Contract Assign vs. double Close?

22 Replies

Hello BP,

As a new wholesaler I wanted to get a better idea of the pro's and cons of contract assignment vs. double closings? is there a preferred approach? is one better then the other?

thanks

Here is a blog I wrote on this exact subject.  here you go"

Many new investors are always wondering what the difference between a double close and an assignment of contract. When doing a double close you are putting the property under contract as the buyer and then you sell the home to your buyer on a separate contract as seller. When the closing attorney closes the transaction you will actually own the home for a brief moment and you will also pay closing costs and fees. The closing attorney will use your buyers funds to pay the person you are buying the home from. ( Note: some closing attorneys will require you to use transactional funds for double closings. Make sure your closing attorney can work around this as in my experience I have never had to do it that way )

Assignment of contract is where you put the home under contract for example, Buyer - John Smith and or assigns, this gives you the ability to assign your contract to another end buyer. Your buyer will have to sign an assignment contract document and they will see how much you are making as an assignment fee. This is why many investors like to do double closings as some end buyers, though it should not be an issue will back out of the deal if they feel you are making too much in profit off them. You will not have any expenses doing an assignment contract.

Hopefully this gives you a little more insight into the differences of a double close and an assignment of contract transaction.

Medium buymemphisnow stacksCurt Davis, Buy Memphis Now | [email protected] | 605‑310‑7929 | http://www.BuyMemphisNow.com

The only benefit to double close is being able to hide the initial purchase price.  If you have a good deal a reputable investor typically won't mind you making money too.

The benefit to a double close is your buyer won't see your profit at the closing table.

If you assign your deal they will see your fee, but most all the time the end buyer will pay the closing cost.

In a double close situation your going to have to pay your "A-B" side of the closing.

So keep that in mind when running your numbers.

Beware of trying to use the end buyer's funds to close the A to B transaction because it could kill the deal and most closing agents will ask the end buyer can they use their funds. 



Joe Gore

I've heard that a side benefit of an assignment is that it keeps you off the chain of title. Perhaps there could be a dispute or claim of some sort after closing and if you were a seller on record, it could come back on you. I've never had this happen myself, but did hear about this as a benefit to assigning over a double escrow.

Thank you all for the advice.  Yes my main concern was if the seller saw my assignment fee if there inclination was to back out and try void the deal.  The local investor buyers I'm aligning with, we've been very open with each other so that side of the transaction is good.

Has anyone experienced an assignment where the seller backed out?  does it happen often?  I am partial to contract assignment (at least i think i am) as it's a more streamlined process.

thanks again

I have used assignments for $5000 fees and below and double escrows above $5000 with good success. Not had an issue at those values with either seller or buyer.

If your open and honest in your dealings, there is no reason to worry about the buyer backing out.

The other benefit of a double close is being able to wholesale foreclosures. Much more complicated than an assignment but makes it feasible.

Natedog

Excellent…thanks all BP members that responded to my post, I appreciate all the advice. 

How much generally are the closing cost? Do you come out ahead doing a double contract if you are the one covering the closing cost?

When you assign your contract to and investor you agree to an assignment fee for your equitable interest in the original contract with the seller. At least in MN the HUD1 statement still shows the property as being bought at the original purchase price agreed upon by you and the seller of the home. Also in the HUD1 there will be an area that lists that assignment fee and most homeowners that will be selling you property wont be very fluent in this document so it will be unlikely that they pick this out of all of the fees listed on the HUD. For all they care they still see the original agreed upon price that they are getting the house for.

 Can any one help with any of these questions?

Is there a way to wholesale a property that the bank owns?

Is there a time time limit once I wholesale a property o get it turned over to a investor?

If the persons property is already going up for foreclosure how do I keep it from going

full foreclosure before I get it to a investor?

Where is the best place to find pre foreclosures?

Where is the best place to find investors?

I hope these questions do not push your patients, I feel like after I know this I can set up investors

and find pre foreclosures and get started. I have set up a appraiser who also does market analogies.

I have set up a pre title searcher who also does title closings and has worked with wholesalers before, she is also familiar with the double contract. I have also been putting feelers out to every realestate and loan person that I have spoke with to see if any of them know investors. I do have one investor set up but they are very limited ,like they only do this every once in a while. Thanks for your time I will be looking forward to your reply.TTHEISS

@Tammy Theiss - wow that's a lot to ask as a response to an old thread.  I would suggest posting as a new comment/question.  But first, read available info here on BP, listen to podcasts and discover what you can!  Lots of info available to you.  Wish I had this when I was getting started! 

I put this on here like this because I was actually getting a lot more feed back over here than I was when I was listing seperate, I am just getting a bit anxious.

Always be upfront with everything. First negotiate a price and have the seller tell you himself that he is happy with it. (If he won't say he is happy with is, go to another prospect) 

If the seller has an issue with your profit margin, always do your best to reiterate and make him understand that he will still be getting the agreed upon price in cash. The buyer will cover your assignment fee.

It also pays to educate the buyer on the cost of your time and investment, marketing etc.  

Yeah because I really wanted to put the time into. I want to pull a pre-tite search,the person who will be doing my title search is also the person who will be doing my title closings. I already have a appraiser set up who also covers the market analagy of the houses around the main house being looked at. Then also less accurate I am going to pull the public file on line for other info. I plan on setting one of these files up for every property I get involved with. I know other wholesalers who go in and do the math and thats it but I want to build a relationship with my investors.

Interesting discussion.assignment of contracts are best to a certain point(a cut off amount, say USD5000) then double closings are best to avoid the buyer backing out of the deal

yes I'm looking for a closing agent double closing assignment of contract who will work with a new investor whose trying to get started thank you sincerely Garrett Collins

I am get my team  together I am a new investor so if you want to join my team let me know please looking for real estate agent who will work with wholesaling also looking for hungry Cash buyers also looking for real estate agent that who understand all the rules Of wholesaling I have great wholesale deals is waiting in my tunnel close between 15 and 30 days  30  And 35 to 55 percent on a dollar 40 to 65 ÷off sellers priced looking for awesome closing agents so we can get paid lets do this strictly business Garrett Collins

yes I'm looking for a closing agent double closing assignment of contract who will work with a new investor whose trying to get started thank you sincerely Garrett Collins