assigning a deal

Thanks, Dallin. I think that since we would only know the numbers on the comps, then that would only be the place where we can do the calculations. My delemma is that the realtors that I come across with talks about FMV and as Investors, we lean more unto ARV. So based on the present thread so far, ARV will always be more than FMV unless there's no rehab cost, then FMV = ARV, correct?

Thanks,

Dan

Guys,
I'm happy to share a tool I use in my own business with you. After years of using the MLS, Online Comps and Tax/County "comps", I decided to bring all the comparable sales into one simple spreadsheet where I could assign a points system and let the "software" do the trick.

Well after 12 months... I got one kick @$$ piece of software. I am glad to run numbers on anyone's property to dial it in even better!

I won't post the link just visit my profile and my website is there. Or simply go to youtube and look up REI AutoComp.

To your success!

Randy
The REI Rockstar

Dan, your summation is correct. It would be nice if everything was very neat and precise, but pretty much everything about real estate investing is, to me, a lot like raising kids--messy, and just when you think you've got things figured out, they surprise you. But, ya gotta love 'em.

That doesn't mean that we throw calculations out the window. It sounds like Randy, who responded above, has a tool that may be worth checking out. I know I plan to check into it in the next couple of days.

Hello Dean,
I need a coach for 2014 to help me to start investing in real estate.

Merry Christmas.

Edward

Edward, I cannot think of a better gift to give yourself than that of education for success. I would recommend that to anyone reading here. I enrolled in coaching at the beginning, and it has led not only to my own success, but the opportunity of helping to create success for others--both of these are a great joy to me! To learn more about the official coaching program for Dean Graziosi, please call 800-860-8068, Option 2, and ask to speak with someone to learn more about the coaching program for Dean Graziosi--they will be happy to connect you with someone who can explain the program in greater detail.
Wishing you a very successful year in 2014!!!

Thebeassignment ofcontract to use is actually located in the forms and documents section of thiswebsitethrugh the link below:

http://www.deangraziosi.com/documents/Assignment-of-Contract.pdf

The biggest things to take into consideration on an assigment are:

1. Never try to assign a property that is bank owned, short sale or HUD.

2. Never assign he contract to anyone until after thy replace your earnest money.

3. Always write "and or assigns" after yourname on the contract ONLY IF te contract has "non-assignability clause".

4. Never show the contract to the initial seller as there is no need.

5. Make sure the tile company or attorney have the signed purchase contract and assignmentof contract before the deal closes.

Really great information from David above. One brief addition, remember that there are two sums of money that you should receive in an assignment.
1) A replacement of your Earnest Money Deposit
2) An Assignment Fee for your efforts
When you receive this money is negotiable. At the very least, you should receive your Earnest Money Deposit replacement at the signing of the assignment agreement with the cash buyer, but we strongly recommend that you collect either half or all of your assignment fee at that time as well. If you collect all your money upon signing of the agreement, you're done. You've been paid, and the buyer proceeds to purchase the property with no further involvement from you.

I have same question, sometimes the agent requires to put 10% deposit to make cash offer and fund proof. while the contract is already there (goes with bank rules, unable to modify to put a clause saying pay everthing at closing ...etc)how to get around of this?

thanks

This post is primarily a response to fuguiRE.
In regard to your questions about requirements for Earnest Money Deposits (EMD), your references appear to be in regard to foreclosed properties, rather than properties that are privately owned that have not been foreclosed upon.
Banks, lending institutions, and government agencies have a right to establish rules and policies for the properties that they sell as foreclosed properties. These rules and policies are not under the control of real estate agents, and these rules and policies can vary from one location to another. I am aware that FNMA (Fannie Mae) foreclosure properties in some areas either require a $1000 EMD, or even a 10% EMD. Most banks and institutions do not have strict rules on the EMD amount.
If you encounter restrictions that come from the seller on a foreclosed property, there is not much you can do other than to choose either to comply with their arrangements, or not make offers on those properties.
You should not find these same restrictions on For Sale by Owner Properties, Private Sales or Pre-Foreclosures. Real Estate agents like large EMD's, but that is very different than having a policy that dictates/requires the EMD to be a specific amount.
So, Bottom Line, if you do not wish to pay a large EMD:
1) If you are dealing with foreclosure rules and policies, then you will have to focus on other non-foreclosure properties, or foreclosures offered by less restrictive sellers;
2) If you are dealing with non-foreclosure properties, the EMD amount is negotiable, and you should make your offers at a lower, more manageable amount. Typically in the program, EMD's on listed properties are in the $500 range, and for FSBO properties, in the $10 to $100 range.

