Assigning a deal with over 20k assignment

17 Replies

me and my partner are about the lack of a deal where we could potentially make more than $20,000. I brought up that we could get transactional funding and double close on it to the end by or do they not see how much were making on the Deal. He wants to assign it but you don't want to show to end by her how much you lock the property down for and that he's paying you a $20,000 assignment. He brings up the fact that if it's a good deal it's a good deal and they shouldn't care how much were making or how far down we got the home locked in at. But I'm thinking about future deals that we sell to this buyer he's going to wonder how much were making. I don't see the problem with the double close as usually closing costs were it would be under $2000.

What are your thoughts?

I think it depends on the deal size.  Buyers of higher priced properties will more easily accept a larger assignment fee, like $20k.  Experienced buyers of lower and mid priced properties may be used to seeing an assignment fee in the $5-7k range, maybe $10k.  I see more wholesalers considering transactional funding in or above the $15k range to avoid disclosing their purchase price when assigning.

720-291-9100

would you double close on a property with 20,000 or more profit if the ARV was in the 400s?

Doing an assignment would mean that the buyer would be sitting across from the seller at closing knowing he's paying 20,000 for the deal when he could just go around and meet directly with the seller. This is what I imagine I would do if I was paying a $100,000 assignment and knowing that right across the table I could ruin everything by just saying oh by the way I'm the end buyer and they're just wholesalers I'll give you your price +$50,000. 

Originally posted by @Mike Watkins :

would you double close on a property with 20,000 or more profit if the ARV was in the 400s?

Doing an assignment would mean that the buyer would be sitting across from the seller at closing knowing he's paying 20,000 for the deal when he could just go around and meet directly with the seller. This is what I imagine I would do if I was paying a $100,000 assignment and knowing that right across the table I could ruin everything by just saying oh by the way I'm the end buyer and they're just wholesalers I'll give you your price +$50,000. 

 Have you worked with this buyer before?  I would think they should know if they double cross you like that their rep is going down.  Loss of future business for $20k? If they are a true investor I'd think they wouldn't want to take that risk.  JMTC ;)

speak to the attorney prior to closing and make the meeting with the seller and the buyer separate so they never see each other. Also notify he attorney that you want your piece of it to be kept confidential. The buyer doesn't recieve any info that will state how much you made, only what he bought it for. It's really very simple. As long as the buyer agrees to double close then everything should be a go. If the attorney wants to continue doing business with you it won't be a problem for him to not mention how much you are making during closing which would be abnormal in my opinion. 

So you would double close on it? 

Would you assign it? 

If we did an assignment we would need to disclose everything at the same closing table. Everything except the assignment fee of course  

Sorry for the horrible grammar in the first post. I was using Siri to transcribe it out. 

I think we should double close to hide our profit from the buyer. He thinks we should assign it. My concern is that the deal will fall through. If I can pay for transactional funding and a closing to make 100k I will. Why risk it. I need to convince my partner to double close on this. That's my hope anyway. I'm looking for a good argument to bring to him. 

you're probably not double closing anything. In many states double closing is now illegal.
the term Double Closing means that you don't use transactional financing and you don't actually put up any of your own cash (or your own borrowed money). Potato potato(e)...

Also, if I was the end buyer and I found out at the CLOSING TABLE !!! that you were making a 20k rip i would be totally pissed and I would walk. Don't care how big the deal is.

If I were you I would make sure your end buyer is completely down with you getting that much $$. Otherwise you're running an enormous risk of not only blowing this deal, but losing that client forever.

Blair Poelman, Broker in Utah (#9299425)

double closes are not illegal in Georgia.

If I were assigning you the deal, you would know before the closing table what you're paying. I've done this successfully before. 

If I was double closing the property to you, you would never see what I was making on it. So I take it that would make double closing the best option. 

Double close, keep your profits private. What you make should be known by you only and your partner in this case. 

People are unpredictable and it sounds like you don't have a long term relationship here.  Its better to close the deal and be safe than sorry. 

Let this be a standard on how you close all your needs with this investor.

Assign it.

Why are you trying to hide everything?   Did you not tell the owner you are planning to make profit?  Do you want to deal with Buyers who beat you up on your fee?

Recent Example from the end of March 2015.  

Purchase Price 20k, Seller Owed 45k, We sold it for 35k (15k Assignment)

All in full disclosure and Seller coming to the table with 25k to close.  Buyer knows what we made, Seller knows what we made and everyone left happy.   We closed in our office and right on our whiteboard was the address and 35k sale price. 

