I have a question regarding assigning a property…My understanding is that one has an offer accepted at a below market value, then turns around and finds another buyer who will purchase at a greater value than you negotiated w/ seller.
My question is this: When does one want to start looking for an assignee? Also is it ok if the assignee assumes that you are the seller? When a person responds to your advertisement and wants to do a walkthru of the property wouldn’t the seller think it odd if you told him/her you were assigning the property to someone else and that person wants to look at the house? I see a potential awkward situation that could break a deal if the seller and assignee finds out you are playing games w/ them! Is it standard to conduct a 2nd viewing of the house for the assignee?
Sorry jczimmy, you have it a little bit wrong, what your describing would be a form of an option. Assigning, is when you get a property under contract, then find a 3rd party(another investor) and have him sign an “assignment of contract” for a fee of about 3000 dollars. Technically speaking, you are selling the contract to another investor.
Jeez I guess I have been misinformed. Does this mean that w/ an assignment you actually have to OWN the property before you can assign it?
Now I am confused!
No, you dont have to own it, you just have to have it under contract, then you “assign” that contract to a 3rd party(another investor) for a fee of say maybe $2000.
Good luck, if you have any more questions, post back.
Depending on how you negotiate the deal with the seller you may not need an approval letter. You usually need this if it’s listed with a Realtor. Another thing you don’t necessarily have to use $2000 or $3000 I know people that does it for much more it just depends on the value of the property and how much equity is in the property when you sell it to the investor. Don’t short change yourself it all depends on the equity that’s in the place. For example if it has $50000 worth of equity I would try for about $10000. That why it is good to have as many investors as possible because someone will take the deal. Remember it’s easier to go down than it is to go up. It all depends on the deal.
That’s the way that we do it. For example if you brought a property for 50000 and it was worth 100000 then they have 50000 worth of equity not to mention they would probably put little money into it depending on repairs and make even more. So we determine how much it’s worth now and even sometimes how much it would be worth when they fix it and make a decision on how much the fee is. Someone else could probably better explain this.
Why does the amount of equity in a property relate to the amount of fee that is charged?
Because, the greater the amount of equity…the greater the potential profit, and, therefore, the larger the pool of potential investors who’ll compete for your option.
You could write the option; that you “or your assigns will close.” Then your client could provide the down payment on closing day. They will have purchased the property with the understanding that as soon as they receive title…they will transfer the amount of your fee into your account.
So we determine how much it’s worth now and even sometimes how much it would be worth when they fix it and make a decision on how much the fee is.
This was right up my alley. Before I left appraising behind I was appraising strictly REO properties (Real Estate Owned). That’s to say, I was performing appraisals on FHA & VA foreclosed properties. They wanted pictures of needed repairs, an “as is” opinion of value, and an “as repaired” opinion of value.
a comment on an earlier post reffering to an option. an option contract can also be assigned for a fee. just be prepared to lose your option fee if you do not find a buyer to assign to or if you cannot buy it yourself