Thank you very much Dallin for your reply and valuable info. It is REO bank owned property. I assume REO is same as foreclosed property, correct me if I am wrong.

I am new to the system and just started reading both Dean's "30 Day to realestate ...cash" and "totally fullfiled" book. They are very very useful, I made a lot of mistakes before I read these books, these books not only teaching streagegy, but also excellent encouragement. often times, I use them as courage recharger whenever I felt down.

hopefully I can get a deal done after I finish the book

Fugui

1. Have a good buyer's list.
2. Find a good agent or agents.
3. Find properties that have repair needs, a motivated seller and are vacant.
4. Make your offers in the name of your LLC and/or Assigns.
5. Get a house under contract.
6. Contact your buyers with the info on the house.
7. Schedule your buyers to see the properties during the due diligence
period.
8. Sign an assignment contract with a buyer.
9. Get all paperwork to the title company.
10. Pick up your check.

This list is a general outline. There are other details within the steps. However, this should help give you a better understanding.

Fugui, thanks for your kind words, always happy to assist. In answer to your question, REO stands for "Real Estate Owned" and technically refers to the term used by banks and lending institutions for the properties that they own. I don't know that government agencies use that term, foreclosed property is the more generic term to use.
Thanks, Roy, for that list of assignment steps, it's good to have a check-off list to use.
For everyone else reading here, please follow Fugui's example and read Dean's books. Not only are they packed with knowledge and learning, they can also help with some emotional support in trying new things.

and taking time to answer my questions.

There are a lot of info to digest, I am bit slow but as long as I don't stop, I think I will eventually learn and get deals done. I saw this from Dean's book and many his/his student examples

Fugui

Again, thanks to Fugui and others for your positive words. We are anxious to be of assistance, and the program is intended to be a success for everyone who will apply it.
To all, I attended a meeting today that reminded me that there are many things we do as real estate investors, but unless we concentrate on doing the things that will make us money, we will not be successful.
Every investor, no exceptions, no excuses, must dedicate a portion of their work week to the following three activities.
1) Building and Managing your Cash Buyer's List (these are your money relationships, and need to be cultivated)
2) Finding Properties (this is your main marketing activity, if you do not have multiple methods of finding enough properties to keep you busy, you need to fix that NOW).
3) Making Offers (this is where the rubber meets the road, no offers, no money, hope that is crystal clear. And to quote the reverse--more offers, more money!!!)
Whatever else you do during your week, schedule time to do these three things!

Deal Timeline
1. Locate property: (agent, craigslist, zillow, FSBO, etc)
2. Research property:
a. FIX & FLIP - Determine ARV ensuring there is nothing cheaper nearby without a good reason and the sold comparables support the ARV. Determine approximate rehab costs based on pictures and general assessment of the property. Determine Max offer price by:
ARV – investor costs-investor profit – rehab costs – your profit = MAX OFFER PRICE

b. CASH FLOW - Determine Gross rents, and expenses (taxes, ins, management). Determine the NET CAP Rate by:
Gross Yearly Rents – taxes, mgt – insurance = NET Operating Income/Purchase Price = NET CAP RATE

3. Make Offer: Call listing agent or your buyer’s agent and have them draft contract for you: ($1K Earnest money, 2 weeks for inspection, 3 weeks to close with cash)
4. Get Counter Offer
5. Counter Offer Back
6. Get Under Contract
7. Market Property: Immediately after you get your counter offer accepted begin marketing property: (buyers list, craigslist, myhousedeals.com, etc)

8. Deposit Earnest Money: Within 3 business days of the final counter offer being signed by both the buyer and the seller, the earnest money deposit will need to be deposited in the title/escrow company of your choosing after the escrow agent looks at the contingencies and confirms the date you would need to get the cancellation in should you need to cancel the contract. Up until now there is ZERO RISK because even though you get a property under contract the most they can do if you don’t EVER deposit it is to cancel the contract!!! THERE IS NO RISK!!!

