Is contract assigning is legal in my state?

I am attempting to assign my first deal tomorrow but I do not have a RE attorney involved. Will I be able to do it without one? If not how should I go about finding one? I cannot afford to pay an attorney right now (that is why I am assigning contracts so I do not know how I can make this work?

when i make an offer for a house, at what stage i should let the seller/owner/broker, i'd like to have an reassign clause?
when i pay downpayment for a house i am interested in reassigning, how can i make sure i won't lose my money or pay any penalties in case i dont reassign the house and just want to cancel the deal?

the assignment clause in the offer contract when you present it and/or before they accept it. After that point, they have no duty to change it.

Fist let me tell you I have been a full time investor in Oregon since 2005 and have closed many deals including assignments, short sales, rehabs and so forth.

I am SOOOOOOO sick of Oregon laws! If you read the statutes very closely, you CANNOT activley participate in real estate (not even one) as a profession UNLESS you have a license. As well you can not actively MARKET for real estate unless you are licensed and registered with the Commissioner as a marketing company.

When it comes to assignments, that used to be my sole basis for transactions, and I did many, until all the Title companies and lenders refused to allow them any longer. I could not do assignments any longer and my business faltered considerably.

I focused on Foreclosures primarily, so most of what I speak is in regards to foreclosures and short sales.

I went to Option To Purchase and Sale Agreements and hit a brick wall in Oregon! I was able to get it past my Attorneys and Title Companies with the proper disclosures, was able to get a couple of R.E. Agents on board, but the majority refused to even talk about it. And of course when I went to sell the property (most listed with an Agent), no one was interested.

The moral of this is Oregon does not like investors and have made it nearly impossible for an investor to particpate in Real Estate with creative real estate investing.

DO NOT beleive what the Gurus tell you, what works in Florida DOES not work in Oregon.

In Oregon even one transactions constitutes real estate activity, and you cannot participate in real estate activity in Oregon as a profession unless you have a license. WHAT A BUNCH OF CRAP! Also if you read the Statutes on marketing, you cannot market for real estate as a profession unless you are registered with the Commissioner as a marketing company!

Double closings are not allowed by title companies and none to my knowledge will do them. Good luck with that one!

Option to Purchase and Sale Agreements will work if you have proper disclosure in them to all parties in the transaction, but you will play hell getting R.E. agents and lenders to agree with them and find Buyers.

So I guess in Oregon the only ones allowed to invest in Real Estate is Realtors unless you have or have access to large sums of cash, your cash!

Don't beleive what the gurus tell you, what works in Florida does NOT work in Oregon!

Hi Everyone,

I just finished Dean's book (which was one of the most enjoyable books I have ever read) and I am ready to get this started! Before embarking on this journey, I would like to check if anyone else on here is doing this in the states of Virginia and Pennsylvania? If possible I would like to save time (and money) and find out about the legality behind these contracts that are provided for our use on this website (whether they documents need modified or not). The first property I'm looking at is a 4-plex and I would like to use the no money down method (contract assignment preferably). This particular property is located in PA and I was wondering if the state of PA legally allows one to do this. Any help and suggestions would be greatly appreciated. I thank you all for your input!

I agree that Dean's book is very exciting and enjoyable. In response to your question on Assigning Contracts where you live, it is pretty much legal in all areas to sell something you own. An accepted offer becomes a contract which you control (own)and by definition you can sell that contract to another person who then will execute that contract. It is done in business all the time. The problem comes in when you try to explain this to a Realtor. We often times do not explain it correctly. We are not selling the house, but a contract we own to buy the house. Once we figure out how to explain what we are doing, it becomes easier for Realtors and others to realize it is a great way to do creative real estate. Regardless what the agents say, keep trying to explain it correctly and you will find the help you need.

Thanks for the input Rich,

I'll keep this in mind when shopping for Realtors and Real Estate Agents. Hopefully I'll be able to find one that has experience with dealing with investors and contract assignments. Thanks again

I cannot tell you how many times I have heard that AoC is illegal. If you look at some of the other posts here in the forums you will find that they are not illegal because you are selling your interest in a contract (offer) not the property itself. This type of selling of contracts is done every day in business. If you are selling a house for someone else without a license, it is different. But, you are not. You are selling you contract to buy the property at a given price for a given period of time.

Usually after some questions I find that the process was described incorrectly to the Realtor. They think you are trying to sell the house before you own it, etc. If you are careful to explain that you are selling your right to buy it to a cash investor, who by the way, will close at which time the Realtor will receive their commission. Good luck and keep working.

Hello,

I'm new to this site and have finished the book Profit From RE TWICE. Also have 2 cash buyers that want to work with me. However, I have a question before I move forward...

In the book Matt Larson says when doing Assignments make sure the house isn't bank owned. The reason is that some banks will not let their clients close on a contract that is not written in their name. Now my question is does that pertain to investors that need financing only? Because my investors are cash buyers that don't need financing...So does that mean I can do REO's, Short Sales, and Foreclosures ?

