What is a simultaneous closing in real estate?

Simultaneous closing, the short definition

In the wholesale and investor world, a simultaneous closing is a double close by another name. A Florida law firm’s glossary and a multistate title company both define a double closing as also known as a simultaneous closing or back-to-back closing: two separate closings on the same property, often on the same day, with an investor buying from the seller and immediately selling to a final buyer.

A financial education reference abbreviates it SIMO and describes it as buying a property on paper to sell it the same day. The idea is the same in every version: one property, two sales, one day, and the second sale cannot close until the first one has.

Where the meanings divide is money. Two sales need two purchase prices paid, and the first seller has to be paid before the investor owns anything to sell. Who supplies that first payment is what separates the structures below.

Three meanings of one phrase

A title and escrow company’s general counsel, writing about wholesale closings, notes that the phrase simultaneous closings has multiple meanings. These are the ones you will meet.

• The double close: you buy from the seller with your own money or a transactional lender’s, the deed to you records, and you resell to the end buyer the same day. Two complete, separately funded transactions.
• The single source close: the end buyer’s money pays both the seller and you, inside one coordinated closing. The same counsel calls this the simultaneous close via single source funding.
• The homeowner’s chain: a family sells one house and uses the proceeds to buy the next on the same day, usually called a back-to-back or concurrent closing.
• And one that is not a closing at all: simultaneous issue, the Florida title insurance rate for an owner’s policy and a lender’s policy issued together on the same land.

Simultaneous closing vs double closing

When someone says simultaneous closing in a wholesale conversation, they usually mean a double closing, and the two terms are interchangeable. When a title agent hears it, they may hear the single source version, and that is the one many will not do. The difference is not timing, because both happen the same day. It is whose money pays the original seller.

The table sets the three structures side by side. Read the second column first: it decides most of the others.

Why an investor closes simultaneously instead of assigning

A simultaneous closing costs more than an assignment: two closings, two deeds, two sets of settlement charges and, in Florida, documentary stamp tax on each deed. Investors pay that for reasons the contract, the seller or the end buyer usually decides.

• The contract cannot be assigned. On the standard Florida residential contract, a blank assignability box means the buyer may not assign, and HUD’s own sales contract is assignable only with HUD’s written consent.
• The end buyer’s lender will not take an assigned contract. Some investor loan programs list assigned contracts as ineligible, and FHA requires the purchase to be from the owner of record with no assignment of the sales contract.
• The spread should stay private. In an assignment the end buyer sees your contract price and your fee; in a simultaneous closing they see their own price, although both deeds later sit in the public record.
• The seller wants one buyer. A Florida attorney notes that sellers are cautious about assignment clauses because they do not want to deal with an unknown third party, and in a double close nobody steps into their contract.

How the single source version works, when it works

A Florida real estate attorney who writes about simultaneous closings sets out the order of funds when every party agrees to it. The end buyer wires the purchase price to the closing agent named in your resale contract. Those funds are not released until the title agent on the resale secures a commitment to insure the end buyer’s title. The closing agent then wires the purchase price to the original seller once the title agent on the first sale secures a commitment to insure your title. Done in that order, both transactions close at the same time.

It works only inside one office. The same attorney writes that, at a minimum, the closing agents must be the same: with different agents, the resale agent holds money it cannot release to the first agent until the end buyer’s conditions are met, which include title insurance the first closing has not yet produced. That is a chicken-and-egg problem that needs the two agents to cooperate, and the cooperation can require telling the seller’s agent how the purchase is being paid for.

The ideal arrangement in that account is a single company acting as closing agent for both sales and issuing both title policies. Anything else adds a party who can say no.

Why many Florida title agents decline that version

The objection is about whose money it is. Under section 626.8473 of the Florida Statutes, funds a title agency receives in escrow are trust funds that belong to the person entitled to them and may be used only in accordance with the escrow, settlement or closing instructions under which they were accepted. Florida’s title escrow rule adds that an agent may not use, endanger or encumber money held in trust without the owner’s permission, given after full disclosure of the circumstances.

The end buyer’s money, in other words, arrives to buy a house from you, and you do not yet own it. A financed end buyer’s lender also sends its own closing instructions for its own funds. The title counsel quoted above puts it plainly: the sale to the ultimate buyer cannot close first, because the wholesaler does not own the property yet, unless the seller, the wholesaler, the end buyer and the end buyer’s lender are all on board.

Some in the industry go further. The Florida attorney notes that some title insurers, agents and closing agents liken simultaneous closings to check-kiting, paying the seller with money the buyer does not have yet, and that the comparison deters some of them from taking part. A Florida title agency says on its website that most Florida title underwriters prohibit using the end buyer’s money for the first leg.

