For the assignment fee, I want to be fair but make a conservative profit…
Would I go for 7800 (10%) of FMV? Or would I do 10% of what I offer the seller? And I was told I should double whatever Im asking to
make room for negotiations. This would be my first deal, what would you do?
It depends on who your assigning to? A owner occupied buyer or an investor.
FMV / ARV does not matter your fee is based on the property purchase when you assign the contract!
Purchase price, rehab and carrying cost’s can not exceed 70% of value for an investor to purchase, your assignment fee must be part of that purchase price!
$78,000 - FMV / ARV
$23,400 - 30% Investor purchase margin
$54,600 - Actual investor purchase price
$30,000 - Purchase Price
$24,600 - Maximum amount of rehab, carrying cost’s and assignment fee
If you are assigning a property to an owner occupied buyer getting a mortgage loan or a 203k loan the assignment fee has been studied and found that about 6% is the maximum amount of money a home buyer will pay out of pocket for the assignment! Anything more than this and owner occupied buyer will go find a different property as your assignment fee can not be included in the HUD 1 and borrower can not include your assignment cost in the loan or closing doc’s!
If you are assigning this to a real estate investor about 10% is the highest you will find successful, anything more on an assignment and the investor will walk as there are other deals out there and since you don’t actually own it, or are at risk in it investors feel 10% is a fair profit.
If you actually bought and own the property and were selling it to an investor you may be able to get 15 to 20% of purchase price as is!
Most of the wholesalers I know don’t negotiate there price, price is what it is and either you buy it or it get’s sold to someone else!
If you buy for any price and get transactional funding, buyer (C) has absolutely no idea what you paid and a deal is a deal whether you make 10% or 50% profit!
But you will have to close to you using transactional funding and then close to your end buyer (2 Contracts)!