Transactional Funding: What It Is and When to Use It
Transactional funding — also called flash funding or ABC funding — is a short-term loan built specifically for double closings. You borrow funds to purchase from the seller (the A-to-B transaction), immediately sell to your end buyer (the B-to-C transaction), repay the lender from the proceeds, and keep the spread. The entire sequence can happen the same day.
No credit check. No income documentation. No appraisal. The deal qualifies you — not your credit score.
When Transactional Funding Is the Right Tool
1. Your spread is large and you want to keep it private.
A straight assignment puts your fee on the closing statement for everyone at the table — seller, buyer, title company, and their attorneys. A double close keeps both transactions completely separate. When the margin is significant, privacy is often worth the cost.
2. Your end buyer requires a double close.
Some buyers — particularly institutional buyers and hedge funds — will not accept an assignment and require you to take title before they purchase. In these cases a double close is not optional. Transactional funding makes it possible without tying up your own capital.
3. Assignment contracts are restricted or prohibited in your market.
As covered in our post on wholesale pitfalls, several states have moved to restrict or effectively ban the marketing of equitable interest. In those markets, a double close with transactional funding is often the only legally compliant path to completing the deal.
What It Costs
Transactional funding typically runs 1–3% of the loan amount with a minimum fee of $750–$1,500. On a $100,000 purchase that's $1,000–$3,000 in funding fees — on top of your double closing costs.
The Risk
Transactional funding only works if your end buyer closes. If they back out, you're holding a property you didn't plan to own with a loan due in as little as one to fourteen days.
Never use transactional funding without a verified, committed end buyer with proof of funds already in hand. This is not a structure for deals where your buyer is still being lined up.
The Math
Double Close
| Item | Amount |
|---|---|
| A-to-B purchase | $100,000 |
| B-to-C sale | $125,000 |
| Transactional funding fee (2%) | $2,000 |
| Double closing costs | ~$2,500 |
| Net profit | ~$20,500 |
Straight Assignment
| Item | Amount |
|---|---|
| Contract price | $100,000 |
| End buyer price | $125,000 |
| Closing costs | $0 (assignee pays all closing costs) |
| Net profit | $25,000 |
The assignment nets approximately $4,500 more on the same deal. But it only works when your buyer will accept it and you're comfortable with the spread being visible. When neither condition is true, transactional funding is the right tool — and the cost is the price of privacy and compliance.
Assignment vs. Double Close — A Simple Decision Framework
- Buyer accepts assignment + spread is modest → Assignment
- Spread is large and privacy matters → Double close
- Buyer requires title transfer → Double close
- State restricts assignment contracts → Double close
RE Data Metrix has transactional funding built directly into the platform. Run your deal analysis, find the right lender, and start the funding application without ever leaving the app.