OfflineI'm sure that I'm jumping the gun and should just get through all of the books that I am reading, but as an excited newbie I have a few questions about assigning contracts:
1. When you lock up a property and assign the contract does the seller pay a commission on the original contract price or the assigned price?
2. Does the final Settlement sheet show the original contract price or the assigned price? This could affect the seller's capital gains tax and the cost basis for the investor buying the property through the assignment.
3. How do we as REI's get paid? Do we get a certified check directly from the assignee at settlement or does the assigned price go on the HUD-1 with an expense line to me (the REI) in which case we would get a check from the title company.
4. I'm sure it's different in every state, but can anyone think why it would be illegal to represent yourself as your own Realtor as long as you disclose it up front? If I wrote my own contract and then assigned it, I could collect a commission as a Realtor and the assignment price as a seller. This would allow me to leave PLENTY of meat on the bone for my investor/assignee.
My standard answer when asked questions like this is "you really should consult with your accountant or attorney", but I think I should also know the answers. I look forward to everyone's input.
Live well, laugh often and love much.
Walter Fabiszewski
Southern, FL
1. When you lock up a property and assign the contract does the seller pay a commission on the original contract price or the assigned price?
I have seen this done 2 different ways...the way I do is collect my fee from the end buyer. The seller never pays...they just get what I offer them for their house....my investors pays me my $$$ (usually cash) on closing day at the title company. I have seen other wholesalers who collect from both the seller and the end buyer
2. Does the final Settlement sheet show the original contract price or the assigned price? This could affect the seller's capital gains tax and the cost basis for the investor buying the property through the assignment.
I assume you are talking about the HUD1? The way I do this and the way my title company required me to do this is to turn in a invoice so I can be paid. The final settlement sheet shows what you offered the seller for his home and is paid by the end buyer. Once you are paid you are out of the deal and they close of what was originally offered
3. How do we as REI's get paid? Do we get a certified check directly from the assignee at settlement or does the assigned price go on the HUD-1 with an expense line to me (the REI) in which case we would get a check from the title company.
I am mostly paid cash on the spot when the investor buys. Some want to go to closing and pay everyone through the title company. IF so you will get a check from your title company. Find a title company that does not mind taking a invoice sheet signed by you, seller and end buyer. They all are agreeing that you will be paid XXX for your fee.
4. I'm sure it's different in every state, but can anyone think why it would be illegal to represent yourself as your own Realtor as long as you disclose it up front? If I wrote my own contract and then assigned it, I could collect a commission as a Realtor and the assignment price as a seller. This would allow me to leave PLENTY of meat on the bone for my investor/assignee.
I am not sure about this one. It seem slike disclosure is the main thing when a person is a realtor and starts working in wholesaling/investing
My standard answer when asked questions like this is "you really should consult with your accountant or attorney", but I think I should also know the answers. I look forward to everyone's input.
Yeah...I just like to offer advice on things I have actually experienced.
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
Thanks for the feedback here too. I am not trying to be greedy or to "double dip", but the fact of the matter is that I will be putting offers in on properties that I find in the MLS. I think it would look more shady if I go through another Realtor...like I am trying to hide something. I will contact a few of my title companies and see what their policies are or what they suggest on how to handle this. In your deals, both the Buyer and Seller know that the contract is being assigned well before settlement right?
Do you do a lot of wholesaling in the area where you are a Realtor?
Live well, laugh often and love much.
Walter Fabiszewski
Southern, FL
Yes...I let everyone know upfront that I am making money on the deal and let them know how much. Me, the seller and the buyer sign the invoice where all are agreeing how much I will be making and turn it into the title company with the rest of the paperwork. The invoice is my way of being paid when we have to go through a title company.
I am not a realtor....only a wholesaler.
When I go in to contract a deal I have with me 3 forms....the Purchase and Sale contract, the Investor Disclosure and Seller Acknowledgement and the Invoice form. I also carry with me a printout of all the houses that have sold in that particular neighborhood over the past year...then I carry the printout you can get off the Property Assessors web site on the house you are looking at. THis shows all the dates of sales on the house...what they paid for it...how much taxes are...what the assessor values the house at...etc...
Have the comps and the printout from the assessors list in a plastic sleeve in a notebook.
On the Purchase and sale contract I already have my name and my contact information filled out, I have the Parcel Number filled in on the contract and the owners name and information filled in. That way you can quickly go over the contract with the seller and then ask him to sign the contracts and forms. I pick up some of those .30 folders that have the pockets and put all 3 of these forms in the folder. One folder for each house you are going to contract.
Here is the way you ask him to sign so he feels like he is in control..."Can I get you to authorize these papers?" OR "Lets get these papers authorized."
It sounds less threatening than "sign these contracts."
