All Forum Posts by: Sharon Vornholt

@ Steve - I'm glad we can still do those closings in Louisville.

@ Finance Examiner - That's a good idea if the seller will agree.

You are quite welcome. It's always interesting to learn how differently things are done in other parts of the country.

Bill -

In my area the buyer purchases the title insurance if they want it - the seller doesn't provide it. I think that is where the confusion is. That is just what is customary here.

With that being said, if the seller wanted title insurance provided as a condition of the sale, I would most likely provide it just to get the deal done.

Sharon

My closings are always within 5-10 minutes of each other, with the same attorney (at the same location or course). Title insurance is always offered for both closings. Hope this helps.

@Bill Thanks for your input.

There are those folks that choose not to buy it for whatever reason.

The buyer buys title insurance if he chooses. There are some cash buyers that choose not to buy it though.

@Elisha - Don't give up. It just takes practice.

Yes it is also called a simultaneous close. It works best when the end buyer is a cash buyer. We don't have any problems in our area doing these, but I understand title companies often won't do them. This strategy doesn't work in all situations but it is one more tool that we can use in our area.

What Is An Assignment of Contract?

An assignment of contract is a term that wholesalers frequently use when they are selling their rights to their existing contract. This essentially means that you will be replacing your name on the contract as the buyer with the name of your new buyer. The assignment fee is the amount you collect from the new buyer or your profit in other words. All other terms and conditions in the existing contract remain and your new buyer is obliged to follow them.


Can Any Contract Be Assigned?

Any contract to purchase real estate is assignable unless the contract specifically states that it is not. A common misconception is that you need to write language such as “and or assigns†after the purchasers name to make it assignable.

There are however, some instances when a contract cannot be assigned. Most REO’s will have language in the contract or addendum that states the contract cannot be assigned. Your local board of realtor contract may also have language in it that will not permit you to assign the contract. As a wholesaler, it is very important that you read through and understand the contract that you will be using to purchase the property.


When Do I Get My Assignment Fee?

Although an assignment fee can be paid at any time, it is customary for it to be paid at closing. Like any other transaction, you would get a deposit from the new buyer and the balance at closing. Most buyers will not give you your fee upfront, because they would run the risk of “chasing†their money if for any reason the house didn’t close as planned. I hardly ever do assignments, but I know a lot of wholesalers that do and they all follow this procedure.


What Are the Positives and Negatives of Assigning the Contract?

When you assign the contract rather than doing a double closing, you eliminate that second set of closing costs. The assignment fee stated on the contract is the exact amount of money you walk away with.

The primary negative of assigning the contract is that your profit is disclosed to both parties. While they are legally required to perform on the contract, this does not mean that one or both of the parties won’t get upset and walk away from the closing. This would leave you in the unfortunate position of having to file a lawsuit to force the party that walked away to perform. Most wholesalers would simply just not want to do this as it is rarely worth the time and effort. I almost always do a double closing when I am wholesaling a property. I would rather pay a couple hundred extra dollars in closing costs for that second closing than to risk having this happen.

Just figure out what works best for you in your business and go for it!