Real Estate Assignment vs Double Closing: Which is the Better Strategy?
- Jul 2
- 5 min read
When entering the world of real estate investing, two popular strategies often come up: real estate assignment and double closing. Both methods allow investors to profit from properties without holding them long-term, but they work in different ways and come with unique advantages and challenges. Understanding these differences can help you choose the best approach for your goals, resources, and market conditions.
This post breaks down real estate assignment and double closing, compares their key features, and offers practical insights to help you decide which strategy fits your investing style.
What Is Real Estate Assignment?
Real estate assignment involves a contract where the original buyer (the assignor) sells their rights to purchase a property to another buyer (the assignee) before the closing date. Instead of buying the property themselves, the assignor transfers the purchase contract to the assignee for a fee.
How It Works
The assignor finds a property and signs a purchase agreement with the seller.
Before closing, the assignor finds an end buyer interested in the property.
The assignor assigns their purchase contract to the end buyer.
The end buyer closes directly with the original seller.
The assignor collects an assignment fee, which is the difference between their contract price and the price paid by the end buyer.
Advantages of Assignment
Lower upfront costs: The assignor does not need to secure financing or close on the property.
Less risk: Since the assignor never takes ownership, they avoid holding costs like taxes, insurance, or repairs.
Faster turnaround: Assignments can close quickly, sometimes within days or weeks.
Simpler process: Fewer parties involved in the closing, usually just the seller and the end buyer.
Limitations and Risks
Seller approval: Some sellers or contracts prohibit assignments, requiring permission or forbidding it altogether.
Assignment fees capped: In some markets, assignment fees may be limited or scrutinized by lenders.
Less control: The assignor cannot negotiate directly with the seller after assignment.
Buyer qualifications: The end buyer must qualify for the purchase, which can delay or derail the deal.
What Is Double Closing?
Double closing, also called simultaneous closing, involves two separate transactions occurring back-to-back on the same day or within a short period. The investor first buys the property from the seller, then immediately sells it to the end buyer.
How It Works
The investor signs a purchase agreement with the seller.
The investor also signs a purchase agreement with the end buyer.
The investor closes on the property with the seller, taking ownership.
The investor then closes with the end buyer, transferring ownership.
The investor profits from the difference between the two sale prices.
Advantages of Double Closing
More control: The investor owns the property briefly, allowing for more negotiation and flexibility.
No assignment restrictions: Since the investor buys and sells the property, assignment clauses do not apply.
Higher potential profits: Double closing can allow for larger spreads since the investor controls both transactions.
Privacy: The end buyer does not see the original purchase price, which can be beneficial in some deals.
Limitations and Risks
Higher upfront costs: The investor must secure funds to close on the property, even if only briefly.
Increased risk: If the end buyer backs out, the investor may be stuck owning the property.
More complex process: Two closings require coordination with multiple parties, including title companies and lenders.
Additional fees: Closing costs apply twice, which can reduce overall profit margins.
Comparing Real Estate Assignment and Double Closing
Feature | Real Estate Assignment | Double Closing |
Ownership Transfer | No ownership by investor | Investor takes ownership briefly |
Upfront Capital Needed | Minimal to none | Significant funds required |
Risk Level | Lower risk | Higher risk |
Closing Complexity | Simpler, one closing | More complex, two closings |
Profit Potential | Usually smaller assignment fees | Potentially larger profit margins |
Seller Approval Needed | Often required for assignment | Not required for double closing |
Privacy for Buyer | End buyer sees original contract price | End buyer does not see original price |
Time to Close | Faster, days to weeks | May take longer due to two closings |
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When to Use Real Estate Assignment
Real estate assignment works best for investors who:
Have limited capital and want to avoid financing.
Want to minimize risk and avoid holding property.
Are working in markets where assignment clauses are allowed.
Prefer quick deals with less paperwork.
Are skilled at finding motivated end buyers quickly.
Example Scenario
An investor finds a distressed property listed for $150,000. They sign a purchase agreement with the seller and then find an end buyer willing to pay $160,000. The investor assigns the contract to the end buyer for a $10,000 fee. The end buyer closes directly with the seller, and the investor collects the fee without ever owning the property.
When to Use Double Closing
Double closing suits investors who:
Have access to funds or transactional financing.
Want more control over the transaction.
Face contracts or sellers that prohibit assignments.
Aim for higher profits by controlling both sides of the deal.
Need to keep the original purchase price confidential from the end buyer.
Example Scenario
An investor signs a contract to buy a property for $200,000. They also have a buyer lined up to purchase it for $220,000. The investor closes on the property, then immediately sells it to the end buyer. The investor earns $20,000 minus closing costs but must cover upfront costs and risks during the process.
Key Considerations Before Choosing a Strategy
Market conditions: In hot markets, quick assignments may be easier. In slower markets, double closings might secure better deals.
Legal restrictions: Review contracts and local laws to ensure assignments or double closings are allowed.
Financing availability: Assess your access to funds or transactional loans.
Experience level: Assignments are simpler for beginners; double closings require more coordination.
Profit goals: Decide if you prefer smaller, quicker profits or larger, riskier gains.
Final Thoughts
Both real estate assignment and double closing offer ways to profit from real estate without long-term ownership. Assignments require less capital and risk but may limit profit potential and depend on seller approval. Double closings offer more control and higher profits but need more funds, carry more risk, and involve complex logistics.
Choosing the better strategy depends on your financial situation, risk tolerance, and market environment. Start by understanding your goals and resources, then test each method with small deals to gain experience. Over time, you may find combining both strategies works best to grow your real estate investing business.
If you want to explore these strategies further, consider consulting with a real estate attorney or experienced investor to navigate contracts and local regulations safely.
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