How does a double escrow work?

I understand that you close the buying/selling on the same day, but I need to know specific detail of the exact process/steps.

For example: contracts, paperwork, people involved, fees, transfers, and advertisements.

I need to know precisely how this is done, as though I could go out and do it myself with no problem.

Thanks for your help

5 Answers

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  • 1 decade ago
    Favorite Answer

    A double escrow is established when you want to purchase a property, then turn around and sell the same property to another buyer. In some states you must tell all the involved that they are in a double escrow.

    Let's say you ran across a good deal on a property. You can purchase this property for $175,000 from the current owner. So you make a contract with the intent of putting it in escrow for closing. There is some minor work that need to be done on the property. Both you and the seller sign the contract for you to purchase the property.

    The contract states that you are purchasing the property or assigns. Also that the contract is subject to securing a new mortgage for the property. The contract calls for $5,000.00 down with the seller paying all closing cost.

    As you are looking for the necessary items to repair the place you run into a person that has seen the property and will accept the property as is for $225,000.

    You make a contract with this buyer to sell the property for $225,000. The contract states the new buyer will secure a new first mortgage and will pay all closing cost. The contract calls for $5000 down

    Now you want to make the profit as oppose to a finders fee from the current owners, so you have to now have to double escrow the transaction.

    You open escrow #1 for a sale between you and the current owners for the sales price of $175,000. You also tell the escrow officer that there is another escrow open on the same property at another escrow and this escrow will be closing first. Place your contract in the escrow. The escrow officer order a title report from a title company. The current owners owe an outstanding mortgage of $150,000.

    You now open escrow #2 with your contract from the new buyer you have a contract with for $225,000. Again you tell the escrow that this transaction will close after the first escrow and they are to work closely with the first escrow.

    Your buyer now qualify and get approved for a mortgage for $225,000.The loan docs are signed and the funds are transferred to escrow #2. You tell this escrow to transfer $170,000 of these funds to Escrow #1 to close that transaction. They make the transfer.

    Once escrow #1 get the transferred funds of $170,000 they close this escrow placing your name on the title as the owner and transfer all the necessary title paperwork to escrow #2. This escrow also make sure the mortgage company is paid off the $150, 000 that is owed them. They take out any closing fees and give the remaining proceeds to the sellers.

    Now that escrow #2 has the clean title with your name on it they can now close this escrow. They ask the buyer to bring in the closing cost to close the transaction. He does, they then transfer the title to his name,placing a lien on the property of $225,000 for the 1st mortgage.

    Since there is a total of $50,000 left in escrow #2 they make a check out to you for that amount since you are the seller.

    The title company and escrow does 90% of the work for each transfer. The lender does what is necessary to close the new mortgage for the last escrow.

    Both escrows can close within hours of each other if done properly and all title work, loan conditions and other items are completed.

    I hope this has been of some use to you. Good luck.

    "FIGHT ON"

  • 4 years ago

    Double Escrow

  • 1 decade ago

    2 ways. You have made an offer of $30,000 on a house. You have someone who will pay you $50,000 for it.

    You can close your original sale and 1 hour later sign a deed to the new buyer. That way the original seller does not know what you are doing. There are 2 sales in 1 hour.

    Or you do not close the first sale to you. YOu assign the contract to the new buyer. The original seller is now selling to the new buyer. That is legal for you to do. The worry in this case is that you would lose your earnest money if the new buyer fails to show up with his money. The good part is that you only pay the escrow company for 1 sale, not 2 sales..

  • 5 years ago

    This Site Might Help You.

    RE:

    How does a double escrow work?

    I understand that you close the buying/selling on the same day, but I need to know specific detail of the exact process/steps.

    For example: contracts, paperwork, people involved, fees, transfers, and advertisements.

    I need to know precisely how this is done, as though I could go out and do it...

    Source(s): double escrow work: https://shortly.im/MQwkd
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    Lv 4
    5 years ago

    For the best answers, search on this site https://shorturl.im/lHK2Y

    yes its called a double, triple or other escrow; where the property SLIPS from one owner to another to ........... it is quite legal and all parties to the transaction have to be informed AT the close! [in writing]

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