Assignment Deals and Real Estate Agents

Having an agent can only help for many reasons as long as you find one that fits you; Dean's book pretty well illuminates the advantages to having an agent or your team. BUT, no, you don't necessarily need an agent to do assignments (Wholesales). It just means you may have to do a bit more of your own legwork, and if it suits you to do so then it's really no big deal; there are advantages to doing your own legwork as well. I'm also getting started the same way you are, and I've already located some potential deals in my hometown (New York City) WITHOUT the help of an agent. Thanks to Dean's teaching, I'm able to do all the due dilligence I need to, so the only thing I'm really sacrificing is my time (time that I would probably just WASTE on something else if I weren't investing). Anyhow, I hope this answers your question; and I'm sure others on the site are going to offer you some more wonderful feedback. Good luck in all of your endeavors; don't let ANYTHING stop you!

You don't need agents, but having agents can bring you more leads than you can handle in your own market. Unless you have a big budget on promoting your company.

Having a REA on your team has it's advantages and disadvantages when doing assignment deals. A REA can run his comparables for the properties you're trying to assign and negotiate with the seller to get 30%-50% off FMV which could leave you with a bigger profit. And they can also handle some of the paper work for you while you're out there looking for more deals. If you don't use a REA for your assignments, then you'll have to do the comparables yourself, do the negotiating, don't pay a REA commission, etc. If you're going to use a REA, make sure you find one that does "investing" himself/herself or one that works with "investors". There is alot of REA that doesn't work with investors. Good Luck.

D'Angelo

If you do assignments, who pays the closing costs when it is all done?

I think I know the assignment process but if I`m wrong would someone clarify it for me. You find a motivated seller , find out how much they want to sell it for, Work out a deal 25 to 30 % below selling price, if they except, have them sign a purchase contract with and/or assign after I sign it, find a buyer on your list, then go to a double closing the same day, fill out assignment contract and sell to buyer 5 to 20k above what seller received.

Thanks to everyone for taking the time to respond to my query. If I do go with a REA for assignment deals, what would be the proper amount of compensation for them? Do they bill you for their services, or do you give them a percentage of the finders fee? And what would that percentage be? I have no problems giving the REA a piece of the action, even if they don't find the property, but if I do an assignment deal for a $10,000 finders fee, I don't want to shell out $5,000 for REA costs/Lawyer fees.

Thanks again for your time,

Walter

Yup, that's basically it twin55. Make sure your buyer or investor makes a profit too...make it a WIN WIN situation. All you have to do now is take ACTION by implementing the methods, learn from your mistakes and never quit! Good Luck.

D'Angelo

Be careful to get a sizable discount on the market value of the property, not the sales price (list price), if you want to wholesale the property. You will need to pass on a good deal to your buyer, and keep some profit for yourself. Also if you are going to double close, you will not need to put assignment language (and/or assignee) in the contract.

I wish you success, Al

WaltFox, their fees normally runs anywhere from 1% to 3%. It depends on the state you live in and also the REA. Good Luck.

D'Angelo

Hello, I am just getting started as well and am in the midst of working out an assignment deal, but the seller is represented by an Agent. We have been speaking and offered me a low price for the property. How do I proceed in a fashion that allows me to follow through with an assignment contract and get paid without having the realtor forfeit her opportunity in getting paid as well?

This is taking place in NH.

One other question: I do not really understand how people like us get paid at the end of an assignment deal. Where does our "10k" profit come from? Is the newly found buyer paying us?? Can someone describe more clearly the process in obtaining an "Escrow" account if need be? I am in the middle of a deal but i do not understand how i get paid...please help

The investors we deal with usually look for a 35%+ discount.

With an assignment, you're working with a privately owned prop and won't need a double-close. You don't take ownership but you instead transfer purchase rights to an end-buyer, so costs are less.

A double-close is for bank-owned/REO and govt-owned props since those props (usually) can't be assigned. The contract's usually a little longer, you actually "own" the property for a few hours, and have more costs than w/an assignment. If you don't have private funding, you can get same-day transactional funds. Might consider comparing fees from several transactional lenders like Tempo Funding (www.Tempofunding.com).

Assignment fees can vary. Check with your local REI clubs and investors. A start might be 8%+ of the sale price. Some investors charge a minimum fee, not just a percentage.

Good luck!

Thank you for the insight. Does anybody have any insight as to how I would include a Realtor who is represnting the property i am tryign to assign to a new buyer in part of the profit. The property i am looking at is hosted by a realtor. I explained to her my intentions of assigning the property to a thrd party buyer, however, she is confused as to how she would make out profitable in teh deal as well. THe property is a home on Lake Winnipesaukee in NH. I am trying to sell it for 406,000 where as I acquired the home for 397,000. So how would i acquire the 10,000 finders fee while incorporating the original host realtor as well?

Not that I've done an assignment deal myself, but as I understand it you make a deal with the seller for 397k and you have 30 days or whatever you work out with them to sell the property. You now have this time to find a buyer at your 407k asking price to make your 10k. The house sells for that and you get your money at the closing. You never own it and the agents fees come out of sellers funds. He would have to pay for them if he sold the house himself. You have to make sure that all of the right forms have been signed along the way. If I'm not right then I'm sure Rina or someone else will correct me. Good luck in all your deals.

The listing agent has an agreement with the seller for a portion of the sale price. The wholesaler writes a contract to purchase from the seller. The contract is written, giving the wholesaler the option to assign. When the wholesaler assignes the contract to another buyer, paperwork is included in the assignment package to sell to the end buyer for a higher price. The escrow company will close the sale using all the written instructions of the listing agreement, the original contract and the assignment contract. Yhe end buyer supplies the necessary funds to purchase the property as agreed on. The seller gets the funds that were agreed upon in the original contract. From those funds, the seller pays the commission to the agents, as agreed upon in the listing contract. A check is written to the wholesaler for the differance between the original contract and the assignment contract.

I appreciate your clarity in response. It has made the process ever clearer!!!

Do I need to drive around my neighborhood alot, or is there a better way to find houses that are being sold by owners

Hello,
I am hoping someone can help me, I am from ohio and i am looking for the correct paper work to make this process as seamless as possible. I hope someone is able to help me, the papers or docs i picked up from staples i didnt like and i want to make sure that i am legal when i flip these properties. I currently have three buyers and no houses so i am in need quick because i have three homes im looking at to possibly create this win win for them and me. Can anybody help?

Thanks for replying

Promeric

These postings are very helpful! However as REI's we should look to asking for/submitting offers of 30-50% of FMV. Thereby allowing a better compensation for our efforts. One must do what is necessary to obtain the Deal and to make it a WIN-WIN-WIN deal. Always be fair and transparent to all involved.

Also, Dante, thanks for your post, I see a lot of potential to the links that you have provided! I see potential use of these links, and hope to corresponding with you soon.

THANKS!!!! BRUCE.......

Does anyone know in which states is it not legal to do assignment deals?

Thanks,
Luciano

I have one more question. Would the commission (say 1% to 3% as in comment #9) for the REA be determined from the sell price of the house being sold, or would it come from the finder's fee.

Thanks Again everyone,

Walter

It would be determined from the sell price. REA commissions are paid separately from your assignment/finders fee.