What Is Transactional Funding? A Plain Guide for Wholesalers

What does transactional funding pay for?

It pays for one thing: the A-B purchase in a double close. In wholesaling shorthand, A is the original seller, B is you, and C is your end buyer. An A-B-C close (also called a double close or double closing) is two separate sales of the same property. A sells to B, then B sells to C, often hours apart at the same title company.

Transactional funding covers the first sale. Your end buyer's funds cover the second. Because the loan only exists between those two closings, it is usually out for hours, not months. On Axelrad's transactional funding program, the loan is repaid out of the B-C closing. See the product page for current terms.

How does a transactional loan work, step by step?

1. You sign a purchase contract with the seller (the A-B contract).
2. You sign a separate resale contract with your end buyer (the B-C contract).
3. You send both executed contracts to the lender, along with proof that the end buyer's money is real.
4. The lender confirms title is ready to close both legs, then wires the A-B purchase money to the title company.
5. The A-B sale closes and you own the property.
6. The B-C sale closes and the end buyer's funds arrive at title.
7. Title repays the lender out of the B-C proceeds and pays your spread to you after closing costs.

For a closer look at the two closing files themselves, read our guide to what a double closing is.

When do wholesalers use it instead of an assignment?

An assignment of contract is simpler and cheaper. You sell your right to buy, and the end buyer closes directly with the seller. But it does not always work. Wholesalers reach for transactional funding when:

• The purchase contract forbids assignment.
• An MLS, REO (bank-owned) or government addendum bans it.
• The state restricts wholesaling by assignment.
• The spread is large enough that you would rather the end buyer never saw it.

Transactional funding is not limited to houses. At Axelrad it covers land deals too; our post on transactional funding for land covers what to ask title on a land file.

In a double close nothing is assigned, so your spread does not show up on the end buyer's settlement statement. To compare what each exit nets on your numbers, use the assignment vs. double close calculator.

What does a transactional lender look at?

The deal, not your file. Repayment comes from the end buyer's money, so the questions are about the exit. A transactional lender needs four things: your executed A-B contract, your executed B-C contract, proof the end buyer's funds are real, and a title company or closing attorney ready to close both legs.

If the end buyer is paying cash, that proof is their proof of funds. If they are financing, it is their lender and whatever conditions are still open. That last point matters. A financed end buyer whose loan has not cleared is a common reason a double close slips.

How much does transactional funding cost?

Transactional funding is usually priced as one fee on the amount advanced, not monthly interest, because the loan is out for hours rather than months. See the transactional funding page for Axelrad's current pricing. For how flat fees and percentages compare, see transactional funding costs.

Here is a hypothetical example to show how the pieces fit. This is an example only, not a quote. On a $200,000 purchase resold for $230,000, with $5,000 in earnest money already paid, the lender wires the $195,000 still owed. Assume a funding fee of $1,950 for illustration. After $5,500 in combined closing costs, the wholesaler keeps $22,550 ($30,000 spread, less $5,500 and less $1,950).

Remember that a double close means two sets of closing costs, so run the numbers before you choose it over an assignment.

What mistakes do beginner wholesalers make with transactional funding?

• Calling the funder last. Send both contracts as soon as the B-C contract is signed, not the morning of closing.
• Treating interest as funds. A buyer saying yes is not a signed B-C contract, and a preapproval is not proof of funds.
• Forgetting the second closing costs. A double close has two sets. Budget for both before you pick it over an assignment.
• Picking a title company that has never run back-to-back closings. Ask before you open the file.
• Ignoring how the end buyer is paying. Some loan programs restrict quick resales, which can kill a same-day close.

What can go wrong on a double close?

Most failed double closes fail on the C side: a lender condition that has not cleared, or a cash buyer who cannot produce the wire. That is why the end buyer's funds are verified and title confirms both legs before any money moves. If the resale needs longer than a day, Axelrad has delayed and extended options. Call before closing day, not after.

Rules on wholesaling and double closings vary by state, and title companies set their own policies. This is general information, not legal advice, so talk to a real estate attorney in your state. Our post on whether transactional funding is legal covers what to check first.

Key takeaways

• Transactional funding pays for the A-B purchase in a double close and is repaid from the B-C closing, usually the same day.
• Lenders underwrite the deal: both contracts, the end buyer's verified funds, and a title company ready for both legs.
• Use it when an assignment is banned or when you want your spread off the end buyer's paperwork.
• Budget for two sets of closing costs and the funding fee before choosing a double close.
• Verify the end buyer's money first. That is where most double closes break.

Talk to Axelrad

Have both contracts signed? Send the deal through Axelrad's application and see the transactional funding page for current terms. A real person reviews every file.