So if your doing a Deal and its closing time how do you get your end of the funds if the buyer buys at let say 85000.00 and the seller sells at 80000.00 how does that work with the Real estate Attourney and gets in to Escrow? Im farily new but i get the idea. and how much would the attouneys costs? And you just deal with a Real estate agent or and Escrow agent? Im still doing my research. so Bear with me. :help
I am also a newbie. I recently closed on my first deal. The way I did it was the end buyer and I agreed on the price he was willing to pay for the house, in your example that would be $85k. The difference between what the buyer was buying at and what the seller was selling at, in your example $5k became my assignment fee, and that was reflected in my assignment contract with the end buyer. The assignment contract also gets sent to the closing agent, along with the executed sales contract. The assignment fee shows up as a cost on the buyer’s side of the HUD1, and the settlement agent sends you a check at closing.
3 things to note:
- get at least $1000 non-refundable deposit to put in escrow when you sign the assingment contract with your buyer (I got $2500)
- If you have put down a large downpayment with your seller, make sure you get that back (I had my end buyer reimburse me for it with a check made out to me at the time we signed the assignment contract; it was also a stipulation in the assignment contract)
- You don’t have to wait until closing to get paid, if your end-buyer will agree to pay you earlier. Also you don’t have to get paid by check from the closing agent if your end-buyer will agree to pay you directly outside of closing.
An alternative way to do this is the double closing, where you actually close with the seller, take title to the house, and then sell to the buyer. The advantage of this is the buyer does not see how much you are making on the deal. Also if you are dealing with a bank, they often do not allow assigning a contract, so you have to use a double closing or an LLC (this is a third way to wholesale your deal). The disadvantage is you may have to pay 2 sets of closing costs, 1 set when you buy, 1 set when you sell. If you have negotiated great deals where the seller pays all closing costs when they sell and the buyer pays all closing costs when they buy, you can avoid this. Also if you are using transactional funding to close with the seller, the lender fees are typically 2%, a cost which can also eat into your profit (but you would not have to worry about this if you have your own cash).
If you use an LLC, then you get the sales contract in the name of the LLC. Once you and your end buyer decide on a price, you sell your interest in the LLC to your end buyer for the amount of your assignment fee. Remember though, when working with the seller, the seller may require proof of funds, and would expect to see either your name, the LLC’s name or the name of a member of the LLC on the proof of funds.