9. Due Diligence Period Expiration: before the end of the due diligence/inspection period you will send a signed notice of cancellation to the listing agent, your buyer’s agent if you are working with one, and the title/escrow company where your earnest money was deposited UNLESS you find a buyer to replace your earnest money. As long as you cancel the contract in writing ether via email or in person and you can prove that you got it to the agents and the escrow officers involved before the due diligence/inspection deadline there is ZERO RISK because the title/escrow company will always do what the contract says. THERE IS NO RISK!!!

10. Closing - Once the buyer replaces your earnest money you can assign the contract, double closing docs, etc, and wait to close.

I wanted to comment on the post above, Solid information David, and very comprehensive.

For ALL--I'd like to provide my personal approach to market the property. This is totally dependent on two things:
1) I have a solid list of cash buyers that includes at least 4 to 5 who are looking for basically the same type of property, and I have confirmed this through interviewing them.
2) I only focus on finding properties for that group of overlapping buyers--I play the odds on getting a property sold by making sure all the properties I place under contract match closely with what 4 to 5 or more people have told me they will say yes to every single time.

Once I receive confirmation that my offer has been accepted:
1) I contact my handyman to arrange to inspect the property--within 24 hours. My handyman will provide me with a list of repairs and a total in the form of a contractor type bid. He will also provide me with 20-25 pictures of the property.
2) I use this information to construct a marketing piece for the property. www.postlets.com provides a template, and you can upload pics and add attachments for the bid, comps, etc. It also provides you with a web address for the marketing piece that you can email or text to people.
3) My marketing plan--3 parts
A) Top of the Buyer's List--Receive a personal call, followed by an email and text of the marketing piece. These are the buyers I have pre-qualified by interview who are active and want properties that match this one. They get a little jump on the opportunity to buy and are informed that there are other interested parties to create a legitimate urgency;
B) Bottom of the Buyer's List--Receive an email that includes the URL for the marketing piece. These are people that I have not interviewed, or are less active, or whose needs I do not know;
C) Shotgun marketing--I place ads on multiple online sites, including craigslist, backpage, etc., plus websites for a couple of REIA sites that have classified sections, plus on the DG classifieds. I also notify my facebook and linked in contacts, etc. This is the "how can I let as many people as possible know about this property" approach. Regular reposting is necessary on some of these sites.

My marketing period continues until the day before my inspection period ends, at which time, if I do not have a commitment on the property, I will terminate the offer, in writing, citing the inspection clause as the reason. If I have done my advance work with my cash buyers, and focus only on properties that I know I have 4 or more cash buyers who specifically want this type of property, commitments usually happen within the first 3 days of the marketing period.

Hi Dallin,

That's really a good checklist. I do have a question regarding your handyman -- how much do you pay him for his services?

Also a few more:

1. For a wet double close, does it mean that you also have 2 closing fees -- as a buyer then as a seller (title insurance 2x)? For this process, does
the title company have a say as far as notifying the seller of the 2
transactions (full disclosure)?
2. Once you have the property on contract, how do you schedule the
inspection of the property by your buyers -- one at a time, only one day
for so many hours etc.?
3. How do you make a deal with another wholesaler who is selling it thru a
company that caters to investors -- what kind of process is that going
to be -- 3 closing and is that allowable?
4. Do you normally view the property before or after the offer is accepted.
For a 25:1 startegy, isn't it imperative to view the property after an
offer is accepted otherwise, the agent will get burned out.