The version most closing agents will run

The structure that avoids the objection is the one where the first leg has its own money. The same title counsel describes it as the double closing: the wholesaler funds the purchase from the seller without relying on the end buyer’s funds, producing two complete and separate transactions, with an extra escrow fee for the second one. The Florida attorney’s alternative is the same: the investor uses its own cash or borrowed funds to buy, then resells on the same day.

Borrowed funds for a same day purchase is what transactional funding is. Entrusted Capital provides same day capital for double close deals, funding the front-side close for up to 100% of the purchase price, which suits a contract that cannot be assigned. A transactional lender is repaid from the end buyer’s funds at the second closing, and nobody’s escrow money is asked to do two jobs.

Back to back closing and concurrent closing

Outside wholesaling, the same words describe a homeowner’s move. A title company defines a back-to-back closing as one where the seller in one transaction is also the buyer in another and the proceeds from the first closing fund the second, and says these are sometimes called concurrent closings or chain closings. The financial education reference quoted above describes a concurrent closing the same way: usually a purchase that depends on the buyer selling an existing home.

The structure looks similar on a calendar, two closings on one day, but the parties are different. Two properties change hands, not one, and the person in the middle is a homeowner moving house, not an investor reselling. When a title agent hears back to back from a family, that is what it means.

Double escrow: the same idea in escrow vocabulary

Double escrow is the name the same structure takes where sales close through escrow. Fannie Mae’s Selling Guide groups the terms together: it tells lenders that documenting the seller’s ownership is especially important for transactions involving an assignment of a contract and back-to-back, simultaneous, double transaction closings, or double escrows. In California, the state’s real estate regulator describes escrow as an indispensable mechanism for completing real property transfers, which is why the escrow name sticks there.

The question that matters does not change with the word. Ask the escrow holder whose money pays the first seller, and whether it will close both escrows the same day.

Simultaneous issue: a title insurance term, not a closing

On a Florida closing statement you may see simultaneous issue, and it has nothing to do with resales. Under Florida’s title rate rule, when an owner’s policy and a mortgagee’s policy covering identical land are issued simultaneously, the owner’s policy is charged the regular owner’s rate and the lender’s policy carries a minimum premium of $25 for coverage up to the owner’s policy amount, with any excess charged at the regular rate for loan policies.

It is a discount for buying both policies at once, and it applies to any financed purchase. The standard Florida residential contract also warns that title premiums are calculated and allocated under Florida law but may be reported differently on federally required closing disclosures, which is why the figures on a disclosure and on the Florida settlement statement do not always line up.

How a Florida simultaneous closing runs on the day

Florida is a wet funding state with a collected funds rule: a title agent may not disburse funds until they are collected, meaning deposited, finally settled and credited to its trust account. That rule shapes the order of a same day double close.

• The end buyer’s funds, or their lender’s, reach the closing agent’s trust account and are collected.
• The A to B money arrives from you or your transactional lender and is collected.
• The seller signs the deed to you in front of two subscribing witnesses, which Florida requires for a deed, and the A to B leg disburses.
• The deed to you goes to record first, then the deed from you to the end buyer.
• The B to C leg disburses: your lender is repaid from the end buyer’s funds, and the rest, after costs, is your spread.
• Both deeds owe documentary stamp tax, each on its own price.

The end buyer’s lender sees both sales

A simultaneous closing is not invisible to the end buyer’s lender, and it is not meant to be. Fannie Mae requires lenders to confirm and document that the property seller in a purchase is the owner of the property, and calls that documentation especially important for back-to-back, simultaneous and double transaction closings. The lender will see a seller who acquired the property that morning.

Some loan programs cannot close that sale at all. A home is not eligible for an FHA-insured mortgage if the buyer’s contract is signed 90 or fewer days after the seller acquired it, so an end buyer using FHA cannot close the second leg of a same day resale; the FHA 90-day flip rule explains the count and the exceptions. Other lenders set their own seasoning rules. Ask the end buyer’s lender in writing before you sign the resale contract.

Questions that tell you which simultaneous closing you are in

The word on its own tells you little. These questions, asked of the closing agent before contracts are signed, tell you everything that matters. If any answer is unclear, a Florida real estate attorney is the right person to read both contracts before you commit.

• Whose money pays the original seller: mine, a transactional lender’s, or the end buyer’s?
• Will one closing agent handle both sales, and has it confirmed that in writing?
• Does your underwriter need to approve a same day resale, and has it?
• Has the end buyer’s lender been told the seller acquired the property the same day?
• Will the deed to me record before the deed to the end buyer?
• What will each of the two settlement statements show?