ASSIGNMENT OF CONTRACT/ how does it work? Should there be a fee?

4 Replies

Greetings BP,

    I recently came across an off market property for sale located close to the Central Ward in Newark.   The asking price was 150,000 and I offered them the full amount to purchase the property. Currently we have been unable to move forward because even though the owner wants to sell, he has tenants/family members who live in the property; they don't want to leave and they are making the process difficult.

As the seller and his company are trying to sort the situation out. I was offered the opportunity to do an assignment of contract. I was told that this means that I would be able to purchase the house and that they would stop marketing it to others. The only thing though is that they are charging me an additional $5,000 because the contract will be dependent on inspection. So if I'm not satisfied I can walk away after inspection considering that this may be the first time I get to see the property. They also said that I would pretty much have to use the title company that they work with.

My concerns are that I probably already offered too much since it doesn't seem like they have other offers on the table now. So I feel uncertain about paying an additional $5,000. I told them 150,000 is what I am willing to pay ...they said they will get back to me.

Nevertheless, the property is currently valued at about 190,000- 200,000. So there is a lot of equity there...

My goal is to live in the property , so it will become my primary residence. I may eventually rent it out in the future. 

For those of you who have done deals in this manner, is this typical protocol, or are they being unreasonable? should I move forward and pay the additional fee?

@Anne Williams there are a few things about this that are uncommon, but then again we're talking about off market properties in Newark which can sometimes be a bit dodgy and there isn't a standardized practice for off market deals. Its tough to say what the story here is as I don't have all of the particulars about the deal, but I would say you should get a strong team to back you on these deals (on market or off market) partner with someone that knows the ropes and a strong Real Estate attorney like @Jessica Zolotorofe to help you understand what you're getting into.

@Vaughn Smith ...I did have an attorney look over the contract and he had some concerns..I  really want the property but it's hard to really fight to secure this deal...considering that they have difficult tenants and the eviction process right now could really drag on due to Covid...

Hello Anne!  Nothing I have watched or listening to over about 7 years full time, I have never heard about that situation.  That being said, another wholesaler or owner can charge what thay want and that is just more profit and their greediness is showing.  This fee should have been disclosed at your first meeting.

If the title company is convenient to you that's just a part of the negotiation.  I would make a closing dependant on all the tenants being gone.  You should not count on anything that might happen.  That fee raises a red flag.  It is much harder, time consuming, and can be very expensive to evict .  

Good luck to you!

@Michael Lee....they did come back and accept my original offer for $150,000....they were clearly just trying to get more money out of me I

I definitely planned to put that the property has to be vacant in the contract.

The major concerns were: 

1) the fact that they wanted me to use their title company-  my attorney advised me NOT to do this

2) In the contract, they blackened out the amount they agreed to pay the seller. So that information is not being shared with attorney said if Im buying this contract that information should be shared with me..

3) when asked who is representing the seller, they said they attorney is wondering if they are able to give counsel...etc...etc...

I spoke to them about giving the original price for the contract, but they said they never reveal that information when they assign a contract as wholesalers...does any of this make sense or seem logical?