Escrow, Assignment Fees, & Ernest Money Deposits

[Darrie W. Bennett]

Hello fellow members -

I finished drafting my Assignment Contract and have a few questions:

1. Do I need to have an attorney review and make changes to the the contract before using it the first time?

2. When do you open escrow? When my offer is accepted or after I have it assigned?

3. How do you determine your assignment fee?

4. When is your fee due? Upon assignment or when escrow closes? I am asking to be paid upon assignment.

5. How do you collect your fee? Cashier's check, wired funds, ... ?

6. Do you ever ask the investor to put up the Earnest Money Deposit ?

I would appreciate any input.

[Cameron Sharp]

1. Do I need to have an attorney review and make changes to the the contract before using it the first time?

It is up to you, wouldn't hurt, but also depends on your budget. With attorney's, they all eat. Take them to lunch, lunch is cheaper than retainers :)

2. When do you open escrow? When my offer is accepted or after I have it assigned?

I let the end user open escrow. They will be buying it anyways.

3. How do you determine your assignment fee?

I determine mine based on what the market will bear and how good of a deal it is based on the market and what the end investor wants. I have assigned for as little as $1,000 and as high as $30,000. The latter was because I got such a great deal and then shopped it to multiple investors.

4. When is your fee due? Upon assignment or when escrow closes? I am asking to be paid upon assignment.

Either or. I shoot for as soon as possible. Some of it will depend on how you structure the assignment. If you go the attorney route, they can help, or title company.

5. How do you collect your fee? Cashier's check, wired funds, ... ?

Cash is King. But any form outside of a personal check :)

6. Do you ever ask the investor to put up the Earnest Money Deposit ?

I do not. But it doesn't mean you can't. Most the time, I have found, the investor will not, unless they are buying the deal. Since you have to secure the property before assigning it, you will most likely be putting down the earnest. Plus, most investors will not put down earnest, unless the contract is in their name so they can have control of their funds.

Good Luck

[Darrie W. Bennett]

Cameron -

Thanks for the reply. I can't believe how much free info I get with Bigger Pockets. It's all good. I just updated the addendum to my Purchase Contract. Now it reads: 1. Escrow to be opened by the assignee within 3 days after the contract is assigned. 2. The assignee will deposit the earnest money deposit.

Otherwise, I will deposit the earnest and ask for it back when I assign the contract. Sound good?

Thanks Again,

Darrie

[Cameron Sharp]

@Darrie W. Bennett Its not free, wait till I send you the bill :) JK

Yes. Put up te earnest and have your clauses in the contract to get it back if the deal goes south or you can not assign it. Then have your new buyer, the assignee put up the earnest to have it assigned to them.