Good morning BP,
This weekend I have verbally agreed with a wholesaler to enter into a contact at a set price, lets call it $50k. I will be seeking renovation financing for this property, so I will need the standard 10-14 day inspection period, and the financing contingency.
I received the Assignment agreement last night and wanted to run the language by some of you seasoned pros out there.
1. States the Buyer (Wholesaler) and Seller names and gives a legal description of the property.
2. "hereby assigns the rights to said contract": My name
3. "In exchange for compensation in the amount of $50k" (agreed upon PP)
4. "Assignee agrees to fulfill all terms, conditions, and contingencies of said Contract and to perform as required in good faith and within any time periods established by said Contract"
5. Signature Line
Here's my questions:
3. Does this language not sound like I am paying "$50k" for the assignment, and not for the property?
4. How am I to fulfill the terms, conditons, etc. of the Contract when I have yet to see it?
6. Has anyone seen a inspection clause and financing clause inserted into the assignment agreement?
I am hoping an experienced wholesaler or buyer can weigh in here and assuage my concerns.
I agree #3 doesn't make sense and may need to be re-worded.
Of perhaps greater importance, and related to paragraph 4, if the wholesaler in this case does not have a financing contingency and inspection period in his/her contract (and a financing contingency would be highly unlikely), I don't think you can add them via an assignment contract. The assignment just puts you in the place of the wholesaler on the contract for purchase and sale, based on whatever terms and contingencies he/she already negotiated with the seller.
You are correct - you need to see the original contract so you know exactly what you are buying with the assignment fee, and at what terms and conditions.
Sounds like you may be dealing with an inexperienced wholesaler. Caveat Emptor.
That's kind of funny, I saw this same exact to BS language in an assignment sent to me by another BP member the other day..
Yes, the assignment fee should be just the fee being paid, Above And Beyond the purchase price in the contract being assigned. In your case, $50k for the fee, plus the purchase contract price.
Yes, of course the contract being assigned has to be included/attached to the assignment agreement. Otherwise, you have no idea what you're agreeing to.
These guys can't be this stupid (can they?) so they're obviously doing this for a reason, that can't be good.
I know that you should definitely have whatever fee you're paying the wholesaler on the assignment contract - not what you'll be in on the property altogether.
Also, as Jeff said, make sure you understand the terms of the purchase agreement before you sign an assignment contract. Protect yourself by having your attorney check it out as well.
Thank you all for the quick responses. That is why I love BP!!
I have spoken with the wholesaler and believe we have everything worked out!
I understand that this forum is to help promote knowledge among real estate investors but what concerns me is the real lack of knowledge of individuals that want to call themselves REI's. It appears that so many people want to be a REI after attending a seminar put on by a real estate "Guru" or signing up online for real estate coaching. A lot of problems would be avoided if those same people took the time to attend a REI event ( a legit one) and network. Maybe take a couple of real estate courses. There is no such thing as getting rich quick with little or no money, unless you play the lottery.
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