Assignment Fee When Structuring Owner Financing Deal
Hello,
I'm currently structuring a wholesale deal with seller financing. How do I apply my assignment fee? I was thinking out of the down payment (Increase down payment by my fee amount and reduce the purchase price by same amount). Thoughts. What has anyone done in the past?
#2 All Forums Contributor
- Investor
- Virginia
Quote from @Eric Clunn:
Hello,
I'm currently structuring a wholesale deal with seller financing. How do I apply my assignment fee? I was thinking out of the down payment (Increase down payment by my fee amount and reduce the purchase price by same amount). Thoughts. What has anyone done in the past?
That seems logical - The way a seller financning transaction "should" go is the same as any other type of financing. The only difference is in lieu of getting money from Wells Fargo it is coming from the seller. In every transaction the buyer would be getting money to put for a down payment and then funds from a third party are the balance of the loan. So it should be on the HUD and come from the buyer.
There should be an "entry fee" that you are marketing to the buyers, and that entry fee should include closing costs, down payment to seller and your assignment fee.
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Real Estate Agent
- Cash Source Homes
Quote from @Eric Clunn:
Hello,
I'm currently structuring a wholesale deal with seller financing. How do I apply my assignment fee? I was thinking out of the down payment (Increase down payment by my fee amount and reduce the purchase price by same amount). Thoughts. What has anyone done in the past?
Add your fee to the DP/PP , OR simply breck it out on the HUD, , the title co will pay you
#4 Wholesaling Contributor
- Wholesaler
- Tampa, FL
@Bryant Brislin said it best!
You should try to shoot for a max of 15% entry fee compared to the purchase price. The better the terms the higher that percentage could become.
I've wholesaled 3 seller finance deals in the past 6 months so feel free to reach out with any questions!
Thank you. This framing of an "entry fee" sounds like the best option when presenting to buyers. Follow up question:
Assuming $140,000 purchase price with $21,000 entry fee (15%). On the settlement statement would all assignment fee, closing costs and down payment come out of that amount? If so, which portion would get applied to the loan as down payment? All (making the loan amount $119,000)? or Just the portion that is the down payment (making the loan amount $140,000 - entry fee + assignment fee + closing costs = remainder to be applied to loan as down payment)?