Any feedback...I would be so grateful!!

Answer for Roads; After a lot of research from RE Attorneys, I did find out that Assign. of Contract is illegal in Calif.

Andrew S

I would say that if wholesalers are making up real estate contracts and amending them, they are acting as real estate attorneys more so than real estate agents, and I think in a legal dispute judge would agree. But, they are acting as real estate agents, too. Think about the functions of a real estate agent and and real estate attorney, and they do what wholesalers often try to do on their own. I would recommend that no body do what is promoted in Dean's books without the help of agents and attorneys, and I think that Dean would agree.

The truth is,

> Agents certainly know that other sorts of contracts and amendments are used in the industry other than the ones they use. That's like real estate 101 - basic training.
> It is they that are only allowed to use the ones promulgated by their state, not the wholesaler,
> They are not the only ones that can draw up or amend (by adding "and or assigns"), a contract
> The state promulgated contracts cannot be amended with "and or assigns".

I would say that wholesalers, investors, real estate attorneys and real estate agents should work in cooperation with one another as needed.

I have absolutely no doubt that most professional investors, including wholesalers & Dean himself, have their own contracts that they have had drawn up and approved of by attorneys. They use those instead of ones that are promulgated by the state, and there's absolutely nothing wrong with that. The real estate agents just get peeved because they can't help you except for in certain roles. They should refer you to an attorney rather than getting peeved.

I understand that an "assignment of contract" is legal in all states and that you are selling your interest in the property but my question is, for tax purposes how do you include this income when you file taxes? It is not Capital Gains if you never have ownership of the property right? Is it considered Earned Income? I guess I will have to talk to a Real Estate CPA but I would appreciate any qualified response

I found a couple of great properties and want to get them under contract. I'm in California and my RE agent says that I can do an assignment (my name/and or assignee) as long as I disclose everything (for example, that I'm making a profit, wholesaling it, etc). My question is, how do I specify the purchase price? I want the seller to get one amount and the buyer to get another amount, so that I can get the difference of the two amounts. Which amount do I use as the purchase price? Do I need another agreement, like an assignment agreement that indicates who gets what amounts? If so, is that when I need to use a RE attorney? Also, who pays for the closing costs and home inspection?

you need to use a purchase agreement AND an assignment of contract both of which are available on this site. if you are just assigning, your end buyer will pay for closing costs when he closes....as far as inspection ...dont know

Thanks for your reply, JGL125 ~ thanks for letting me know that I need to use both the purchase contract and the assignment of contract. I was able to find a copy of both contracts on this site, so I appreciate your help.

This is my first assignment of contract, so I'm not exactly clear on the procedures. Below is what I understand from Dean's books and DVDs, and the comments in this forum.

I'm thinking that either (or both) the seller and end buyer will pay for the closing costs, and the end buyer will pay for the inspection.

Also, I'm not sure which price I write on the purchase contract? I'm thinking that I should use the price that I want to purchase the property for since that's the contract between me or my assignee and the seller. Then, I'm assuming that the assignment of contract should indicate the purchase price that the end buyer will be paying for the property. The difference between the two prices, which will probably need to be specified/disclosed, will be my "assignment fee", right?

For example, if I'm purchasing the property from the seller for $100k, then this is the amount that I specify in the purchase contract. Then, if I'm assigning this contract to the end buyer for $125k, then this is the amount I specify in the assignment of contract. I would probably need to disclose that the $25k difference between the two prices is my "assignment fee".

Finally, to make sure everything is done legally, a RE attorney should be used, preferably through the title company. I'm hoping that the RE attorney fees will be included in the closing costs.

Am I understanding this assignment of contract procedure correctly? Will this work for REOs and short sales?

I believe that the assignment of contract will only state the amount of your fee on it...what you are doing is selling your rights in the contract to your end buyer and the assignment of contract binds them to the terms that you agreeed to with the seller in your purchase contract...the buyer knows that they are paying you to get the property....if you were making a whole lot more (10K and up) you may want to hide the amount you are making with a doulble close

Your assignment contract should state the purchase price as stated in you purchase and sale contract with the seller ANS show your assignment fee.
Example:
Purchase and sale contract amount $100,000 your assignment fee is going to be $10,000.
Your assignment contract will state:
Buyers price $100,000
Assignment fee $10,000
Total due at closing $110,000

Take both contracts to the title company or attorney and set up a closing date.

Never "hide" anything from your buyer. If your deal is so strong that you can make a large assignment fee, so be it!!
Always practice full disclosure. If you feel you have to "hide" something, you are not doing something right.

This will not work with REOs and short sales. On those you can double close as long as there are no seasoning issues. You will need a strong POF letter when making offers (if you want then accepted anyway!) on REOs and Short sales. Also,you must know how to close them using Transactional funds or an LLC or a trust or simultaneous close them.

