Hey guys I just had a few questions about assigning a contract.
When do you get the assignment fee?
What happens if the person you assign to does not close on the deal? Do you still get your fee? Are you still under contract with the seller?
Also, does anyone have an assignment form?
Thanks for the help.
Matt
anybody?
hEY Down investments I am actually a newbie to this… so you may also want to check with a veteran, I am looking to double close my first deal, and the way I heard it can be done a few different ways.
you can enter the assignment fee on the hud-1, and the title agent will cut the check, once the wet close(your sale of the property to your end-buyer ) funds , then the funds from that will pay for the property to your seller whom you purchase the the home from,
or you can assign it to the borrower’s or end-buyers loan, however you would get paid outside of the closing… which is too risky because the borrower if not an investor, usually won’t have the funds…
the Last route I heard, was that a lien can be placed against the home for your assignment fee… again I am not clear with all the details, one of the gurus/veterans here, should be able to clean up what I have said…
I also have a question for you… How does one get around the title seasoning issues with the lender… when they go to check the title and find out my name is not on it…they usually won’t do it? I was thinking maybe if the end-buyer is an investor and uses hard money it won’t be an issue… if its a retail buyer… then what???
Its difficult to assign or double close to retail buyers. A “wholesaler” sells to investors not retail buyers, hence the term “wholesale”. We do this for a number of reasons but mostly because financing is less of an issue with an investor. Most investors use hard money or commercial lending which either of those don’t care about the chain of title. They can also close much faster than a retail buyer. If I am wholesaling a property and the buyer wants more than 2 weeks to close, I’m usually not interested.
If the assignee doesn’t close, you are normally still liable for the contract. Most assignments are done on the HUD-1 as an assignment fee, but some wholesalers require some or all of the assignment fee upfront. If you don’t get your assignment upfront and the buyer doesn’t close, you won’t get your fee.
Hello Ryan, thanks for your expertise…
in your expert opinion, do you recommend the wholesaler taking the entire assignment fee up front, or perhaps taking a deposit and the latter part of the assignment on the hud-1.
Which method do you prefer/use…
Lastly I was told that an option contract would allow the wholesaler to get out of the contract in the event the buyer can’t close… is this true?
I normally do double closings. The assignments I have done I just collected the fee at the title office. Whenever I sell I always require a non-refundable deposit, $1000 per property. An option in a contract, requires an option fee to be paid to the seller (can be a $1), and it allows the buyer to terminate the contract for a specified period of time with no recourse. Most wholesalers that put outs in their contract (I don’t use any) just put in some kind of contingency such as “contingent upon partners approval” or a financing contigency or something similar that will allow you to get out of the contract with no legal recourse from the seller.