I would like to have a contract set up so I get paid at closing. That way I never assing a contract for 5k and then my buyeyr never closes on the house because of heavy leins that the seller can’t sell for the agreed price or major work that my buyer can not afford to do. That way my buyer does not spend 5k on a contract for a house that ends up not being an investment and has to back out loosing 5k.
Is there a contract set up for this?
Most investors are not gonna give you it until it closes(I know i would’nt).If he is a SMART investor,then he will have his homework done before the closing and find out for sure if he has a deal.
Makes sense but it seems like they can wait until your contract is null and get the house under contract with the seller eliminating you fee.
To prevent that you can get a Memorandum of agreement filed,this will cloud the title.
Where do you get this “Memorandum of Agreement” from? What are the steps to order and/or file? Who do you file this with?
You assign the contract via a little piece of paper called an assignment of contract. It becomes part of the sales contract and will be paid at closing by the closing agent.
First, the majority of investors are actually honest people. If you bring a legitimate deal and they make a contract with you, you will get paid.
Second, they can’t just “back out” without recourse. You do have a contract with the that is enforcable.
Third, yes, if you assign a contract, in most cases the investor will want to pay the majority of it at closing. However, it is still a contract, and you should ask for an upfront payment as well.
Raj
In half of the posts, the advice is to be paid for our assignment fee at the time of assignment and that we should be paid regardless if the buyer goes through with the deal (if the seller backs out, the fee is to be refunded however).
In the other half, the advice is that a “smart” investor would not pay until closing.
I fail to see why someone that has run the numbers and done the due diligence enough to accept the assignment would not want to pay the fee when it’s signed over. Once I sign my contract over, I am out of it. I can do the memorandums and all that, but why should I have to? I don’t have interest in doing business with someone who is unable or unwilling to pay me for the deal I’ve brought them when I sign it over to them. If I am going to wait for closing to get paid, I might as well do a double close and make more money.
If you are worried about an investor not paying at closing, the assignment fee, than yes best course of action is to file memorandum which at worst takes an hour of your time to do.
But the most important thing here to remember is, that if he/she doesn’t follow through on your assignment fee, you will never do business with that person again, right? LOL
I know, not a pretty answer, but it’s just one deal. Have more than one in your pipeline and if someone tries to “screw” you remember who it is and wear a sign at your nest REI Club Meeting that says “SO AND SO UNSCRUPULOUS INVESTOR DIDN’T PAY ME”
LOL…I only am kidding about that.
Seriously, yes, after assignment you are out of it, but wouldn’t it be prudent to just request a small fee upfront and rest in escrow?
I may not have the best answer; anyone else have something better, I humbly ask for clarification from those on this board.
Best wishes! :biggrin
Ed Bisquera