AND/OR ASSIGNS - How to Use It and Get It Accepted!

Yes, typically the buyer you are assigning the contract to would want to see the property. It is actually not difficult, all you have to do is create your contract with the clause that says "PENDING partners' approval" -- it gives consent that in order for the deal to be fully executed, our buyer/partner would have to do their inspections.

Yes, this happened to me before where banks refused to pay my assignment fee. Thank God for Sully, who always thinks outside of the box, advised me to do a double closing! It was easy - now it is the commonality of my REI business. Thanks Sully!!!

Thanks I was wondering how all of this was to take place, you guys are the greatest. At first I felt a little afaid but I think with the information from this site and the wonderful people that frequent it will be ok

Thanks you have cleared up unanswered questions.

God Bless
Lavenia

So, when/if banks balk at an assignment fee, and instead you do a DC, how then is your payment structured into the deal?
Is this a situation where you submit an addendum, one that gives you the right to assign the deal? - or otherwise how is your payment structured ?
If addendum is the method used, it would be great if someone could share one such addendum, so we can see how our fee is structured into the deal when done this way.

I am getting this all worked out for when I approach the re broker again, and we either either get rolling with this, or I move on to find a broker/agent who will.
Anyhow - good morning all, its going to be a great day !

-Brian

You don't need any kind of assignment addendum if you are doing a double closing. You will need two separate puchase agreements. You will actually be doing one transaction with the seller (you are the buyer), and then another with your end buyer (with you as the seller). Your profit would come in the mark-up you put into the second contract. As far as the specifics of the transferring of funds, I am a little less clear on that. When you find a title/escrow company willing to do double closings, you could ask them for more details. Or, if you want to totally know what you're doing BEFORE you talk to the title company, there are a few people I know of on here that have done them recently that may offer an answer.

Hope that helps a little.

Rina

It is basically 2 transactions with 2 escrow open. For example: Contract 1 - You lock up a property for $500K, you then sell the property with a totally different contract (Contract 2) for $600K. When buyer from contract 2 funds the purchase, it will fund your purchase for Contract 1. The difference is $100K minus fees, you keep!

SULLY can give you a better insight on this. He actually created a blog on this.

I think you guys did an EXCELLENT job on explaining the art of the "double close" if you need any further explaination neednow, just ask, SULLY

Hello everyone,
I have a question ...

There are so many short sales right now at great deals. i have been reading here that you can do an assignment with a short sale. I thought that the banks want to pre qualify me before they will even look at my offer.

let's say I find a great short sale listed with an agent. I want to assign it. What is the process? If it is listed with an agent can I still make a purchase agreement with the owner? How would that work if the agent gets her % from the deal?

I am confused, very confused!

Once the property becomes a "short sale", the owner looses control of the property. If a sale is going to happen, it will need to be approved by the bank. If the bank will not approve an assignment, you could still do a double closing. In short sales, RE agents are paid by the bank.

Hope this helps, Al

Thanks Al, I think I got it now.

Hi Carol, Thank you for asking that question. I'm from California and you could imagine the massive list of short sales and REO houses that are priced below market value. I'm a newbie and almost ready to make an offer but yes, I'm afraid that banks will not accept the and/or assign in my offer.

Hi Al, Thank you for your advice about the double closing. Now I know what to do in case the bank will not like the assignment.

I'm glad I joined this site!

Brian, the only problem you could face is that this kind of "fake" double closing (where the buyer from the 2nd closing provides in fact the funds for the 1st closing to go through) is ILLEGAL in various states. And - if I remember my real estate agent education correctly - CA (where Sheila lives) is one of them - they banned simultaneous closings some 5 years ago or so.

If a title company schedules the first closing (where you as the buyer would have to come up with the $500K) let's say 3hrs AFTER the second closing so that you don't have to come up with the money, but then the first seller has a heart attack or just a change of mind and the first closing doesn't go through..... well the title company will be in hot waters and so will you.

The solution (in the states where it's illegal) is to use a hard money lender (= HML) who is willing to make a quick buck for funding your first deal ===> ask Sissy, she knows i.e. one in TX, who does his double closings in Ohio, because of these problems.... I guess in Ohio it's still legal. But be prepared that this HML charges usually a lot more points/fees for this short term funding. The one in TX for example, even if the funding amount is much lower than $100K, let's say $40K (which is seemingly for many of you guys here a common price for house deals) he still charges $5,000.

So, unless the deal you are looking at has enough equity resp. spread in it, these extra fees could be a deal killer.... especially if you have already negotiated a price with the endbuyer. So check the regulations in your state first, then line up the HML for this kind of situation.... and go and make it happen!

Good luck!
Conny

Hi everyone

I have had a pretty tough time getting a loan so I am going to do wholesaling for a while. I like the idea and it gives me a chance to participate with minimal risk. I've studied it long enough and am ready to move forward. I would like to seem as professional as possiable when calling about info from homeowners and was wondering if there is a list or maybe a script that some of you use to collect the right info? This topic in this forum is exploding right now as well, I LOVE IT!

