I have a question on this: What if I sign the purchase agreement with “AND OR ASSIGNS” on the contract so that I could assign it to an investor, but I’m having a hard time finding the investor to buy the contract. Is there a way out of the deal altogether if I cannot find someone to assign it to? In other words do I put escape clauses in contract?
I do not want to get stuckand not be able to buy the property if I cannot find an investor to take it off my hands.
Also, what is a typical fee for an assignment deal? I’m thinking 2% of the After Repair Value. Any thoughts?
Sure, add an escape clause if you like. You can make it subject to partner’s approval. If you cannot find someone to buy the contract from you, then the numbers are not good to begin with.
Thank you Fadiz & Rich_in_CT for replying. Great advice. I will be sure to make certain the numbers are attarctive to my buyers and that I actually do have a buyer list ready.
Anyone else who wants to chime in, please do so as I could use all the advice I can get.
From my own experience the escape clause “Contingent upon partner approval” is way over used and frowned upon, and in many instances throws up a red flag to home sellers. Where is this partner, when can they get here are things you may here. I have had alot of success using the 7-10 day inspection clause, then getting your buyers through in that 7-10 day period. I purchase alot of foreclosures and most banks that I have worked with allow the 7-10 inspection clause but would laugh at the “partner approval”.
Eric,
Forgive my ignorance, but I was under the impression banks don’t allow assignment deals on their properties. If I’m sourly misinformed, please set me streight. New here and appreciate your knowledge.
On all my contracts they are for sixty days. I hope you are using your states legal contract forms. They are what everyone (title company’s, lawyers, inspections, apprasials, etc) are use to using. Therefore a lot less red flags will wave.
And on the (your states) contract the first thing you should put an “x” on is the contingent on third party financing. In sixty days if you don’t have a buyer, call the seller, ask if they would like an extension, or the deal is off cause no financing.
I have had only one so far not give me 60 days. She only gave me 30…I told her then, well if I have to call you to get a signed extension…then and basiclly I had to get an extension just because the title company was dragging their heels. I had it flipped in 3 weeks. So the closing sets it out too…60 days is not that long and if they are truely motivated to sell to begin with it should not matter.
As for the assignment fee depending on the spread…5K up. Always leave plenty on the table for the other investor, so he/she will call on you again & again. Now if you sell to an end buyer… Lets say you bought a property for 100K, and the comps prove 150K area. …Dont’t get too greedy and you will get a buyer real fast at 125K-135K, still leaving them with a great deal too, and ask for freinds/family referals…you make money, seller made money, buyer made money…win/win/win…