OfflineHello,
I'm a Newbie and this is my first post. Hopefully, I chose the correct forum. I am trying to organize the processes in my mind and I think I have a good understanding about purchasing a property 30-50% below FMV and then assigning the contract to another buyer (preferably a cash buyer). But, the process gets a little cloudy to me when and how the process of "Closing" actually goes. I haven't found it in Dean's books or in any of the forums so far. Can someone detail the closing process to me. I was a licensed Realtor so I know what happens at closing, but I can't quite grasp how it works with an assigned contract. Which parties actually attend the closing with the Title Company? Of course the original motivated seller and I gather the buyer who the purchase contract was assigned to. Does the investor (me) who actually locked up the wholesale contract and assigned it to the cash buyer (another investor) actually attend the closing? Are all three parties required to attend?
Thanks,
Newage8767
Always striving to move forward toward better times!
Verna (newage8767)
Thanks for the question. Just reading your paragraph shed some understanding for me. I bookmarked this because I think the responses will also help my understanding. Rick in Georgia
There are several ways to close. You can do a double closing, assignment of contract. With double closing, typically you will need money to pay for the first transaction with the seller. Some companies charge less than 3% for that. The assignment is more easier. Basically you can assign a contract for a fee.
"If you cannot do great things, do small things in a great way.”
Napoleon Hill quote
You are quite welcome! I never imagined my question would have helped someone else since I'm just learning myself! I am by nature a very organized person and I have got to make sure I have all my ducks in a row before I take action on anything. I hate diving into something just to hit a brick wall because I haven't done all my homework!
Glad I could help.
newage8767
Always striving to move forward toward better times!
Verna (newage8767)
Thanks for the response, but it didn't quite answer my question. I've heard about the double closings but right now for me that wouldn't work since I don't have the funds to actually settle myself on a contract. I would definitely have to do an assignment contract. But I wanted to know how the closing process would work when not doing a double closing.
As I understand it, I would need to ensure that the Title company used would agree to do assignment contracts and I would need to have a real estate attorney present to effectuate the assignment contract because a Title company legally can't do it. I think it has something to do with having to change the buyer from me to the assignment buyer.
newage8767
Always striving to move forward toward better times!
Verna (newage8767)
When assigning a contract, you the investor, will "lock up" the property with a purchase agreement. In the purchase agreement you have the right to assign the contact to a third party. Remember, that once this contract is signed, nothing can be changed in the agreement - it must be executed as it was written.
Once you have the agreement in place, you contact your end buyer and see if they are interested in the deal. You will show them the contract and the property. If they are interested, then you assign them your position in the contract for a fee that you both agree on.
You never close on the deal, you simply assign your position in the contract as the buyer to your end buyer for a fee. Once you have assigned your position in the contract to someone else you are done with that deal. If you decide to get paid at that point or at closing will dictate whether you attend the closing or not!
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Thanks! That is exactly the information I needed to know. But, if I want to be paid by the assignment buyer at the time of the assignment contract does that information need to be in the assignment contract? Why would anyone want to wait until closing settlement to get paid if they can get paid when the assignment contract is made?
I guess it would then be up to the assignment buyer to bring in the real estate attorney then? It is my understanding that the Title Company can not legally add or change the buyer names on the contracts and that is why the attorney would need to be at the settlement to effectuate that name on the contract? I may not have that exactly right.
Do most investors (the third party buyer) usually want to wait to pay the wholesaler investor (me) at closing or do they usually pay when the assignment contract is made? I don't want to have to attend a settlement closing if I don't have to. What would be the benefit of any wholesaler doing that?
So after I do the assignment contract with the cash investor, I would tear up the original contract between myself and the seller, right? And, because I have already informed the seller that I would be assigning the contract, the seller already agreed to having another contract with the third party, cash investor. Because I had the seller sign an agreement to that affect there is no way the seller can refuse to go through with the settlement at closing. Is that correct?
Thanks,
newage8767
Always striving to move forward toward better times!
Verna (newage8767)
I have a POF on a REO that I want to assign. My question is this: May I ask the bank to send me the closing package by e-mail? I want to do the B-C transaction first to use the end buyer's funds and then send the closing package back to the bank to perform the A-B transaction, thus using none of my money. Is this legal in Texas? Thanks in advance......Pete