Hello BP. I have been helping investors find properties to purchase for the last several months starting with my first profit made in June 2014. I have done about 5 more deals since. However, I have not been doing it the traditional "wholesaleing" way. I have been getting away with having my buyers verbally agree to pay my finder's fee or partnering with other wholesalers and splitting profits when I find them a buyer or find them a property. However, I would like to change or upgrade my method.
I have a property under contract and a buyer ready to purchase. I have my "Assignment Agreement" ready to send to the end buyer. However, I am a tad bit nervous because I am wondering how the buyer will perform. If I send the buyer my Assignment Agreement with the Option Contract (the contract between the owner and I) attached to it, the buyer will see how much profit I am making from the sale and will see that they could have purchased the property for less if they could get around me. So, do I send the buyer the Assignment Agreement first and then the Option Contract after they send me back the Assignment Agreement? Or just send them both at the same time?
Your option/purchase agreement is what you are assigning/selling. Why on earth would someone sign an assignment agreement and pay you money, if they didn't know what they were buying? Your assignment agreement obviously much have a price/fee that they are paying you, for a specific agreement on a specific property, so the assignment agreement by itself reveals your fee/spread. No way to prevent this with an assignment, only with a double close.
Ditto what @Wayne Brooks said. An assignment contract basically assigns your rights to an end-buyer to purchase the property according to the purchase contract between you and the seller. However, it also obligates the end-buyer to the terms/conditions in the purchase contract. Given that, I don't know too many investors who would sign the assignment contract without first reviewing the purchase contract. I know I wouldn't.
OK guys. Thank you so much for the quick response @Kyle J. and @Wayne Brooks. (don't know why my @ feature is not working)
I have never wholesaled before, but would it be out of the question to ask for a proof of funds to ensure the buyer can close?
No Michael, it wouldn't be out of the question.
But, it's an option, they buy it, what they do with it is rather irrelevant, the owner knows the property isn't sold.
Now, if it were a case of assigning a sale contract, there would and should be more concern about the buyer performing. The owner would go after the wholesaler, not so much the end buyer (depending on how the assignment was agreed to). Knowing that most wholesalers are broke means they spend money defending themselves and then would need to seek legal action against the end buyer, most likely they don't have the bucks to fight on two legal fronts at the same time.
I think most think they are conducting a no risk business, according to some gurus, but they have no idea.
Always know who you're dealing with. :)
Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com
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