Adding Your EndBuyer On An Addendum, Instead Of Assigning

I am hoping Shelia will come back on the board and see this so she can shed some light on her technique.

Jason, I read and re-read your post and wrote a long reply in how I interpreted it. Then I thought, heck what if I'm reading what Shiela wrote all wrong!?? LOL So I am VERY anxious to hear from her. You should put a link to this in her journal. She may see it easier, if she pops in briefly.

I've started using the "and/or assigns" clause and made 6 offers so far with another 2 coming today. Also using the inspection contigency from here from Dean's site should I need an exit and the POF letter from Coastal Funding. Haven't been questioned yet from bank on these offers, in fact, had one bank accept my offer as a back-up in case the initial offer from another party fell thru.

Bruce

Here is Shiela's answer to my questions:

No, I don't quit claim anything. However, that is a more securing idea -- I will brush more on how to do this later.

Ok step 1: Write a contract for the REO under your name Jason Smith, no need for and/or assign.

2. Get it accepted and know your contingencies and/or negotiate to extend for cushion, if needed, to find an endbuyer.

3. So you already have your endbuyer, John Doe. Now, create Addendum A: "add second buyer, John Doe". Now you, and John Doe signs this AND submit to listing agent for sellers signatures. Before submission for sellers signatures, collect your upfront fee.

Once you get a copy of this signed addendum by all parties/including sellers, your end buyer is official!

This is the loophole. Only 1 of the buyers need to fund the loan. In this case, since your endbuyer is already an approved buyer, title only needs to see his loan docs to close escrow.

To the REO's side, they think you needed the second buyer to move forward. On your side, is none of their business. They think you needed a second buyer because you no longer qualify for the loan by yourself, in reality, its a loophole to assignment.

Let's brush back on with doing a quitclaim thru title.

Once your end buyers loans docs is ready for signing. Add a grant deed just between you and endbuyer to put you on grant deed. This grant deed is best to be signed while at loan docs signing, because there is also a notary public present. You keep this and provide a copy to your end buyer. Do Not give this to title with loan docs - this is private not for endbuyers lender to see.

Once the endbuyers loan funds, and records...that same day or the next day, go to county records office and record that grant deed and puts you back on title. This is only if you don't collect all your fees upfront. This way, whatever your end buyer does with the property like selling, refinance...he/she cannot do without your signature/authority. This is great security for you to get the rest of your money without being part of the loan. Joint Tenancy is the best way to be on title.

Oh and one last thing. You can get the end buyer to pay you thru escrow as well in a the form called "third party check". Endbuyer just simply has to create a letter that says, I am depositing X amount of money for escrow# for closing. I understand my closing figure is only $...Please write a third party check for the excess in the amount of $15,000 (example) made payable to Jason Smith, with the remaining to be refunded back to me via check/wire...etc.

This demand the REO/Short Sale Lender nor endbuyers lender will see! In the escrows eyes, they see an excess of closing funds and they have to refund that to the end buyer, and the endbuyer can demand how his/her money is to be distributed.
Feel free to post this and share with the DG Fam. Let them know that I said hello and that I apologize for my absence.

Thanks!
Sheila

I thought I would bump this back up since I posted it late last night.
I plan on trying this and I will give feed back on my progress.

Thank you for getting in touch with Shiela and posting her answer! (Shiela, thank you for this! You are amazing!)
This is great! Keeps everything in order and for only the eyes that need to see each document. Brilliant.

I am trying to figure this out...

Step 1: You put in an offer in your name and it gets accepted
Step 2: You add an addendum, adding an end buyer

How do you then take yourself out of the equation? Your name is still there, right?

Yuri

After 1. you have an accepted offer, and 2. you have seller's signature accepting extra end-buyer, you can close with just his name on the title, removing yours, since you are both ok'ed by the REO bank (seller). You would do this IF they have already paid you your assignment fee. If not, your name stays on until such time that your end buyer pays you, then you quit claim (?) your name off the deed.

Jason, is that how you understood it? (Maybe Shiela can confirm if she pops in)

Rina

How do you get your name off title? I was told that is where the quit claim deed comes in...

Is Rina correct in how she interpreted closing with your name off the title and using your end buyer's name instead?

I sure hope that's what she means and has tried. Wouldn't that be sweet and simple?? The reason I'm guessing this is because several times I have had just my name on a purchase agreement and then asked if we could add my husband on the closing docs or put it in my company name. They have said "no problem" (although the realtor had originally said you can't do that). BUT, I thought that it was because we were married, or because I was owner of the business.

This is becoming interesting.

