A wholesaler in Tampa locked a distressed property under contract for $180,000 with an end buyer ready to pay $210,000. The seller refused assignment and demanded a true closing. Without $180,000 in the bank, the deal required transactional funding to bridge the gap between the A-to-B purchase and the B-to-C sale on the same day.
Transactional funding lets wholesalers execute double closings without using their own capital by borrowing the purchase price for a few hours, repaid at the second closing. Fees run 1-2% of the loan amount plus flat charges, often $500 to $1,500.
What Transactional Funding Is and Why Wholesalers Use It
Transactional funding is short-term capital borrowed to close the A-to-B leg of a double closing and repaid hours later when the B-to-C sale funds. Wholesalers use it when the seller won't allow assignment, when the end buyer demands clean title with no assignment visible, or when state disclosure rules make assignment risky.
It differs sharply from hard money. No credit checks. No appraisals. The loan exists for hours, not months.
The lender's collateral is the end buyer's proof of funds and the scheduled same-day closing. If the B-to-C sale doesn't fund, the lender has no long-term security, which is why they require ironclad proof the second closing will happen.
How the Process Works
The wholesaler signs a purchase agreement with the seller (A-to-B) and a separate purchase agreement with the end buyer (B-to-C). Both closings are scheduled the same day, often B-to-C first or back-to-back with a coordinated title company.
The transactional lender wires funds to the title company for the A-to-B purchase. The wholesaler takes title briefly, then immediately sells to the end buyer in the B-to-C closing. Proceeds from the B-to-C sale repay the transactional lender plus fees. The wholesaler keeps the spread.
Timeline: application to funding in 24 to 48 hours if the end buyer's proof of funds and contracts are clean. The title company handles the sequencing, ensuring the lender is repaid from the second closing proceeds before the wholesaler sees a dime.
Costs and Lender Requirements
Fee structure runs 1-2% of the loan amount plus flat origination or processing fees, often $500 to $1,500. On a $180,000 loan at 1.5% plus a $750 flat fee, the total cost is $3,450.
Lenders require executed A-to-B and B-to-C contracts, end buyer proof of funds, title company coordination, and sometimes an earnest money deposit. Personal guarantees or credit checks? Rare. But the lender may require the wholesaler to cover any shortfall if the B-to-C closing falls through. Some lenders cap loan-to-value or require a minimum spread between the A-to-B and B-to-C prices to ensure the deal math works.
The speed and convenience come at a cost: transactional funding is more expensive per deal than assignment, which costs nothing but an assignment fee, and lenders require proof that the end buyer has verified funds and a firm closing scheduled the same day.
When It Makes Sense and When to Choose Assignment Instead
Transactional funding makes sense when the deal spread is large enough to absorb the funding cost and still profit. If the Tampa wholesaler nets $30,000 on the $210,000 sale after paying $180,000 plus $3,450 in funding costs, the deal works.
Assignment is better if the seller and buyer both accept it. Assignment costs nothing and closes faster with less paperwork. But if the seller refuses or the end buyer wants a clean chain of title, transactional funding is the only path forward.
Risk factor: if the end buyer's financing falls through or the closing delays, the wholesaler may owe lender fees or need to cover the purchase out of pocket. State and county rules vary, so consult a local real estate attorney before structuring the deal.
Some wholesalers use transactional lenders' proof of funds letters to make offers more credible, even if they plan to assign. The letter shows sellers the wholesaler can close if needed.
Frequently Asked Questions
How long does transactional funding last?
Transactional funding lasts a few hours, from the moment the lender wires funds for the A-to-B closing until the B-to-C sale repays the loan. Some lenders offer same-day funding if both closings happen within business hours.
Can I use transactional funding if my end buyer is using a mortgage?
Most transactional lenders require the end buyer to pay cash because mortgage closings can delay unpredictably. If your end buyer needs financing, you'll need a longer-term loan like hard money or a different exit strategy.
What happens if the second closing falls through?
If the B-to-C closing doesn't fund, you owe the transactional lender the full loan amount plus fees, and you own the property. Some lenders require a backup plan or proof of personal liquidity before funding, so clarify terms upfront.
Flowstate buys houses as-is for cash and closes in 21 days or less. If your wholesale deal needs a reliable cash buyer or you're looking to exit a property quickly, we can help.