Different wording for "assignment fee"

I haven't closed my first deal yet but I'm getting close. I've called a title company that I was told works with investors and learned that banks aren't letting people "assign" contracts in Arkansas. I would have to hold the property for atleast 6 months before I could do anything with it.

Yes, I know ideally buyers should be cash buyers but I have a retail end buyer. Any suggestions on any other possibly "wordings" for assignment fee that won't send up any red flags to anyone like lawyers/mortgage guys/anyone with authority that could throw a red flag?

Any help is greatly appreciated. Thanks in advance!!

J Scott

Real Estate Investor · Atlanta, Georgia

Donor Pro

6,628 posts
13 awards
94 influence

Feb 22 '11, 04:12 AM

First problem: Is this a bank-owned REO? If so, you're not going to be allowed to assign the contract, and there's no magic wording that will allow you to.

Second problem: Are you trying to wholesale this deal to a buyer who is using conventional financing? If so, the buyer's lender may require some seasoning period before they will fund their buyer. If it's an FHA buyer, there is no seasoning period, but if you don't do any work to the property (i.e., rehab), it likely won't appraise for more than what you're paying for it, and therefore you won't be able to sell it for several months under that scenario either.

Solutions:

1. Deal with cash buyers if you plan to wholesale without making any upgrades/renovations;

2. Instead of assigning the contract, either do a double close or purchase the property in an LLC (or trust) and sell the LLC (or trust) to your end-buyer for a profit.

J Scott, Lish Properties, LLC
Telephone: 770-906-6358
Website: http://www.123flip.com
http://www.123flip.com

Jesse R

Rehabber · El Paso, Texas

508 posts
7 awards
50 influence

Feb 22 '11, 04:58 AM

J Scott hit the nail right on the head.
Enough said.

Corry Taie

Rehabber · lake elsinore, California

179 posts
4 awards
50 influence

Feb 28 '11, 11:58 PM

Another way to do it, is to add the end buyer on title for the purchase, then have them "buy you out" for the agreed upon amount. At that point you would simply quit claim your interest to them.

C L.

· near Philadelphia, Pennsylvania

82 posts
1 award
50 influence

Mar 01 '11, 12:43 AM

If Arkansas doesn't permit assignments, do you really want to widdle your way around it by using another noun/verb?

Just saying . . .

J Scott

Real Estate Investor · Atlanta, Georgia

Donor Pro

6,628 posts
13 awards
94 influence

Mar 01 '11, 03:07 AM

Originally posted by MsJerseyDevil

If Arkansas doesn't permit assignments, do you really want to widdle your way around it by using another noun/verb?

Just saying . . .

This is not an Arkansas rule (or any state that I'm aware of)...this is a rule that banks have when they sell REOs...

J Scott, Lish Properties, LLC
Telephone: 770-906-6358
Website: http://www.123flip.com
http://www.123flip.com

Bill Gulley

Real Estate Investor · Springfield, Missouri

5,643 posts
13 awards
100 influence

Mar 01 '11, 03:34 AM

Right, not an Arkansas issue, it's the title company or lender. You can also buy it with your buyer and assign by QC deed later or get an option specifying your assigns and sell the option. Since the option is not required to be taken, it in itself is not a real estate transaction, sell the option and your buyer closes later.

If you are not in Little Rock, RE is pretty laid back and lax. A title company will close, it depends on how you do your option contract to the sale contract. Good luck....