You can find a script to use when contacting the owner in Dean's book. Also in Dean's list to the right under student resources.

Hope this helps.

I know that the word wholesaling have been used several times on this site. How does this concept work? Maybe there is another word that mirrors the word wholesaling that I am familiar with. Just need some clarification. Thanks and God bless.

Sandra

Hi Sandra,

Wholesaling is assigning properties. When you do an assignment on a property you are basically wholesaling the property.

Yep. Carol's right. Assigning is one way to wholesale.
Basically, wholesaling real estate is like wholesaling anything. You buy low (at 70% or LESS of MV) in order to sell to another investor, who will in turn repair the property (if needed) and either keep it or "retail" it to an end buyer.

You can wholesale properties by assigning them or doing double closings.

Here's a good thread on wholesaling from Elena.

http://www.deangraziosi.com/node/5585

Rina

Thanks Carol

Hi Carol, thanks for clarification. I do understand, I guess assigning and wholesaling are used alternately. Good looking out and God Bless.

Sandra

No Problem. Assigning just seems to be my nitch. I have no desire in investing right now I like the idea of locken them up and movin them out. It's a challenge for me and I love a challenge. Kind of like treasure hunting. What can I find today???

Thanks Rina for your speedy reply. Thanks Alena for that knowledgable piece of info about wholesaling, it was step by step, to the point and easy to understand. Take care and God Bless to all.

Sandra

What I found with the title company I use (who performs double closings in all 50 states) is they require both transactions to stand own their own. Meaning you have to bring in funds to fund the A to B (seller to assignor)transaction then your end buyer (C) has to bring in his funds to purchase the house.
They say anymore it is illegal to not have funding on both ends. I use someone who funds for me so I am covered on the funding part. I am basically renting the money for one day to buy the house in my name then turn around and sell it a few minutes or hours later.

Hi Anita.
I'm very new to real estate investing and just finished
deans course.I understand the and /or assigns concept and i
and decided thats what i will be doing on all my
foreclosure/preforeclosure deals.i'm currently working
on building my buyers list and getting out there and doing
lots of deals.I was a little scared at first but overcame
my fears.I put god first and realized that i can do all
things through christ who strenghtens me.I'm so anxious to get
started, i can hardly sleep at night.Even in this economy
the sky is the limit and i'm going for it.
Can we say millionaire!

Welcome aboard!! Yes we can say "millionaire" we love that word here!! and your right you can "do all things through Christ who strengthens you" Just stay focused and if you need help we are all in this together. Just ask!!

Hi Elena,

How can I profit from a lease option? I already have the assigning thing down

LEASE OPTION: I LOVE Lease Options, especially in this DOWN market that we are in. There are 3 possible ways to profit from doing a Lease option. #1 OPTION CONSIDERATION: This is the first way, this is the money you will charge the future homeowner for giving them the "OPTION" to purchase the home at a fixed pre-determined price. This fee is usually anywhere from 4%-10% of the purchase price. #2 CASH FLOW: Because your offering a Lease Option, generally the monthly payments will be a little higher than the area's market RENT, the BIG reason for this is you will be negotiating a certain amount of the monthly payment to go towards the purchase price, when the Option is activated. ex. If the AVERAGE RENT in the area is $1,400 you could charge $1,700 and $300-$400 of that will go towards the DOWN PAYMENT of the property, when the Option is activated. #3 CASH OUT: When your "Tenant/Buyer" comes close to the Option experation date, you SHOULD have been "HELPING" him/her with their "credit issues" along the way, they should be ready to get TRADITIONAL FINANCING from a bank, and remember they have a considerable amount of a DOWN PAYMENT from: the OPTION CONSIDERATION, and collecting that additional $300 or $400 a month, every month which also goes towards the purchase of the property, Now their ready to "CASH YOU OUT", meaning, if you bought the property on a Lease Option for $225,000 and you SOLD it on a Lease Option for $257,000 then you'll profit $32,000 at the END of the Transaction, that about does it, SULLY

Sully,

What if the person that you give the lease option to does not hold up to the agreement? What if they don't pay or change their mind about purchasing the property? I had a bad experience back in 1992 when my husband and I did a lease purchase on our property and the people totally trashed the place and never paid a dime. My insurance did not cover it because they were renting and we ended up letting it go to foreclosure. How can I avoid making the same mistake again?

I believe, if the "renters" do not go through with the lease/option, the money/consideration that they put down is yours! So, even if they did not purchase the property, you still made money, unfortunately in your case they did trash the place. But, atleast you could have taken the consideration $$ for repairs.

If I remember correctly, the lease/option Doc available on the site, does state that you can keep the consideration $$ if renters choose not to purchase. If not, you can always add that to the agreement.