Assign or double close?

I had a deal fall out of the sky and right into my lap the other day. It’ll be my 2nd deal. I’ve been a home inspector for two years now and have been blessed to network on a daily basis with endless investors, Realtors, appraisers, lenders, everyone in the game, basically. I’m of the “earn as you learn” mindset so have gotten into some deals maybe a bit ahead of my time, but as the inspector have always stepped easily out of them with no earnest money lost.

But now I got a winner. Divorced rich woman wants to wash her hands of a rental, because the tenants have made a mess of it… cosmetically. If it was in the same condition it was in prior to their move-in 16 months ago, it’d list for about $415K. I did a walk through to make sure it hadn’t really been wrecked and wasn’t a meth lab, and I wrote an offer at $240K, which she signed. I have several investors and one regular home-shopper looking for a fixer ready to jump at $300K. I like the idea of the easy money rather than doing the rehab, despite the lost profit. I have another contract on a duplex pending and, of course, plans for more and more, and wonder what could be easier than just selling a contract?

My question regards assigning the contract vs. closing then re-selling. What are the advantages to each? Excise tax is 1.78% so I could save that, and fees for coming up with the $240K whether on a conventional or hard money loan. Am I seeing the whole picture here? Does it not make sense to simply assign if it’s possible. My existing contract to buy is signed “and/or assigns.” Thanks for your help.

WOW! I wish I was that blessed to have the potential to get $60K tofall in my lap. If it was me, I would assign it - you could make my entire 1 year salary as a teacher by simply signing your name over to an investor willing to pay $300K. Don’t need to worry about coming up with funds, etc. or any lender seasoning issues.

Easy to say from my objective viewpoint but if all you want is some easy money, then don’t get greedy and just assign it and GET PAID! :slight_smile:

Cha - CHING!

First, for any newbies out there, this did not just “fall out of the sky and right into his lap.” This deal came about because bnelson did what anyone in this business should be doing, networking. If you tell everyone that you meet that your a RE investor looking to buy property, you will eventually have something “fall into your lap,” too.

Second, you mention “lost profit” in assigning a deal. If you don’t want to assign the don’t, but don’t assume that you’re losing money on an assignment. Even a minor rehab takes a long time to fix and get ready for market, plus the added cost of actually fixing and holding onto the property. In a time value of money comparision, I making $60K in a few hours is actually MORE than making $150K in 3 months.

Third, if you contract is assignable, then it’s more practical to just assign it, because it will eliminate the costs involved in a double closing. However, you are still responsible for the closing, so you want to make sure that you choose a buyer/assignee that can and will close (verify before assigning). Also, you want to make sure that the seller won’t have a problem with seeing a $60K assignment fee on the HUD-1 at closing. Definitely don’t want the seller refusing to sign at the closing table.


The other thing to really take into consideration is the fact that double closings are getting harder to do! There are more lenders now days that have a no double closing policy by requiring title seasoning… Meaning that the owner has to have owned the property for longer then 6 months or so… The other thing to really look at is the fact that many title companies no longer will do double closings I know here in the Denver area there are three title companies that still allow them. As well as I know of four lenders that do not require title seasoning. These issues make it hard to double close now day’s… There for you are always better off assigning the contract if you can… In my opinion!!! But just like RAJ said that is if t is assignable!

What does “Assign” means and when/how should you use it?

Thank you.


Assign is when you basically sell your contract to an end buyer. Example - you get the property under contract for $100K, you sell it to me - the end buyer - for $105K. You do not have to come up with any money. You have a clause in your purchase agreement that lets you assign your contract; I pay the seller the purchase price you negogiated, plus I pay you the $5K for the assignment.

Double close - I believe but I"m not positive - is when you actually have two closings because you have to close with the seller and then the end-buyer does too. This brings up lender seasoning issues.

The advantage of a double close is the end-buyer doesn’ t know how much YOU negogiated the property for. You could sell it to me for $105 but you got it for “only” $90K - so that means a $15K profit for you! All I know is how much you are “charging” me for it, not what you got the seller to sell it to you for.

Is it not possible in an “assign” deal to have the title company draft documents that would prevent the assignee from seeing the negotiated price that I, the investor, tied up the property for? The property seller would be privvy to the end number and perhaps feel that they had “missed out” on an extra 5 or 15K, whatever the number may be, but the end buyer wouldn’t necessarily ever have to know what the investor ended up profiting…

In my case, I’m looking at assigning a contract for a fee of around $60K. I guess my concern would be that the seller is going to have a heart attack when she sees what her property was really worth. (“Worth” or “value” being defined as what someone is willing to pay for it.) Should I approach her now, before the assignment, to be sure she’s o.k. with it and won’t throw any wrenches into the deal at closing? (My rationalization, of course, is that “Hey, what IS business but simply moving a product through a supply chain, raising its price with each set of new hands it lands in?”

Yes, it’s possible to assign a contract without it showing on the HUD-1 (and such, the seller wouldn’t know the assignment fee). IF the investor that is paying the fee is willing to pay it to you upfront, ie not at the closing table. By doing so, the investor is taking a larger risk by investing funds before THEY can do their own due diligence on the property. In your particular case, I seriously doubt that you’ll convince an investor to give you $60K upfront. It’s going to be given at closing, I’m sure.

As to the seller, you’ve made a rookie mistake and you’ll just have to do the best that you can with it now. The mistake was NOT explaining to the seller upfront that you are an investor, that you intend to assign the contract, AND that you intend to make a profit on that assignment. Are they, as the sellers, comfortable with that and the price that they’ve negotiated with you?

Yes, if you have an investor lined up willing to sign, then I would probably inform the seller that you will be assigning the contract to “so and so investor” and that they will be taking your place in the contract as buyer.

An assignment of $60K may get the seller upset, VERY upset. Or it may not. Hard to tell. If it becomes a problem, I’d suggest splitting the fee with the seller in some fashion. Hey, even if it’s a 50/50 split, $30K is better than $0K.


When you do a ‘double close’, you have to have money down, right?

Yes, you need the funds to settle/close. If you are going to net $60,000.00 and you KNOW FOR SURE that the buyer will show up at settlement, take whatever steps are necessary to get the money to close.

You can use credit cards, loans against 401K, IRA, Hard Money Lender, friends or family (give them a $1,000.00 for their trouble). Make the deal work!!

what is the cost of a double close? Or how is it calculated?

Still learning :slight_smile:

thanks in advance

I would think it would be whatever the amount of closing costs comes to. Here in Maryland, it’s about 4 to 5 % of the purchase price (crazy, I know!)

Ok, dumb question.

When you do contract assigntment, that’s the Contract of Sale, right? Not assigning the agreed Offer to Purchase form?