Rina

If this is the case then we just found the cleanest way to wholesale an REO. No land trusts, no quit claim deeds, etc. If true, this is awesome.

just to clarify my last post: It was the title company that said no problem, but I've never had to actually send an addendum for an REO bank to accept and sign. This will be a great challenge for some of us to try. And a person doesn't even have to eliminate other variables (contingencies, lowball offers) to try it, because you will be doing it with an offer that's already accepted.
I am anxious to hear back from Jason or Shiela.

Just read the post. It really blew my mind. That's making it easy for everyone. It has also answered a whole lot of questions.

Thanks Sheila.

No quote. Copyright thing.

Sheila, Can you post a copy of your actual addendum, as to clarify your meaning and wording????

Thx, Bruce

Sheila said when she gets time, she would give us even more info.

Rina I think you have it correct.

My wife and I spent hours last night reseaching properties and we have 25 offers ready to go out today. My Realtor also wants to try this strategy and told me to send those offers to her.

I will keep everyone posted and add any info I get. Hopefully this is the way around assigning REO's because this has been a road block for most of us Newbies.

Thank you guys for clarification. I guess we need to figure out a clean RE language to write that contract and proposal in so it gets accepted without anything to come back and bite us at the end.

Yuri

Bruce,

Some questions regarding your recent offers:
Where they on REO or Shortsales?
When completing the Purchase Agreement, under BUYER, did you show your own name, an LLC, did you include AND/OR ASSIGNS here?
What did you indicated for how you are financing the purchase?
How are you handling the escrow money portion?
What are the contingencies you added to the contract?
Do you already have an end buyer lined up or are you first acquiring prop and then marketing it to assign?
Are you looking at these props before submitting offer?
How are you determining your offer price?
Are you collecting your assignment fee upfront or at closing?
Curious to see your strategy and techniques!
Thanks,
Mati

Your questions are going to take this good thread way off.
Sounds like you should PM Bruce with your questions so we can focus on this great strategy that Shiela is using to get around the and/or assigns.

Nothing personal, we just need to keep threads related to the Title.

Thank you to EVERYONE!! I had read Sheila's journal entry weeks ago when she posted it, but was confused. I am sure she is EXTREMELY busy doing deals and making money (good problem to have!! ), and so she hasn't responded to any of my questions. I'm so glad that you were able to contact her, Jason.

This strategy seems very straight-forward and clean. I like it A LOT!! I had the same question that Yuri did -- how do we get off the title? Thank you, Rina, for answering it!! So to make sure I'm understanding...

1. Continue putting in offers in our name.
2. Get an offer accepted (the HARDEST part!! )
3. Decide as to which end-buyer the contract will be assigned (John Smith).
4. Add an addendum: "Add second buyer: John Smith", with all other terms
and conditions to remain the same.
5. John Smith and Dom and Kim sign the addendum, we collect our fee.
6. Submit to listing agent for sellers signatures.
7. Let the title company know that ONLY John Smith's name will be on title.

Does it sound like I'm getting it right? If I am, this is definitely the way that we will be doing our deals. It seems to be a much better way than the strategies we have been investigating.

Thank you to EVERYONE for all of your input on this!!

Sheila,
With regards to your method for submitting REO/Shortsale offers, please see questions below:
You find an REO/SS prop listing and determine an offer price. What calculations do you do to come up with offer amount? Do you see these props first in person?
Once you have interest in prop, you then submit a Purchase contract. Under BUYER do you show your personal name, and LLC name, do you add the and/or assigns to the line?
Under the financing portion of contract, what do you show as method of payment?
Under the escrow portion of contract, what do you show as payment amount and method?
What are the contigencies that you add to this first contract? Please list them.
Do you sign the contract under your personal name?

Now - you submit offer to bank and it is accepted!!!!

You then visit the prop, get pics, rehab info, etc on it and then market it to end buyers. You have end buyers visit prop and when interested you then ...

Give your RE Agent a new addemdum to send in to be added to the original addendum submitted with the original Purchase contract, that indicated that you have the right to add a second buyer to the contract. In this addendum, you indicate that your second buyer is XXXX and all other contingencies remain the same. You must have this new addendum signed by end buyer, seller and you.

In the event that XXX buyer no longer wants prop, you then need to find another buyer and when you do, you would do a new addendum, showing the new end buyer ZZZ. It would be signed by new end buyer ZZZ, by you, by seller and you would indicate that end buyer XXX be removed. You would give this to your agent to send in.

What are your steps from here to get payment? Please elaborate with each method.
What documents and agreements do you use to get your payment?