Thanks,

Dan

Here are some answers for Dan:
I pay my handyman about $80 to $100, depending on distance traveled, his work usually takes him about 2 hours. This seems to work for my area, and I periodically also reward him with gift certificates to take his wife to dinner.

Dan:
1. For a wet double close, does it mean that you also have 2 closing fees -- as a buyer then as a seller (title insurance 2x)? For this process, does
the title company have a say as far as notifying the seller of the 2
transactions (full disclosure)?

Response: The double close does require an additional close, for which there will be additional closing costs to be born by the middleman. If you use transactional funding from Insiders Cash, the cost is 1% of purchase price, plus you will probably need about 2% to cover other closing costs, so calculate those into the deal. The end buyer is the one who will decide whether to pay for title insurance. No one has the right to share information regarding a closing with someone who is not a party to that transaction, so the details of what you make will remain private, at least until recording of the two transactions after the fact.

Dan:
2. Once you have the property on contract, how do you schedule the
inspection of the property by your buyers -- one at a time, only one day
for so many hours etc.?

Response: Scheduling opportunities for buyers to inspect a property can be challenging, meshing their schedule with that of an agent, but if they are very anxious, they will do their best to be accommodating. I have found that you usually have to go with what is practical in the moment, but I do try to schedule individual times for buyers to see the property, sometimes back to back with another buyer.

Dan:
3. How do you make a deal with another wholesaler who is selling it thru a
company that caters to investors -- what kind of process is that going
to be -- 3 closing and is that allowable?

Response: Sounds complicated, be sure you have analyzed all that is going on, and determined if there is a way to simplify--after all more costs equals less profits, perhaps the property could be put into an LLC or Land Trust and do one closing. Supporting paperwork could show distribution of fees to the intermediate parties. I suppose a triple closing would be legal, but I'm not an attorney.

Dan:
4. Do you normally view the property before or after the offer is accepted.
For a 25:1 startegy, isn't it imperative to view the property after an
offer is accepted otherwise, the agent will get burned out.

Response: I do not have time to view properties before making offers. I use the formulas for calculating MAO and also for calculating Rehab (I typically factor for $20/sf if I do not know anything about the condition of the property--my handyman then views the property, evaluates the rehab costs and tells me if I made a ridiculous offer or a solid one. Note: It is imperative that you not overload your agent. Find ways to streamline processes, and if you are making more than about 6 to 8 offers per week, you need to start adding additional agents. This is a good reason not to have an exclusive agreement with one agent.

Hi Dallin,

Thanks for responding to all my questions. It's inspiring to learn from your expertise specially the ones that are not normally done.

Again thanks -- more power to you.

Dan

First, thanks for your response, Dan, we're happy to help.

For all readers, if you are novice at this wholesaling process, it may seem that some fairly complex processes are being described in these forums. Our suggestion is that you try to make your first transactions as simple as possible, try doing an assignment before doing a double closing, things like that.
We want you to get your first transaction completed, and to do so successfully so that you will feel the new level of confidence that comes with that. Wholesaling transactions are low risk and less complex than fix and resell, etc. Learn the processes from simpler transactions, then graduate to the more elaborate ones.

Visualize a real estate purchase contract with just a few extra words added to your name as the buyer. This would look something like this: "Buyer: John J. Doe, and/or assigns." That's it. Seems simple, and it is. But, it opens up many opportunities for profits in real estate investing.

The "assigns" would be anyone that you want to pass your purchase rights along to. You have effectively locked up a property with a purchase contract. You can now go ahead and buy it, flip it, rehab and rent it, or any other strategy that's legal. But, you can also pass it along to someone else for profit, never buying it yourself.
Profiting by simply referring it along:
The simplest way to profit in this situation is to simply locate one or more buyers in your buyer database, show them the value in the deal, and take a referral or "bird-dog" fee for bringing the deal to them.

