Property flipping or double closing has been the talk of the media these days. A lot of negative things are being said about flipping. Consequently, some of the leaders and real state agents have even declared that double closing is illegal. The truth is quite different. After all, middlemen earn profits by buying the property below market price and reselling the same at market price, and there is nothing illegal or unethical about it. 

The Truth of So-Called ‘Illegal Property Flipping?lt;br>
Investors buy run-down properties at a very low price. After certain renovations, they lure buyers. For this, they submit fraudulent loan documents and a bogus appraisal. Consequently, the buyer pays too much for a house and unable to afford the loan. 

Comment: In no way, this specifies that either flipping house or double closing is illegal. Such activities simply amount to loan fraud. Hence, overall, it is the potential loan fraud, which is damaging the reputation of double closing in the market. 

All those, who say that flipping house or double closing is illegal, are either does not know the whole truth or are simply prejudiced. Most of the critics do not even know what actually is this double closing or property flipping. Yet, they do not approve this, just because media has given a negative feedback on property flipping. 

What is Double Closing, and how does it work?

Flipping or closing is a process, in which a seller hands over a title to a buyer. A double closing is two back-to-back closings, in which you fund the first closing from the proceeds of the second closing. This double closing is done in a way that the middleman could buy and resell a property for profit without using his own cash. 

The following points would make it easy for you to understand how does double closing work.
?The dealer signs a written contract with the retailer and the owner of the property.
?It is the retailer, who arranges funds on behalf of the dealer. He/she borrows money from a lender, and his/her bank wires the fund into the bank account of the closing agent.
?The dealer signs a deed to the retailer and to the owner, which is deposited in escrow with the closing agent. 
?The closing agent records the two deeds at the count’s land records office. 
?The retailer signs bank loan documents to complete the transaction
?In the end, closing agent remits the amount of purchase price to the owner, and the remaining amount to the dealer. 

Thus in double closing, it is just that the success of the first sale depends upon the second sale. 

How to Answer the Critics?

Now when it is quite evident that there is nothing wrong with property flipping or double closing, there is just one way to answer the critics. Whenever you deal in property flipping or double closing, do take additional precautions to keep a close eye on potential loan frauds.

 

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