Please post your original addendum contingencies submitted with your ORIGINAL purchase contract.
Please post an example of an addendum used to show second buyer.

Thank you so much for your help ... we are all very excited to follow your example and learn from you further.

IF ANYONE ELSE HAS INSIGHT AND SUGGESTIONS ... please post.

Mati

What if you

I understand this method to be basically what you are describing, however, i just submitted a long list of questions attempting to obtain a more step-by-step breakdown of how this is done. I'm still not clear on how you get your payment and what paperwork would be used between you and endbuyer when he pays you this $$$. Any suggestions?
If you are willing to accept a little less $$$ as payment, then you would get paid upfront, but what if you want to collect a little higher payment and wait for prop to go to closing ... how do you get your payment there? I saw that Sheila mentioned a method of putting your name on title until you get full payment, then she mentioned having the endbuyer submit a letter to title letting them know that a check for the amount of XXX to be paid to a third party (us) at closing ... VERY CONFUSED ON ALL OF THIS ... ANY SUGGESTIONS!
Mati

than it needs to be. Keep it simple. First, you're not going to put an end buyer on the addendum until you receive your fee. You want your end buyer to have a vested interest in closing on the property. If you stick him/her on the title without getting your fee then they're not vested. However, if they have 5k, 10k or more vested in the deal, nonrefundable, they're not going to back out. If they don't feel comfortable giving you the full assignment fee. Then tell them that you want at least 5k (or a % if it is less than 5k) up front and then the rest can be paid in the 3rd party overage escrow check. You are going to use a regular assignment contract with end buyer. Make sure you add that your realtor still needs to be paid in the deal. Once you have your fee, and the assignment contract signed then you're going to do the addendum. With the banks having so much control, the old rules go out the window. True investors know what is up. They know that they're paying a fee up front. If you have a killer deal where you are making a lot of money then you're going to want to do the other method. Which is have the buyer right the amount for the full selling price of the house (i.e. you locked up for 100k, but are selling it for 125k.) The end buyer writes a check to escrow for $125k stating that he/she knows it is more than the amount owed and that they want the overage to be paid to a 3rd party meaning you. I hope this makes sense. At least this is how I understand Sheila's Method.

Have you had much success in getting payment upfront from an investor, of say the 5K NON REFUNDABLE margin? Do you find that they would opt to perform inspection, title work, rehab assessment, etc prior to paying you this fee? Could you please post the assignment contract that you use with the end buyer ... do you add any contigencies to this contract?
Now once you have it signed, how do you go about removing your name from buyer and putting in end buyer's name on Purchase contract? Please advise.
Thanks,
Mati

Contracts can be found under DG Forms and Docs. When you do an assignment you should have already started your due diligence so that you can provide those details to the end buyer so that they can make an informed decision on whether to purchase from you or not. As far as having your name removed, I like Sheila's strategy or you could use the land trust method, etc. If that doesn't work then you close with both you and the end buyer's name on the title. After escrow you can do a quit claim deed to the end buyer and have your name removed. I'm trying everything. Whatever works is what I am going with. If it doesn't work then I go with another strategy. Worse case I am out my earnest money and I've learned a lesson I will never repeat. If you wait to have all your ducks in a row, you'll never make offers. You will be paralyzed.

It sounds like you have been doing this for years.you do make sense on everything you say and I agree.

Forgive me for not reading the replys! Addendum, is a very powerful word!
Used correctly...can mean the difference in what you trying to do.
Addendum...called an appendix or a RIDER! Know, you know you can ride it?
For the chase of a REI...I would use my REattorney to honor my addendum,
For my attorney has the...certificate...To make my And/Or assigns,Good!

Randy
P.S. I GET IT!...LOL
"MAKE YOUR ACTIONS COUNT"

Thanks for the compliment. I'm trying to stay focused and keep all the obstacle questions as easy, surmountable, inconveniences. I am learning a lot from this site, but the second guessing doesn't do any of us any good mentally. I think the information that has been shared over the last several weeks is outstanding. We all have to try the methods and then report back. ACTION is key to making this work.

I am trying to figure out how to get out names off the contract assuming that the fee was collected up front.

Sounds like Dom and Kim (5H) got it sort of down. I guess when I get one of my offers accepted, I will come back here and have you, brilliant minds guide me through it. LOL

I had 25 verbal and email offers go out today and we got leads to 3 of them telling us to put it in writing.
we are offering cash and a quick close to get the bank motivated to accept our offer, but doing it this way, I need proof of funds.
"Not the Coastal funding letter" Real proof
I will get back to you if I figure this one out.