The dealer is protected because she has already received her proceeds from the sale of the contract. But the retailer who buys the contract is wary of the deal falling through and will factor it into the price he is willing to pay.
With a double closing, the dealer assumes more risk because if the deal falls through, she receives nothing. However, with this greater risk comes a greater reward.
A double closing begins with the dealer signing a purchase contract with the property owner. Then the dealer signs a contract with the retailer, in which the retailer agrees to buy the property from the dealer at a higher price and deposits that amount in escrow. The property owner signs the deed to the dealer, who then signs it to the retailer.
The retailer then signs the loan documents, and the process is complete--the property owner is paid his asking price, and the dealer is paid the difference. Note that the dealer came to the table with no money, and her credit was never an issue.
I hope today's lesson is not that hard. IF it is, take your time today to digest it and understand the method. It might be useful for you to start your property investment with it. For the time being, stay tuned for our lesson No.3 tomorrow.