Assigning contracts

18 Replies

I'm trying to understand how to assign contracts. Once I'm in contract with my seller, and I find a willing buyer (say, willing to pay $5k more), how exactly do I "assign" the contract over to the new buyer?
[list]
- The new buyer closes on the property, as opposed to me, right?
- By assigning, my name is never on the final title or contract, correct?
- Lastly, how and when do I get my $5k?
[/list:u]
Does anyone have or know of any sample assignment contracts?

I'm so confused . . .:crazed: . . . please help me out on this one.

This post has been removed.

Hey All Cash - I think Johnny is a beginner and just trying to figure things out for himself. I think your reality check is great. It is not an easy thing to do, assigning, but when accomplished, a beautiful feat.

It is an art form. You create a deal that never existed. You have to be able to convince people that they should pay more then you were willing to. It is challenging, but rewarding.

Johnny, feel free to ask anything you want. We're here to help. :mrgreen:

BTW, how many properties have YOU PERSONALLY BOUGHT AND SOLD? This is not idle curiousity but prompted by others I have seen who have TRIED (and failed) to do assignments.

I'm new at this. As biggerpo said, I'm looking to figure things out. I realize you may know more than me, and maybe others, but I feel like you're talking down to me. :pissed: Everyone has to start somewhere. Thank you for your examples and explanation - i think it is useful. I just could do without the "talking down".

I do appreciate your help, though.

Johnny;
I wasn't trying to talk down to you although in re-reading my post I guess I could see how you could take it that way. There are LOTS of people out there who are willing to tell you FOR A FEE how easy everything is. I don't think anything in life is easy, just learnable. I don't think it's my place to tell you something is easy if it's not, and remember when dealing with real estate issues you are dealing with people's homes, (lots of) money and sometimes sticky legal issues.

My question was prompted by the fact that at our RE investment club I still run into lots of people who have just spent a bunch of money on a set of books and tapes and are always talking about all of the ways that they are going to start making money. Year in, year out they talk about all their grand scheme. When I ask them why they just don't jump in, buy a foreclosure, or a fixer uppper, or a cash flowing rental their repsones range from "too much work", "not my cup of tea", "not enough cash on hand" etc. Assignments are a way of making money, but like I said I think they take very specific situations to make them work out.

Again, didn't mean to talk down, just wanted to talk straight.

all cash

Great topic, I too am new and would like to learn more on this as well. I read a great deal and find that anything can be made to look good on paper, I use information I read about as a guide for this reason there is no way I take it as law althou it may be the case I want to allow for change. thanks

M

Originally posted by "JohnnyUtah":
I'm trying to understand how to assign contracts. Once I'm in contract with my seller, and I find a willing buyer (say, willing to pay $5k more), how exactly do I "assign" the contract over to the new buyer?
[list]
- The new buyer closes on the property, as opposed to me, right?
- By assigning, my name is never on the final title or contract, correct?
- Lastly, how and when do I get my $5k?
[/list:u]
Does anyone have or know of any sample assignment contracts?

I'm so confused . . .:crazed: . . . please help me out on this one.

Don't ever try to hide the fact that you are doing an assignment. I know here in Texas all the title companies I work with require that the seller sign the assignment agreement as well. Assignments can be done, but I prefer a double close to get paid. Just personal preference. There are times when an assignment is the only way to go.

Originally posted by "joelags":
Originally posted by "Anonymous":

A potential assignor finds a house, either a FSBO or on the MLS, makes a sufficiently low-ball offer that he thinks he can buy the house at, and then find someone else who will buy it for $5K more. Let's assume the house is on MLS and has been for 60-90 days at the time of contract, and you contract for a 45 day closing. You now have 45 days to advertise for and find a potential buyer, SHOW a house via sellers who CONSIDER THEIR HOUSE SOLD, get your buyer to contract and do all that at a price that is $5K HIGHER THAN THE RE AGENT WAS ABLE TO DO.

all cash

All Cash, In regards to this quote above, you mentioned, once you are in contract, you pretty much have up until the closing date to advertise the property. How is this advertising done? Through newspapers and other kinds of classfieds? I guess selling it as a FSBO would not work because technically you dont own the property.

The reason I ask is because I am in a similar situation. I have my first contract in and the seller is allowing me to advertise it before closing. The house is worth $105000, i bought it for $81000 and only needs about 2k in repairs which I will do right around the closing date. I want to sell it at market value or a little underneath MV and I cant do it through the MLS. What do you recommend?

Thank you

Well, if it's not a subject to deal and you don't have an end buyer for it, you need to start lining up your own financing to cover it.
Joel

No the double close and assignment are two seperate things. If you're doing a double close, you don't have to do an assignment. Like all cash said, you need to check in your state, but every deal in Texas that I have done has required that the seller sign the assignment. Most of the time it's ok if they do it at the close, some may require to disclose up front.

