How to assign an contract with a “non assignment” clause

Question

New and young Wholesaler here working to get my first deal. I plan to visit a motivated seller’s home in a few days but this particular seller is listed with an agent. I know that most agent’s have a no assignment clause in their contract and have heard from a few people here that it’s possible to ask the agent to cross it out, initial it, and ask them to write an assignable clause. Ex. “He/she assigns…” but I’m not sure if this is legal or realistic when trying to wholesale, or at least wholesale in the state of GA. I know for sure that you can either put it under an llc or perform a double close, but I do not have the capital or POF for a double close nor an llc just yet. I need brutal honest advice as to whether this is a dead deal for me or should I try and ask the agent for them to rewrite their contract.

John Clark · Answer

Why not call the real estate agent and tell him  there's a chance you'll be assigning the contract and will that be a problem. Go from there.

Jesse LeBlanc · Answer

A double close would cost you more since you'd be on the hook for paying closing costs on the first transaction.  EMD depends on your contract and regardless you would be responsible for the EMD unless you assigned it before the EMD was due and then your end buyer put down EMD.  POF is a stupid piece of paper that means nothing, but for some reason some agents like to see it and feel like it means something, but I never offer it unless someone specifically asks when I used to wholesale.     I have done 100k assignments, and I've also done 5k double closings.  So many variables and reasons, no two scenarios are 100% alike due to dealing with human emotions.

Jesse LeBlanc · Answer

@Amaya Boyd you can double close on the property if they won't allow you to assign.  I always think full transparency is best!  Then assuming all parties are on the same page, they can draft an amendment to that contract allowing the assignment OR if you all are on the same page and if they chose not to assign you could double close (cost more) or you can allow the seller to go direct with the end buyer and you can have your fee in the special stipulation of their contract to make sure you still get your fee at closing. If you double close, some attorneys will allow you to use pass through funding but ONLY if the end buyers lender (unless cash) must allow that, but most folks don't bring it up and all good.  Otherwise, you can use a Transactional Lender for funding your initial purchase on the double closing.  I am a Transactional Lender here in GA, but work in every state.  Wholesalers Transactional Funding :)

Chris Seveney · Answer

@Tim Delaney

Exactly - also if I wanted it I would just wait until it falls back out from being under agreement and buy it then which it will 99.9% or the time

Tim Delaney · Answer

@Amaya Boyd since you asked for brutally honest advice I’ll give you some that most of the others in this thread have overlooked. You said the house is listed with an agent. Which in theory means that it is on the MLS and therefore every single halfway decent investor already knows about it if it meets their criteria.

I’ve seen this type of question repeatedly from new wholesalers. If the property is on the market you really shouldn’t be wasting your time on it. Wholesalers make money by finding great off market deals from motivated sellers. I could be wrong, maybe you’ll still be able to squeeze out a small assignment fee, but more likely than not the agent will advise their client not to accept your offer because you don’t seem capable of closing.

You are also in a tricky spot trying to market this property. Because of for some reason people on your buyer list don’t already know about it, when you tell them about it to gauge their interest they can easily go directly to the agent selling it.

I’m not a wholesaler, but I do buy lots of houses from the MLS and wholesalers. If a wholesaler brought me a deal that was on the market I would be shocked if the numbers actually pencilled out. I’ve had wholesalers bring me expired listings and even those don’t work out because the price is too high.

Wayne Brooks · Answer

@Amaya Boyd For an mls property….

- you will need earnest money and a POF, whether the contract is assignable or not

- the mls is the Retail market, not the wholesale market….100’s of buyers have already passed on this property at the listed price.

Barry Ruby · Answer

@Nicholas L. In future deals try to vest with you as the Buyer and add “and or assigns” after the named Buyer.

This will either allow you to assign and or bring the point to light and open a discussion and negotiation on it between the Parties.

Nicholas L. · Answer

@Amaya Boyd

Setting aside everything else in this thread (POF, assigning, etc. etc.) if it's on the market, it seems extremely unlikely it will be a deal... seller will want a market price...

Corby Goade · Answer

It's not illegal anywhere to assign a contract, and as long as both buyer and seller agree to nearly any terms, it's fine.

However, in many places, it's a grey area, at the very least, if someone can profit off of an assignment, that's probably the heart of the question here.

If you already have a contract to purchase the property, you can't just write a new one and expect things to be fine, the seller has to agree to new terms, and there's no reason for them to agree if it does not benefit them, and the assignment is highly unlikely to benefit them.

How to assign an contract with a “non assignment” clause

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