A ‘Double Close’ Wholesale Case Stud...

Howdy, folks, Cody Sperber here...

I hope all y’all are as hunky-dory as I am. Hopefully, most of you guys are familiar with me by now from my previous (awesome!) training call and other (super-duper) lessons I’ve done here, at Mogul. Oh, and check out another recent lesson I did about wholesaling for quick cash.

Well, today is your lucky day because I’m going to share with you guys an experience I had with one of my own personal deals, so that some of you can have a better understanding of a double close. And, I am quite the storyteller, if I do say so myself.

Let the study begin

Picture it…

Final Destination: 531 Alameda Drive

It was an eerie, smoldering morning… the 7th day of August, I recall. I decided to take a new route to the office and “drive for dollars.” Driving for dollars is one of my acquisition strategies. Basically, it’s all about driving around town and looking for distressed, abandoned or odd-looking houses that you would have missed if you’d taken the same daily route.

Side Note…

When I do see a property that is a potential deal, I do this:

Write down the address
Snap a picture of the exterior
Grab a bandit sign and throw it in the front yard that says “I Pay Cash for Houses” along with my phone number

Anyways, back to the story…

I was driving for dollars when something stopped me dead in my tracks about two blocks before reaching the office. She was beautiful. Not only because of her outside, but also for what was going on on the inside. She was surrounded by a crew of people discarding all her contents (furniture, carpet, trash, etc.) into a giant dumpster. I was diggin’ what I saw, so I took a picture, wrote down her address, and left my number (bandit sign). (Just like I explained in my Side Note above.)

Once I arrived at my office, I diligently checked the tax records of my newly discovered jewel to see if its taxable mailing address was different than that of the physical property address. DING! DING! DING! The addresses were, indeed, different.

Side Note…

Question: If a potential deal has a different taxable mailing address from its physical address – what does that tell us?

Answer: It’s a great indicator that the owner of the property lives elsewhere. In this case, it also told me that the property was owned by an individual, a Mrs. Dorothea B. Zimmerman (Revocable Trust), and not owned by a bank.

Anyways, back to the story…

Okay, so I discovered the owner’s “real address” and hastily mail merged my curbside photo of the property into a simple flyer template, designed to grab the owner’s attention by asking as simple question:

Is this your property? Because I want to pay cash for it.

I then mailed out the flyer, sat back, relaxed and drank some tea.

The Cliff Hanger

At this point, one of two things could happen: Either…

A. The owner may be so pissed off upon seeing my sign in his front yard that he decides to call me and ask why I placed my sign in front of his property. When this occurs, I politely explain that I am “truly sorry” for being “too aggressive” for his taste, but I was “only trying to get his attention” (which I succeeded in doing).

B. The owner may get my flyer in his mailbox and be greatly inspired to sell me their house.

C. Where art thou? It’s a great mystery that Sherlock himself couldn’t solve.

Alas…

The flyer I mailed found its way into the hands of the property owner’s daughter-in-law, who called me to say that the elderly owner had just moved into a long-term care facility, due to stage three Alzheimer’s disease. The owner’s daughter-in-law also let me know that the property I spotted had recently been occupied by crazy cat woman. Most importantly, I learned that the owner’s daughter-in-law (and her husband) lived over three hours away – and neither of them wanted to deal with this “problem” property (Yippee!).

They owned the property free and clear (such sweet words to my ears), which means nothing is owed and they had Power of Attorney over the mother’s estate. I asked the daughter-in-law what they might want to sell the house for, if I was willing to pay 100% cash, and she said she wanted around $100,000. She also told me that the property needed a full remodel.

After I asked all the questions I needed from the daughter-in-law, I immediately got off the phone and ran comps for her property and did some online research. My research indicated that the property would be worth around $200,000 if it was fully remodeled. And since it was right around the corner, I immediately drove back to the property to conduct a quick visual inspection.

Of course, the house was of great devastation. She was a horrific sight and her smell was putrid, but I loved her anyway. I estimated that a full remodel on this 1,700-square-foot beauty would cost around $30,000 to restore her to all her glory. So I began to fantasize about my offer in my head.

Romancing the Deal: The A – B Side of a Double Close

So… I called the crazy cat lady’s daughter-in-law and I told her that the most I could pay was $85,500, and that we would need to split the closing costs. She countered by telling me that she and her husband could not accept any offer lower than $90,000. So I told them I would be willing to pay $89,000, in addition to covering all the closing costs – and they agreed (SCORE. Yeah, me!).

Using email, I immediately sent them a Purchase & Sale Agreement, which they promptly signed and sent right back. I now controlled the property. MWA-HA-HA! (If you didn’t read that in your most evil, sinister voice… please read it again).

Side Note…

In every single real estate transaction, I always make sure that the seller benefits in the transaction. For instance, in this deal, the daughter-in-law and son were elated to get rid of their “problem property” in order to focus better on helping the sick owner adjust to a long-term care facility. Because they sold their property to an investor (and not through traditional channels) they enjoyed a “hassle-free” sale and received the cash they needed to care for their ill family member.

Okay, so back to the story…

As soon as I received the contract back, my intern added the property to our wholesaling website and blasted it to our database of cash buyers, using my Mobile Marketing Machine software to advertise a $121,000 asking price. Simultaneously, we faxed the contract over to my investor-friendly closing agent to open escrow.

Sealed with a K.I.S.S.: The B – C Side of a Double Close

I let my closing agent know that I planned to use the Double Close method, because I was going to be making a lot of money on this one, and I did not want everyone involved in my transaction to know how much I was making.

Within minutes of advertising the property via text message, I got a call from a guy named James who said he would take the deal if we would sell it to him for $118,800. I agreed and emailed the Sales Contract for him to sign. I informed my intern that he needed to take the signed agreement to my investor-friendly closing agent, along with his earnest deposit and open escrow.

Then, I just sat back, relaxed, and waited for the deal to close.

Here’s the double close part:

We then closed both escrows, which means that part of the funds from the B-C escrow floated over to fund the A-B escrow – and the remaining balance in the B-C escrow was paid out to me as my profit.

Isn’t that beautiful?! I told you I could tell a story…

Who else could talk about real estate and include a little romance, horror, thrill, fabulous wit and even a bit of Shakespeare?