As far as it negativelyaffecting the deal, it's on a case by case basis. If you have a guy who's going to foreclosure auction on Tuesday and he's happy with the figure you told him he would walk away with, then you shouldn't have a problem. If you are embarrased to disclose your fee, or think the seller will balk, you might have a problem. That is why knowing the seller, getting the full story, and if you're working off MLS, disclosure is so important. It's better that everyone knows what is going on from the beginning. If any party feels like they are being taken advantage of or they don't understand something, your deal could go south. A friend of mine recently was at the closing table on a standard MLS deal. The title company whipped out that assignment agreement and the seller walked. The house is still on the market. Many people would say, wouldn't the guy rather have his house sold? Maybe, but to many people, if they think you are trying tog et something over on them, they will walk. I would.

Now, if he would have been up front with him, and explained that the assignment would not have much of an effect on the seller other than having to sign an extra piece of paper, he might have avoided that. In my opinion, it's better to disclose up front if you're stuck with an assignment and take the risk of the deal walking before too much effort is put into it rather than at the closing table.

I will always prefer to do a double close because, frankly, it's no one's business how much I'm making as long as they are making what they want too.

Depends on the title company but more than likely

I do quite a bit of wholesaling (mostly double closes but some assignments) in Texas and the seller has never had to sign the assignment. It may be because my title company doesn't require it, but the seller will still see the fee on the buyer's side of the HUD1.

Now the sellers contract will state so and so and/or assigns as the buyer, so they may get discouraged by this. At that point you would reassure them that you may assign the contract but either way it won't affect them getting their money.

Ryan, I'm glad you added a few words to this topic.

Folks, Ryan does exactly what this poster was asking
about at the beginning of the thread. And I wish he
had told you all a bit about how he markets his
properties.

I'm not saying that a brand new person could do this
in this way, but he has a lot of contacts, and when he
gets a house he gets on the phone and starts telling
them about it.

Frequently he sells it that way -- no open houses, no
ads in the paper. So his experience will be different from
someone just beginning.

Thanks Wes for your comments, and I would be glad to share some wholesaling principles for selling a house.

The number one key to SELLING wholesale property is networking. A wholesaler's success relies completely on two things, finding deals and your investor buyer network.

See if I am a rehabber I can find 5 or 6 houses every year and not have a good network. If I do rentals or owner carries or lease options, I can build a very substantial portfolio with just networking with a couple people. But if I am a wholesaler then my success will be completely dependent on my network. I will succed or fail completely depending on how strong my network is.

I sell 90% of my property now with my network. I usually can make a handful of phone calls and sell most houses I have. For the last year, I have been incorporating my wholesale properties into my website. It took me about a year to train my buyers to look on my website, but I still don't rely on it. The phone call to the investor that I know is looking in that area for that kind of house with that kind of work for that price is my number one selling method.

When I am looking at a house to buy, one of the first things I think about is who can I sell this house to and for much can I sell it to them for? Now over the last couple years, I have developed a database of over 300 investors in my city of 200K, but there are about 30 in that database that are serious buyers. I know I can call 2 or 3 of them and tell them about the house, and I have a very good chance of getting a contract to sell it within a day of putting it under contract (sometimes in a matter of hours). Most of these investors can close in less than a week, two weeks at most. I have investors now that call ME and tell me their looking for this type of house in this area for this much. I love it.

When I first started building my network, I did everything I could to search out and network with every investor I could find. I started out searching them out on the tax rolls and at the county courthouse records. When I saw someone working on a property, I would stop and talk with them. Whenever I would get a property I would put an ad in the paper, and normally I never sold it with the ad, but I was building my database for my future deals. I would search out people who bought HUD repos or REO's and network with them. When I came across my local REI club I thought it was a dream come true. Here's a gathering of people with the sole purpose of networking. On a slightly different note, I remember when I was getting started I had a house that I had actually rehabbed, and I called 6 different realtors to come over to talk about listing it. I was interested in listing it, but I was more interested in networking with them. I ended up selling it FSBO. lol. Two of the realtors, though, I still do business with today.

A wholesaler's success depends on two things. Finding deals and their network.

That was very well put. I started out wholesaling here in CA mainly because for one I had little money and two my credit wasn't good enough to get the preferred rates so I would lose alot of the profit to interest.

Finding deals and building a proper network is the key to wholesaling and thanks to that combination I was able to "graduate" to rehabing. Everyone reading this, if you take nothing else with you from here remember those two words. "NETWORKING" and "DEALS".

i am a house hunter in new jersey looking to build my list of investors to send deals to. if interested please private message me with your email/contact info so i can send you my property research analysis and you can see that i can find you great deals.
look foward to hearing from you