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
I wouldn't think you are double dipping at all. You have to make enough to operate your business and keep it going. The seller is thankful you have came along to solve his real estate problems. Just always be straight up forward and honest and your business will go far. I show the owner everything and tell him what I can and can't do and they appreciate it. You will do just fine. It is really simple once you have done a couple wholesale deals. you already have a upper hand being a realtor and all your knowledge.
Do you do a lot of wholesaling in the area where you are a Realtor?
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
I am new myself, but this might help.
1. Go to the search box in the upper left and search "Offer Formula".
2. You will see that it suggest a Profit of at least 10% be deducted. This
would perhaps cover your efforts.
3. Perhaps you would not need to go through a process of attempting to state
a disclamier of you being a Real Estate Agent by disclosure. Even though
you aren't but want to be compensated.
4. I hope this helped. If not PM Indiana Joe, Rina, Elena Cbr Power,etc for
their help. Keep at it!!!!!!
Bruce....
When you lock up the property for a price you and the Seller agree on and then you want to assign the deal over to your end buyer,simlpy add on your assign fee to your end buyer.He will pay your assignment fee and close with the Seller.
whurndon
H&H PROPERTY SOLUTIONS LLC
Thank You for all your info. You clarified few questions about the contracts. Now I feel total confident I can make offers with the package you recommend. I remember my first offer, I think the seller almost laugh on my face. He never called me about my offer and I never did. I was pettrified. Its that I got so fired up and went and make my first offer but I think I was trying getting too much on his eyes. Then I started concentrating on Lease Optons and learned a lot on that, but the unclarity and analyzis paralysis of the contracts kept me from making offers now I have some more ammo.
Thanks I am not here alone or doing this on my own I have Dean and the Family
max
Commit to the Lord whatever you do, and your plans will succeed.
Prov. 16:3
"I am talented. I am creative. I am greatley favor by God. I am equipped. I am
well able. I will see my dreams come to pass."
Joel Austin
That is an awesome suggestion on how to get the seller to "authorize the paperwork. I love it! Are there samples of the contract and other two forms that you bring to the seller here on this site or did you have an attorney prepare them for you? I know that I am over-analyzing things here. I guess I can prepare my own board of Realtors contract if I want. Thank you so much for the input. I just finished watching Gain the edge'09, am reading "Think a Little Different" and am waiting for my copy of Dean's new book.
Live well, laugh often and love much.
Walter Fabiszewski
Southern, FL
Thank you all for your feedback too. I have never been a member of a group such as this with so many people willing to help others get ahead.
Live well, laugh often and love much.
Walter Fabiszewski
Southern, FL
You need to link up with Carol Stenson ID freeindeed, She is the assigmnet queen from jersey.
max
Commit to the Lord whatever you do, and your plans will succeed.
Prov. 16:3
"I am talented. I am creative. I am greatley favor by God. I am equipped. I am
well able. I will see my dreams come to pass."
Joel Austin
I do too. I read her stories and blogs both here and on Facebook quite often. She seems like an amazing person and willing to help.
Live well, laugh often and love much.
Walter Fabiszewski
Southern, FL
great post. I'm looking to start rei. Thank you. I tried searching for Carol Stenson, id freeindeed to no avail. I'd like to contact her also.
I am new to REI and can use all the help I can get! Great info again and look forward to working with everyone in the future!
You can never eliminate fear, but you can use your fear and turn it into your strength!!!!
"Faith is taking the first step even when you don't see the whole staircase."
-Dr. Martin Luther King
Thanks for all this wonderful information. I am new to REI and this
awesome website. I am grateful I found DG and website family!
I have another offer in for a 3 bed 1 bath fixer. I plan to wholesale the property. I am still working to develop a buyers list locally.
I have a question about the double close option. I have made a cash offer for $90k and signed with and or assignee on the offer the price was listed at 140k and it is definitely the ugliest property in the neighborhood. My Realtor tells me that the propterty has a 25k bid for rehab which should cover kitchen remodel, floors, windows, bathroom, paint. My agent has run a market analysis and says it will sell for 175k when the deal is done. This leaves a nice profit for myself and the retail buyer.
In California I think I have 7 days before I have to put up ernest money. Is it true that all you need is a faxed copy of a cashier's check once the offer has been accepted. They want $2k and if we are putting in multiple offers I don't want to have that much money tied up.
If I can't find a cash buyer within the next 17 days than I will have to use the inspection contingency to beat up the bank and drop out of the negotiations at some point before losing my ernest money. That is my worst case scenario.
The pressure is on to find a buyer. I know that there are motivated buyers out there and I am determined to make this deal. I am calling rental owners in the area to see if any of them are in the market to purchase another house. I know the clock is ticking. (I'm feeling excited, anxious and scared. But, thanks to BARM and Edge 2010, Dean and the DG family I know that it is possible and have taken action.)
Thanks for all your support and prayers.