Wholesale Assignment Question

2 Replies

I am beginning to wholesale in my area and I am unsure on something I thought about concerning the assignment of a contract. Here's an example I was thinking about:

1. Wholesaler finds property with an ARV of $140k

2. Estimated repairs needed come to $25k

3. Wholesaler obtained signed memorandum for contract; seller signs purchase contract for $56k

4. Wholesaler's assignment fee is $15k

Now, if a buyer cannot put the entire fee of $15k in escrow with the title company at the time they agree to buy from the wholesaler, can he or she put a portion in escrow (say $3000) and provide a promissory note for the remaining amount to the title company?

How is this structured? Examples please.

Guy,

At a minimum, I would get a portion of the assignment fee when the buyer signs the assignment contract (my RE attorney wrote my assignment contract to have 25% of the assignment fee placed in escrow at time of signing the assignment contract).  The balance would be placed in to escrow right before the close (when all funds need to be in place).  If all contingencies are removed (per the original contract) and the buyer fails to close, they are at risk of losing the 25% of the assignment fee they put down.  This should be sufficient incentive for the buyer to follow thru and close.  I think this is a reasonable and fair way for all parties to handle the transaction.  Hope that helps!

Mark

Originally posted by @Mark Gagner :

Guy,

At a minimum, I would get a portion of the assignment fee when the buyer signs the assignment contract (my RE attorney wrote my assignment contract to have 25% of the assignment fee placed in escrow at time of signing the assignment contract).  The balance would be placed in to escrow right before the close (when all funds need to be in place).  If all contingencies are removed (per the original contract) and the buyer fails to close, they are at risk of losing the 25% of the assignment fee they put down.  This should be sufficient incentive for the buyer to follow thru and close.  I think this is a reasonable and fair way for all parties to handle the transaction.  Hope that helps!

Mark

 That was perfect. Makes sense. Thanks for the assist...

Join the Largest Real Estate Investing Community

Basic membership is free, forever.