You assign your rights to the deal, and they go forward to closing, paying you your fee after or at closing. You profit handsomely, though you only had whatever earnest money deposit to lock up the contract at risk. By knowing who your buyers are likely to be before you contract the property, that risk is very low if the value is there.
Back-to-back closings for a flip sale:
You can also take on the purchase, immediately selling the property to another investor or a retail buyer. You would probably take this approach because your profits would be higher. After the mortgage crisis in 2007 and after, you can no longer use the funds of one deal to close on another in simultaneous closings. The lenders just won't allow it. However, you can explore resources for short term funding, maybe a relative, your own cash, or a hard money lender. You only need the money long enough to close the purchase and then the sale. This can be hours, but never more than a day or two.
Assignment Deals are a Great Real Estate Investment Strategy:
What is your role here, and how are you adding value? Simply, you have perfected your techniques, and can locate really great deep discount real estate deals before others, your buyers, ever know about them. There are many ways to get to a good deal early, and your value to your buyer customer is that you've got the property in your control, so they'll only get it if you pass it along.

You have two tasks to hone to make this work well for you. First, have a really good buyer database, with information about what each is looking for. Second, you learn and put into play strategies to locate great property deals before they're general knowledge. If you get these two things in line and operating for you, using real estate assignment contracts can be your ticket to real estate investing profits with little of your own money at risk.Jkimmoms

Hi Dallin,

I just saw your message#590 while I couldn't decide what method to use for the 1st deal and your message gave me very good solution for my situation. I also have a couple of quesionts:
1. If I get a deal from a wholesaler who is also real estate agent, then assign to my end buyer, is the assignment procedure still the same?

2. In Randy's message #591, last paragraph, it was mentioned "... Second, you learn and put into play strategies to locate great property deals before they're general knowledge..."

What if the end buyer wait until my lock up contract expired(the property can become general knowledge) then the buyer can contact the seller directly, this way, the end buyer can skip all the middle cost? I know that I wouldn't release the address before my buyer pays me the assignment fees, but if my end buyer want to buy/hold then rent, resale in future when price is up..., without release address for them to decide good /bad property location...etc many factors, it is hard for them to make a decision.

Do you or randy or Anyone has any idea how to handle this situation?

thank you very much in advace

I am a new investor and have deals back to back from home owners but just not sure how to go about the whole process of me getting paid. I have the contract to lock the deals but once I do that and find my buyer,how long do I have to start the title search are is that necessary for "AS IS" house?

Also,who opens up the escrow after I have the contract locked in? Do I ask the buyer to put $2500 into escrow to make sure the buyer is for real and if so,would the $2500 be toward their purchase?

I hope this is worded correctly

Thanks

FuguiRE, thanks for your reply and questions, glad to assist with that.

1) When a RE agent decides to participate in a transaction as a principle rather than as an agent, they have the same rights and obligations as other property owners (except that they have to disclose that they are an owner/agent in this transaction). If they are wholesaling, they have what is legally called an "Equitable Ownership" in the property by means of the signed Purchase Agreement. You should treat them like any other owner or wholesaler, the assignment agreement we would use is the same, and we need to protect our own rights in exactly the same way.

2) If I understood your question here, you are looking for ways to find properties that are not listed. There are basically two approaches to this: the first is to ask an agent if they have any properties that are going to be listed, but are not yet on the MLS. They often have one or more of these properties, technically called "pocket listings" and although they are really not supposed to be marketing the property before it hits the MLS, they may be able to give you a few hours, or possibly a day before they do the paperwork to list it.
The other method is simply to look for properties that are For Sale By Owner or that have not even been put up for sale, and there are dozens of ways, and MANY websites to look for those. If you will follow the link at the bottom of this post to my blog, there is an article called "51 Ways to Find Properties" that you should reference to find a pretty long list of other ways to find properties besides through an agent.