Seller hit up every online house buyer and had 5-6 offers on the property.  Ours was the highest.  (Complete Disaster of a house).

On another deal in January, I had a buyer question my fee.   $4500 on a $18500 Total Purchase Price.  He thought it was too high.  A quick conversation with him and that was no longer an issue.  Marketing costs A LOT of money.   

Anyways.   IMHO  Assign.   Assign.   Assign, and then next time Assign.  At least 99% of the time :)    

Taking ownership and resale only if you can INCREASE the spread, not if you are just trying to HIDE the spread.    (Ex Wholetailing or Buy and Flip)  

Good Luck!

Originally posted by @Stephen Chatto :

Assign it.

Why are you trying to hide everything?   Did you not tell the owner you are planning to make profit?  Do you want to deal with Buyers who beat you up on your fee?

Recent Example from the end of March 2015.  

Purchase Price 20k, Seller Owed 45k, We sold it for 35k (15k Assignment)

All in full disclosure and Seller coming to the table with 25k to close.  Buyer knows what we made, Seller knows what we made and everyone left happy.   We closed in our office and right on our whiteboard was the address and 35k sale price. 

Seller hit up every online house buyer and had 5-6 offers on the property.  Ours was the highest.  (Complete Disaster of a house).

On another deal in January, I had a buyer question my fee.   $4500 on a $18500 Total Purchase Price.  He thought it was too high.  A quick conversation with him and that was no longer an issue.  Marketing costs A LOT of money.   

Anyways.   IMHO  Assign.   Assign.   Assign, and then next time Assign.  At least 99% of the time :)    

Taking ownership and resale only if you can INCREASE the spread, not if you are just trying to HIDE the spread.    (Ex Wholetailing or Buy and Flip)  

Good Luck!

 I don't really understand the first example but the second is only 4k. I recently had a 4k assignment. There's no question about assigning a 4k profit. No one will ever question that. 

I have never dealt with the seller before. I have never dealt with the buyer. 

I have quadrupled my marketing to get this deal.  I would be taking ownership to increase my profits. I'm not hiding my profits so much as hiding the seller from the buyer(the person I have not done deals with before). 


 I don't really understand the first example but the second is only 4k. I recently had a 4k assignment. There's no question about assigning a 4k profit. No one will ever question that. 

I have never dealt with the seller before. I have never dealt with the buyer. 

I have quadrupled my marketing to get this deal.  I would be taking ownership to increase my profits. I'm not hiding my profits so much as hiding the seller from the buyer(the person I have not done deals with before). 

 1)  The 1st deal I explained we made 15k on a small price point deal, Assigned it, Buyer and Seller (Both of whom we did not know).   That's why we sign contracts. 

2)  IKR,  I was surprised this buyer (Who I deal with regularly) was balking at the 4.5k Assignment fee (which was disclosed upfront).  Afterward He felt it was high for the price point (4500/18500 is about 25% of the entire deal).  

3)  They don't need to be in the same room or close at the same time for an assignment.   I did a deal recently with 4 SELLERS.   They all signed the papers in front of a notary, dropped them off the day before closing, and the buyer closed himself at the title company later that day.   (even brought me my assignment fee check back)

You don't need to double close to keep buyer and seller apart.  

You don't need to be at closing.  

Your title company can keep them apart if you wish.   But I don't see the benefit to it....   Why would you want to keep them apart?

That is the creative answer I was looking for. 

Show the value to your buyer. If they are worried about your profit, then you want new buyers all together. Tell them if you buy the property for $1, it doesnt mean they get the advantage of your negotiating skills. You sell your wholesale deals for as much as possible and that is simple a math equation. Train the buyer to see your value and the price will never be an issue. 

@Mike Watkins Mike I really think you are overthinking this one lol. It doesn't need to be super creative or anything like that, do a double closing and its as simple as that. As I stated in my earlier post, the attorney has no obligation or pressure to tell anybody how much you are making. Ive been at the closing table with the buyer and the seller during a double closing and no one knew what I made. I knew EVERYTHING, but it wasn't everyones business as to what was in it for me. As long as everyone gets what they want I don't see the big issue here. If you need a good attorney let me know.

@Mike Watkins  stated your margins are your business. If it's a deal with meat on the bone somebody else will buy it it this guy doesn't. I see many builders and rehabbers hitting occasional home runs and they don't give away the finished product but sell it at market value.  You'll need those home runs for the deals that go south.

Your buyer is either unsophisticated or playing you but if he doesn't want the deal just get another one.

Cheers,

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