Do I use an assignment contract or purchase agreement?

This is not a situation that a RE agent will be able to give you proper guidance from the details that you have provided in your other post. You need to find a RE attorney to help you with this and with what you are wanting to do with the profits.

Karen

If you have an agent that is representing you and the buyer you will have the agent fill out the purchase contract. I'm not sure how you are using your compnay in the deal as well. Are you doing an assignment or just selling the property? We will need a little more information on how the deal is being put together to give you a good answer.

From what I get from your post is you're selling your dad's rental property with a agent. In this case it should be a straight forward transaction. Have the agent fill out the purchase and sales contract and then get a title company or closing attorney to close the deal.

He has posted on another thread additional info. He is wanting to run the sale thru his company somehow and reinvest the money (sounds like possibly a 1031) to lessen the taxes.

If it goes 1031, there will have to be a third party who handles 1031s and will take the proceeds of the sale until it is reinvested and the time limits will have to be followed, etc. If this is not followed to the letter, it will negate to 1031 protection. That is why I recommended getting an atty involved.

A regular realtor cannot handle that and may not be wise enough to realize that either.

Karen

I apologize for the delayed response, I wanted to speak with the agent before I replied. I am trying to do an assignment contract using my company to absorb the equity in the contract. I am not selling it for him, I am treating this like I would any other deal/person. I have a seller willing to sell for 71k and a buyer willing to buy at 140k. I explained to the agent that I am trying to do an assignment but she was unfamiliar with the process. So she is suppose to speak with her broker to see if he is familiar with these type of deals and requested that I send her any documents I might have so that she can have an idea on how to do this assignment. I'm thinking the investor disclosure agreement and purchase agreement with an assignee. Let me know what else I might need to send to her. Thank you

If you are just doing a regular deal, there is no need to even use a realtor and have to pay a fee.

You use your Purchase Agreement between you and your father (seller) and then an Assignment Agreement between you and the buyer. When the buyer signs my Assignment Agreement, that is when I collect my non-refundable assignment fee. (some people wait and get it at closing) I find that by getting it ahead of time there is less of a chance that the buyer will back out. I then give the buyer a copy of the Assignment Agreement and a copy of the original Purchase Agreement where he/she is taking my position as the buyer. (When you have quoted and agreed upon a price with the final buyer it will be the total of original contract plus your fee)

Take the original Purchase Agreement and the Assignment Agreement to the entity that will do the closing in your particular state (atty, escrow or title company) and you are "officially" finished. I stay in touch with the closing entity until the deal is done in case there are any snags that arise. Just good customer service.

Hopefully, this will answer what you are needing.

Save the realtor fee. Totally unnecessary.

Karen

Now I have a pretty good understanding of what steps I should take since you have explained them. I can't cut out the agent for the simple fact that the buyer was only granted the loan because of her influence and connection with the loan company. So her fee will have to stay in order to finalize the deal. The question I have now is, do I use the "Agreement to Purchase" contract or the "Agreement to Purchase and Sale" contract listed on Deans forms and docs? Also I noticed in the assignment contract it has compensation amount, this is where I would write $69,000 correct? I am getting it for 71,000 and the buyer has already agreed and qualified for 140,000 so the difference is 69k. Which leads me to my next question, in the purchase agreement between the seller and myself, do I input the purchase price at 71k even though it is suppose to be sold at 140k to the buyer?

You will use a Purchase agreement is your doing a double close with the property and you will use an assignment of contract is your wholesaling the house to the buyer. Performing a double close with hide your fee your making from the buyer and seller but will cost you money to get the funding from a company for the same day to make the sale, which would cost anywhere from $3500-$4000. Now using a assignment of contract cost you nothing but both parties would know what your making non the deal. And I think you need the buyer to pay cash to do the assignment of contract but don't hold me to that, but if its true then you will have to do a double close to make this deal work.

Reynold is correct on this. More and more facts are coming out now.

You cannot do an assignment on this with the buyer getting a loan. You will have to do a double close. So you need to do a Purchase Agreement between you and your father for the $71k (A-B part of closing)and a separate PA between you and the end buyer (B-C part of closing). The mortgage company MAY not issue the funds for the B-C closing until the deed is actually recorded at the court house in your name, so it may take several days. You will need to arrange for the funding of the A-B closing separately.

I know that you said your are doing this process for your Dad to avoid the taxes on it. You DO realize that you will also have capital gains taxes on this deal, right? Are you counting on your tax write offs throughout the year on your business to offset that?

Just FYI, Rule of thumb is to do an Assignment on a wholesale deal if your profit will be $20k or less. If more, do a double close.

Karen

I honestly appreciate the feedback. Now I understand how and when to do an assignment. Looks like the amount will require a double close. I have a meeting with a real estate attorney on Monday, he just so happens to be a licensed broker and agent as well. So the majority of my questions should be answered then. I will let you all know what process he feels would be in our best interest and what the results are. Thanks again