in a position to make settlement on the property. This is especially handy if acquiring short sales.

Rob Beeman