3)In reference to your concern about a buyer waiting for your contract to expire, then purchasing the property, although this does not happen often, it does happen. As a protection, I would suggest that when you initiate your relationship with a cash buyer, you conclude your first conversation by indicating that you would like to make sure that you are both protected in sharing future information by forwarding to them a "Confidentiality Agreement." This agreement also has a non-circumvent and a non-disclosure clause that protect you both. Since it is reciprocal, it protects you both equally, so it is a very fair and balanced, and logical agreement for both parties to sign. There may be a version of confidentiality agreement in the Student Resources area of this site, if not, if you will private message me with an email address, I can forward one. The cool thing about this agreement is, that once they have signed it, neither they, nor their business, nor their friends, nor their friends businesses can purchase that property for 5 years without compensation being due to you. You would, of course, need to be aware if they did, so you might want to file a Notice of Interest at the county recorders office on properties that you place under contract. If there is interest, I can discuss the notice of interest further for those posting here.

Hello Dallin

thank you so much for your time and valuable info. I will study each info you gave and tried to find everything you suggested. If I couldn't find, I will contact you. I heard email address won't show in PM but I will try.

Here is a simple outline for those that are trying to get in their mind the assignment process.

1. Have a good buyer's list.
2. Find a good agent or agents.
3. Find properties that have repair needs, a motivated seller and are vacant.
4. Make your offers in the name of your LLC and/or Assigns.
5. Get a house under contract.
6. Contact your buyers with the info on the house.
7. Schedule your buyers to see the properties during the due diligence
period.
8. Sign an assignment contract with a buyer.
9. Get all paperwork to the title company.
10. Pick up your check.

This list is a general outline. There are other details within the steps. However, this should help give you a better understanding.

Here is a simple outline for those that are trying to get in their mind the assignment process.

1. Have a good buyer's list.
2. Find a good agent or agents.
3. Find properties that have repair needs, a motivated seller and are vacant.
4. Make your offers in the name of your LLC and/or Assigns.
5. Get a house under contract.
6. Contact your buyers with the info on the house.
7. Schedule your buyers to see the properties during the due diligence
period.
8. Sign an assignment contract with a buyer.
9. Get all paperwork to the title company.
10. Pick up your check.

This list is a general outline. There are other details within the steps. However, this should help give you a better understanding.

As soon as you have both your purchase contract with the "seller", AND your Assignment Contract with the "buyer" signed, you can go to your closing agent/company and THEY will begin the Title Search.. You will get paid however you base it on in your contracts...

Hope this helps...

Dallin.... I had a quick question for you kind of based on your #2 response about finding "pre market" deals....

I have noticed recently on web sites such as Zillow & Trulia there is a search option for "pre-foreclosure" properties... What are these types of properties exactly?? I mean are they completely bank owned or are they just kind of a threat to the homeowner??
and....
The price they are listed for... Is this what is owed on the mortgage? Or are they basing this "pre determined" amount on actual comps and condition of the property??

Emattp, apologies for being slow to respond, some technical difficulty blocked my ability to respond for more than a week and that capability was just restored this afternoon. I've missed being a presence here.
Pre-foreclosure properties listed on any site will be the result of some type of legal action being taken by a lender to either stimulate payment or recover the title to the property from a delinquent owner. When a property owner becomes delinquent, after about 3 months the lender has a right to file a legal action, which is designated as either "Notice of Default" or "Lis Pendens." This is a public record action, and databases like zillow and trulia are able to retrieve that information to use in posting properties on their site. As additional time passes, the lender will be able to schedule a sheriff's or trustee's sale of the property, which is the final event in a foreclosure prior to the lender taking ownership of the property. Notice of Sheriff's Sale or Notice of Trustee's Sale generally is delivered to the owner about 4 to 6 weeks before the sale date, and the sale date is their last day to redeem the delinquency.
The seller may or may not be offering the property for sale. Some sellers are in denial about what is happening when in pre-foreclosure. Your communication needs to be with the private owner, banks or lenders cannot communicate with you until after a foreclosure takes place unless you have a release or information or power of attorney from the owner.
The amounts listed in terms of value on zillow or trulia are estimates of value, if the property is listed for sale, there will also be a listing price. Delinquent amounts may be listed as the amount in default, or the entire balance owed including delinquency, depending on how a particular county reports that information.
Hope this gives you some information to go on.