Hello Fellow Investors! I have a quick question and would like some advice. I am from Illinois and I have already have a great deal under contract. I already have another investor to flip it to. I haven’t done an assignment before and am wondering if I need to write up another purchase contract with the investor. How do I pull out the money for assigning the contract to another investor? Thanks in advance!!
You have two options - assign the contract or double close.
To assign the contract, you just sign an assignment agreement with the end buyer, assigning your rights under the purchase contract to them for a fee. You both sign the assignment and give the document to the escrow company/attorney doing the closing. Normally you get a deposit ($1k or whatever) with the remainder you getting when the transaction closes. This is the easiest way to do it.
However, sometimes you have to do a double close. This is because the seller (normally a bank or HUD) won’t allow an assignment, or your profit on the wholesale is high and you don’t want the seller to know how much you made. Then you do a purchase contract with the end-buyer as a seperate transaction and have the closing entity do a simultaneous close. Negatives of this are there are a lot more closing costs, which eat into your profit, and some attorneys/escrow companies don’t like doing double closes - causing lots of paperwork-recording problems.
I hope I am understanding your question correctly…
I’m not sure what you mean by
How do I pull out the money for assigning the contract to another investor?
Are you looking to get paid upfront? If so, you can let the Investor know that and you can get an Assignment Form. Let the Investor know your fee for the contract. Once that is set, fill out the assignment form, indicating your assignment fee, and assign him your contract. Now you get to walk away from the deal with whatever you charged him for the assignment fee. I hope that I made that clear:
Step 1. Get an Assignment Form
Step 2. Set an Assignment Fee (Attractive Assignments, in my opinion, can be up to $10K, but it really depends on the overall profit potential in the deal)
Step 3. Relay this information to the Investor and have him pay you this Assignment fee upfront. Then you two fill out the Assignment Form and he gets your postion in the contract.
Step 4. Walk away with your cut and enjoy :beer
or you can do it how Sal said it. Both ways will work.
If you get paid at closing then, you can do just as Sal has said. Double Closing…
Hope that helps…
hey fellow investors,
i want to thank you for all the great information. i did some research and called my loan officer and discussed the situation with her. For those that read this and are looking for other ways to help save on closing costs and what have ya, you can always add an addendum to the contract. the addendum is a consultation fee. watch your state, because they do set up limits to this. due to my situation, there isn’t much gap in the deal that would allow me to take a substantial payoff. the only con on this is that you have to wait until the closing to get your pay off. you actually don’t even have to be there to get the money. they will actually send it to you. anway, i just want to let you all know that you have helped me push myself to research further and better myself. in return, if you have any questions, please don’t hesitate to ask me. Carpi deim!
Can you elaborate a little on the consultation fee/addendum please? Are you doing this to avoid the extra set of closing costs involved in a double close? Sounds interesting.
Are you still able to do double closings? I’m hearing they are, in all but a ver few cases, non existant.
Who told you that?
Double closings are still alive and well here in sunny FL.
In my area, investors frequently use a couple escrow officers to do double closings. In fact, one of my investor buddies just did a double yesterday because he stood to make $35K on an assignment. The officer that closed his deal actually spoke at our REIA meeting last night, and she mentioned that she’s working with a rep. from CitiMortgage to help him understand the legitimacy of double closings for flipping properties to retail buyers; the person from Citi was in the audience and seemed very open to the idea. She also mentioned that many of the major lenders seem to be relaxing their seasoning requirements because of the current state of affairs.