You have a house under contract. You have a buyer. And you don’t want to — or can’t — assign the contract. So you plan to buy it and sell it in back-to-back closings. The problem: you need the money for the first closing before the buyer’s money shows up for the second.
That’s the gap transactional funding fills.
It’s a real tool. It’s also one of the most misunderstood tools in investor circles, mostly because it gets sold as a magic trick. It isn’t. It’s a short loan that only works if everything around it is done right — including the legal sequencing in your state.
What is transactional funding?
Transactional funding is extremely short-term financing used to fund the first leg of a double closing. In a double close, there are two separate transactions:
- A-to-B: The investor buys the property from the seller.
- B-to-C: The investor sells the property to the end buyer.
The transactional lender funds A-to-B. At B-to-C, the end buyer’s money comes in and the transactional lender is paid back. Often both closings happen the same day, sometimes back-to-back at the same closing attorney’s office.
That’s it. No renovation, no holding period. The money exists for hours or days, not months.
When investors use transactional funding
People reach for it in a few situations:
- The contract isn’t assignable — the seller or the paperwork doesn’t allow it.
- The end buyer’s lender won’t allow an assignment in the chain of title.
- The investor wants the two transactions kept separate so each party sees only their own closing.
- The investor is doing a quick resale after taking title as part of a documented plan.
If you’re new to how assignments and double closings compare, read assignment of contract in real estate alongside the double close guide.
The South Carolina sequencing caution
Here’s where I slow everybody down.
In May 2024, South Carolina’s revised Real Estate Practice Act addressed wholesaling directly. The definition centers on having a contract to buy residential property and marketing it to a different buyer before taking legal ownership. The South Carolina Real Estate Commission’s November 2024 advisory treats marketing broadly — MLS, social media, Facebook groups, private email groups, even verbal communication.
Why does that matter for transactional funding? Because a typical “same-day double close” story goes like this: put a house under contract, market it to buyers, find one, then double close. The double close doesn’t change what happened before it. If you marketed the property before you owned it, a funding structure at the end doesn’t undo that.
So in South Carolina, the order of events matters more than the funding mechanism. Read my full breakdown of wholesaling in South Carolina and the paths investors discuss, then talk to a South Carolina real estate attorney before you plan any double close. I won’t call any structure legal or safe. For what it’s worth, I take title in my own deals here, and when counsel says no, the answer is no.
Outside South Carolina, the rulebook has shifted too: a number of states now regulate contract assignments through licensing, registration or required disclosures. Confirm what your state requires today, with a local attorney, before you line up funding for a two-step close.
How a transactional lender evaluates a deal
Because the loan only lives as long as the second closing, transactional lenders focus on whether that second closing is real.
They typically want to see:
- The signed A-to-B purchase contract
- The signed B-to-C contract with the end buyer
- Proof the end buyer has funds or a lending commitment
- A closing attorney or title office handling both transactions
- Clean title, or a clear plan to clear it
They’re lending on the strength of the exit. If the end buyer is shaky, the deal is shaky.
Questions to ask a transactional lender
- Can I see a written term sheet showing every fee before I commit?
- What documents do you need, and how far ahead of closing?
- Do you work with my closing attorney, and in my state?
- What happens if the second closing is delayed or falls through?
- Do you require the end buyer’s funds to be verified first?
- How is your payoff handled at the second closing?
- Do you require anyone to sign personally on the loan?
Every lender prices differently. I don’t publish fees or rates here. Ask for a written term sheet and compare it against what the deal can actually bear.
The costs to plan for
A double close isn’t free even when the funding is smooth. Plan for two sets of closing costs, the transactional lender’s fees, title work on both sides, and possible transfer or recording costs depending on the state. Some deals can’t carry that. Know it before you promise anyone anything.
When not to use transactional funding
Skip it when the second closing is uncertain. Skip it when you haven’t confirmed the sequencing with an attorney. Skip it when the deal is so thin that two sets of closing costs wipe it out. And skip it if anyone describes it to you as a way to avoid a law.
If what you actually need is money to buy, fix and hold a house for a few months, that’s a different tool. Read hard money loans instead, or go back to how to fund real estate deals for the full map.
Your next step
If you’re thinking about a double close, write out every step from first contact with the seller to the second closing. Mark the moment you take title. Mark every moment anyone outside your company hears about the property. Then take that timeline to a real estate attorney.
Want a second set of eyes before that? Post your deal structure in REI Skool. It’s free, and the community is good at spotting where a plan breaks.
Questions people ask
What is transactional funding in real estate?
Transactional funding is very short-term money used to complete the first purchase in a double closing, where an investor buys a property and resells it to an end buyer in back-to-back transactions. The loan is typically repaid from the end buyer’s funds at the second closing.
Is transactional funding legal in South Carolina?
The funding itself is a loan. The bigger question in South Carolina is the marketing that happens before you own the property. Under the 2024 revisions to the Real Estate Practice Act, marketing property you don’t own can require a license. Read https://wholesaling-in-south-carolina.benlovro.com/ and talk to a South Carolina real estate attorney before you plan a double close.
How is transactional funding different from a hard money loan?
A hard money loan funds a purchase and often renovation over months. Transactional funding usually covers only a purchase that is immediately followed by a resale, often the same day. It depends entirely on the second closing happening.