$100k assignment fee
Hey guys, I am 19 years old and I currently have a property under contract for $820,000. The ARV is $1.3 million. My issue is, I want to make a $100,000 assignment fee. I already calculated that if the cash buyer buys the property for $920,000, he will still make a 32% profit if he sells for $1.3 million ( mind you, the ARV could be more). The issue is that I do not want the SELLER (not the BUYER) to know I made $100,000 at closing. I know that the title company can make a sellers side HUD and a buyers side HUD. But to be clear, I would love someone experienced to help me out with this huge transaction. I am aware that I can do double closing but in my state, which is Florida, you need a transactional funding company to fund the deal. They can make as much as 1%-3% off the loan and I will also pay closing costs. Plus, I do not want to hide my profits from the buyer, because I want to do future business with him. Thank you so much to whomever took the time to answer this.
#5 Wholesaling Contributor
- Real Estate Broker
- Naples, FL
Is this thread just a primer to sell a guru course to newbies? Or is it factual and you are screwing some unsuspecting owner out of a LOT of money? This thread debunks the BS that most unlicensed brokers claim they are "helping" a seller. Ever thought of treating people like family? Just curious......
#2 Contractors Contributor
- Severna Park, MD
Another thing to consider , there are not that many flippers or rehabbers that are going to gamble on a house at $850k Those high dollar houses dont sell fast and thats a lot of cash to tie up . I could buy 6 to 8 houses for that kind of coin . And spread my risk
Originally posted by @Account Closed:
I do not even want to say how much I have seen paid by people doing assemblages. But... four to fives time individual lot value is not unheard of.
A friend of mine's client did an assemblage land deal and pocketed $7+mln. Another friend had a client who over 20+ years bought land, stripped the mineral rights, and resold the land. He cashed out 3 years ago at $100mln.
@John Thedford Applying your logic, every investor in BP would be screwing "unsuspecting" owners. I think most homeowners know what they have. They are just not in a great position to negotiate given their financial circumstances.
A couple months ago, I closed on a estate sale. Initially, my intention was to rehab and sell the house. A week after closing, I decided to put it on the MLS because I couldn't find a decent crew to work on the project. I Closed on it for 85k and sold it for 127K. Would it have been any different if I decided to assign my contract before closing? or am I screwing someone over because I'm assigning my contract to someone else?
Originally posted by @Account Closed:
@John Thedford Applying your logic, every investor in BP would be screwing "unsuspecting" owners. I think most homeowners know what they have. They are just not in a great position to negotiate given their financial circumstances.
A couple months ago, I closed on a estate sale. Initially, my intention was to rehab and sell the house. A week after closing, I decided to put it on the MLS because I couldn't find a decent crew to work on the project. I Closed on it for 85k and sold it for 127K. Would it have been any different if I decided to assign my contract before closing? or am I screwing someone over because I'm assigning my contract to someone else?
You didn't screw anyone over. You dealt with a fiduciary who screwed the heirs over by selling at 67% FMV.
Originally posted by @Account Closed Applying your logic, every investor in BP would be screwing "unsuspecting" owners. I think most homeowners know what they have. They are just not in a great position to negotiate given their financial circumstances.A couple months ago, I closed on a estate sale. Initially, my intention was to rehab and sell the house. A week after closing, I decided to put it on the MLS because I couldn't find a decent crew to work on the project. I Closed on it for 85k and sold it for 127K. Would it have been any different if I decided to assign my contract before closing? or am I screwing someone over because I'm assigning my contract to someone else?
I'm sure most of them leave tens of thousands on the table with a thorough understanding of the simple steps they could have followed to realize that additional profit.
@Account Closed Care to share the property address?
@Jorge Reveron You have the answer to your question in your post. Simply have the title Co to separate the HUD. They cannot completely omit the assignment from both so if it's the seller you want to keep in the dark on your fee then just go that route. Don't overthink it. Good luck, sounds like a solid deal. I had a deal in November that we got for $37K and assigned to our regular buyers for $42K, then I asked him if he wanted to make $4.5K for nothing LOL!!? He said yes and assigned it to another one of my buyers for $46.5K. Property was worth around $60K occupied generating $1,700 per month with $6K in repairs needed. When you get deals like this it is hard for a seller to swallow a $100K assignment. But if the numbers work, knock it out the park man!!!
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Developer
- IKEPTIT Real Estate LLC
@Shawn Ackerman So your Mid West East Coast advice is just have the title company hide the $100k from the seller somehow. Is that accurate?
I love how everybody giving advice on this topic also has an anecdote that takes a couple run-on sentences but makes zero sense.
@Tom Gimer Thanks for the feedback man. Much appreciated.
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Developer
- IKEPTIT Real Estate LLC
Off the top of my head, that sounds like it's going to be tighter than you think and will be hard to move. Nice job starting so young. Keep at it.
I call BS.
I guess yeah the major assumptions in your breakdown are that you WANTING 100k, and then assuming that me as moneybags cash buyer is going to pay your ask for the contract. I personally would NEVER just go OK, I will pay that. On that size property, if you wanted $950, I come in at $875. Simply due to size and risk. a Bad roof on a 3/2 is $5000, a bad roof on a 5000 sq. ft house is 30k.
Wholesalers always start high so they have room to "negotiate" and still make a normal fee. I want them to make some $! But not 20% off of me. Its amazing watching the prices fall, its like a used car lot, where they just CANT take anything less then x... then you walk away, and suddenly there is room. too many saturday night guru tv shows with giant blurred out checks.
Let alone the ARV and rehab and all that. I think you will have a hard time keeping that contract asking price. and WHO CARES!!.. if you make $30k off it, thats still a homerun. Get off your 100k obsession, find a buyer who makes you a good profit, and RUN with it. bird in the hand and all...
Originally posted by @Tom Gimer:
You didn't screw anyone over. You dealt with a fiduciary who screwed the heirs over by selling at 67% FMV.
My guess is he's the one selling for a family member.
@Jorge Reveron Jorge - any updates on this potential deal?
Can I view assignment agreement