Michael Mangham
MD Home Acquisitions LLC

Thanks!

RENinja

Thanks for your detailed reply, Michael. You clarified the assignment of contract procedure for me. I agree with your suggestion about disclosing everything to the buyer. My RE agent/broker advised me of the same thing, and in fact told me to use full disclosure with all parties. I had intended to do so.

You brought up some other excellent points for me to consider and learn about. For instance, can you give me examples of seasoning issues that I may run into when double closing? I'm not sure how strong my POF letter will be, but I know I'll need to learn how to close using transactional funds. I've heard about Coastal Funding and I'm considering using them for my transactional funding. Have you worked with them before or can you recommend another transactional funding company?

Also, what is a simultaneous close? Isn't it the same as a double close? If not, what's the difference?

I am in the success academy and currently building my power team. Following is an email I sent to an agent I wanted on my team. Note that she gets paid the usual real estate agents commission for selling a house, but she wouldn't have been able to sell it in the first place if it weren't for us working together. Also a little nugget of good info my AMAZING coach Randy taught me was that most agents will want an exclusive agent agreement to protect them from you taking your business elsewhere too soon. So when you sign one, you can specify the area your agent will be representing you in, from a whole state down to one house. There will also be a term that should be no more than 6 months and you HAVE to check and be sure they have not listed any additional compensation other than the selling commission shown on the MLS. By the way she DID join our team.

I would like to tell you a little about Mr. Purple Real Estate Solutions. We are a partnership of investors looking to invest in east TN including but not limited to Cleveland and Chattanooga. We plan on doing several deals in the area each month and would like to bring this repeat business to you as an agent.

As an incentive for you to work with us, I will be offering referrals to you on an ongoing basis. For example, if I have sellers who do not want to work with me on a deal or are trying to sell a home on their own, I will be referring them to you. I will also refer real estate investors who do not compete with my target market and are looking for a good real estate agent. There are enough deals at any given time that many can be in the business and make a healthy income.

You will not be working for free, you will be compensated as any agent would who represents a buyer in a transaction. We get paid by selling the deal. If we don't want the deal our investors will purchase our position in the contract. We use this technique because of how much time and research we will invest in the property.

As a real estate agent we will need you to,

•Find “pocket listings” and notify us about them before others know
•Show pocket listings and other properties to us or our business partners
•Pull accurate comparable for these properties
•Gather any other property details we may need
•Present low ball or creative offers to sellers in a favorable light
•Offer referrals of people who can help close deals quickly and effectively
•Refer people on an ongoing basis, such as other real estate professionals, buyers, sellers, or renters

As we are just getting started we are seeking local referrals to professionals in the following fields,

•Real estate agents
•Mortgage brokers
•Title or escrow officers
•Private lenders
•Hard money lenders
•Appraisers
•Handymen
•Contractors
•Licensed property inspectors
•Property managers
•Accountants
•Real estate investors
•Real estate lawyers

Thank you for your time, and we look forward to doing business with you in the future.

when you double close your buyer does not know how much you bought the property for, only how much they are buying for

I realy dont think that you need to have the purchase price on the assignment of contract..its only job is to state that you are selling your interests in the contract to your buyer....the purchase agreement has the purchase price on it, the assignment of contract should simply state what you fee it. if you look at the contract available on this site along with the one used by both chip and andrea and carol stinson they have no place listed on their contracts for purchase price...only their fee...

As far as "Hiding" your the amount you make goes.....if you are making an a large amount on any single trasaction it can raise "eyebrows" depending upon who you buyer is

My perpective Realtor just told me they banned that in Florida a few years ago. I said, no they didnt...tell me where I can read that law...His response was some mortgage act...Needless to say, he said we didnt need to lock the properties up..Just make the deal with my buyer/investor, get my fee and he will handle the rest. Deal or No Deal????

if you dont lock up the property then what is the point of your buyer paing you a fee? They could certainly just go around you and buy from the buyer and avoid paying you any fee. Get more info from your agent, what is he/she talking about?

Is it legal to do Assignment deals in New York??

Keep your religious dogma off this site. There are people here of other religions.

Thank You,
Michael Mangham
MD Home Acquisitions LLC

I agree Michael. What the heck is this person posting on here for. It has nothing to do with real estate investing. Ridiculous! Not only that but the little *&*%()! can't even show his identity!

All you have to do is hit the "Flag as offensive" button under a particular post, fill it out (short) and it will remove the post. hee

The easiest way is to ask a real estate attorney. They know! Also your Title Company should know and they generally have an attorney on staff.

In the event that the bank says they will not honor one you can always do a double or simultaneous closing and again the title company you are working with should be familiar with this process and is legal pretty much everywhere.

Don't let agents or others give you false information. It is easy to get an accurate answer if you know where to ask it. So anything above will work.

Good luck,

Randy Bailiff