Assigning A Contract: Who Can See What?

Question

If I wholesale a house to another investor and assign the contract to the investor, what information is visible to the investor and the seller?

For example, can the seller see the name of the investor who is buying the house, and vice versa?

What about the prices? Can the seller see the price the investor is paying and vice versa?

Sonny Ngo · Answer

@Brandon G.

Hi Brandon,  great question.  They will see everything on the HUD if you do an assignment.  The HUD has a long list of fees as you may know, and your assignment fee will be visible to the seller and buyer.  However, you can do a double closing if your fees is over 10k because it will avoid a lot of issues with the seller.  My suggestion is if your fees is over 10k, you should do a double closing or simultaneous closing.  Also another piece of advice that i 'd like to offer you is to choose a good title company.  Some title companies will not be comfortable with you making 30k on an assignment fee.  Who are they to tell you how much you can make and how much you can not make?  At the end of the day, don't let title companies tell you how you should run your business.

Stephen Brown · Answer

@Brandon G. Generally speaking if you assign a contract both the buyer and seller will see your "assignment fee" on the hud statement. The buyer will also be able to see the name of the person selling the house.

If you want to keep this information confidential, then you should do a double close. This will generate two separate transactions:

A to B (Your Seller selling the property to you)

B to C (Your Buyer buying the property from you)

This way your buyer will not know how much you got the property under contract for, and the seller or buyer will not know how much you are making on the transaction.

Generally speaking if my assignment fee is less than 10K I will just use an assignment of contract, as this way incurs less closing costs.

If my assignment fee is greater than 10K I will typically do a double close to keep these numbers confidential.

Because if the seller, for example, knows I'm making 20K+ on the transaction, the seller might not like that.....get cold feet....and back out of the sale. So in those situation doing a double close is just safer.

Josh James · Answer

Please do not ever try to hide your wholesale fee from either buyer or seller. Explain to them how much work you put into the deal. If they still do not understand, they are probably the type that do not like realtors too. Not a lot you can do. But never compromise on morals. As an investor, if I buy from a wholesaler, I want total honesty. If the wholesaler cannot be forthcoming of their fee, I have to wonder what else might they be witholding?

Josh James · Answer

Either a title company or an attorney can close a transaction in Texas.

Jay Hinrichs · Answer

@Ned Carey

Not correcting you just pointing out the geographic difference's and it tends to be in my expeirnce.. WEst coast from continental divide west close the same way.. Mid west is both title co and closing attorney then East coast  where the properties are much older ( IE created in many instances a hundred years or more before any west coast properties. So title is more of an issue.. Plus we don't have title abstractors.. We have title plants at the Title and escrow companies and they are the big boys.. FATCO  Fidelity, ( all of Fidelities children)  So title can be done in a matter of hours.. If your a top tear client on the west coast you can call in an order at 8 am and have full prelim and title commitment by lunch no problem.  When I do my deals on the east coast its for ever getting title a little frustrating sometimes but it is what it is.

Kris Haskins · Answer

Hey Brandon, this is a great topic, I'm glad u brought this up.  I have coaching clients ask me this a lot.  They ask:  when the seller signs the hud and sees my assignment fee on the hud(which they will), what happens when they ask me about it?  you can ie. tell the seller that's your fee, OR merely tell them that's ur construction draw on the house.  I get that question very frequently, but the truth is, the seller rarely even cares because their getting the money agreed to them.  If this info helps in any way, pls vote for my post....

Account Closed · Answer

Brandon, if you're working with a seasoned investor he won't mind paying you an assignment fee. Your seller will see who is buying the property but they don't usually have to see the buyers closing statement which will have your assignment fee listed. As Pete said as long as you're upfront about everything there shouldn't be any problems.

Good Luck!

Brandon G. · Answer

@Pete T. I hope I did not give the wrong impression. I want to clarify that I don't even have an intention of becoming a wholesaler, and so I likely will never even assign a contract. However, I am in the process of learning real estate investing. I know nothing and want to learn as much as I can. Therefore, to me, it actually does matter.

Account Closed I appreciate the info!

Sonny Ngo · Answer

@Stephen Brown

I concur with Stephen.

Stephen Brown · Answer

@Brandon G. Double closing is not illegal in Texas. As @Sonny Ngo said you just need to make sure you are working with an investor friendly Title Company.

I have come across certain Title Companies in Houston who would not do double closings, not that it was illegal, it was just their company policy......or so they claimed.

Assigning A Contract: Who Can See What?

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