Transactional Funding or also known as Double Closing Funding is a short-term loan provided to wholesalers who purchase and quickly re-sell a property the same day. The seller of the property is typically called “Party A”. The wholesaler is typically called “Party B”. The end buyer of the property is typically called “Party C”. Transactional Funding deals are also sometimes called “A-B – B-C” Transactions.
Transactional funding is a same-day loan. The applicant will buy the property from the seller with TREF money. You will only receive funds once there is an end buyer who is buying the home from you for more than you are buying it from the seller. The objective for the applicant is to bring a property they have under contract with a seller, and another contract they have with a cash buyer. These contracts demonstrate that you are buying (A-B) and then selling (A-C) and have a closing attorney or title agency. The reason why applicants would use transactional funding is in order to buy low and sell high within the same day. TREF comes in and assists with the funding and charges a 1% interest on money borrowed.
- Example - $100,000 loan / $1,000 fee
If the applicant doesn’t have both contracts signed as well as working with a closing attorney or title agency, we will not fund them. I hope this provides the clarification needed. Feel free to reach out if we can provide any additional bits of information.