I have 3 to 4 contracts I want to flip. When I feel out the contract with the realtor do I tell her I will assign this contract to a partner?
After paper work is completed with realtor, I find investor who wants the property I give him my assignment form and collect deposit? Lets say he gives me a deposit, do I take the paper to the title company?
Not sure how to fill out realtor paper work regarding options.
Not sure what the steps are, any help would be great!
Before you sign any contract to buy a home to assign, you should have your buyers lined up.
Tie the home up under contract with an easy out clause such as contract is contingent upon the outcome of inspections, inspections will be completed within 10 days. If you intend on assigning the contract use something like “your name and/or assignees” to sign with.
Make your earnest money deposit also contingent upon inspections
Get your buyers through during the inspection period.
If they like the home take the deposit from them and use it as yours be sure to inform you buyers that their money is non refundable and get it in writing.
It is possible to just take your fee out from the investor and then have him sign a form that takes on the contract at the said price. This is a great way because it pulls you out of all risks associated with him not closing. You have got your money whether or not he/she closes. They would sign a contract along with the sellers stating that they are the new buyers. You do not necessarily have to get the sellers signatures, but it could prevent some headaches down the road.
There are many more options you could use but, your way would have looked like this.
Find some homes
Scramble all over looking for buyers
End up losing money, or at least end up looking bad when you cant close all of the deals…
Are you actually planning on flipping, wholesaling, or assigning?
At any rate all of the above are much eisier if you have buyers first.
I have some clarifying questions about steps 5 -7
“5. Get your buyers through during the inspection period.”
*Do you mean have them look at the property during the Inspection phase? But you don’t actually pay for an inspection, correct?
“6. If they like the home take the deposit from them and use it as yours be sure to inform you(r) buyers that their money is non-refundable and get it in writing.”
*After earnest money, you have 2nd deposit ready?
“7. It is possible to just take your fee out from the investor and then have him sign a form that takes on the contract at the said price. This is a great way because it pulls you out of all risks associated with him not closing. You have got your money whether or not he/she closes. They would sign a contract along with the sellers stating that they are the new buyers. You do not necessarily have to get the sellers signatures, but it could prevent some headaches down the road.”
*Please elaborate on step 7. I want to avoid going to closing. Also, would be very and appreciated greatly if I could view a sample of your contracts between you and the assignee or any other forms you use during this process.
Is there any liability to you if there is something wrong with the property? I would think not only because you are selling your position as a potential buyer not the seller of the property. Correct?
It’s a good idea to have a corporation setup to use as the buyer. In the buyer’s line put your corp name and/or assigns. IF they ask you what the situation is just tell them you have to assign it to an individual’s name before closing.
Quick question about step 5…if you bring in your buyers to check the property, couldnt they just wait until your inspection period with the buyer is up and buy direct and cut you out? How do you protect yourself? I would like to think your buyers have some ethics, but you can never tell right?
A buyer could certainly wait for you inspection period to be up and then go around you. That is why you have several buyers lined up. It is a big risk for them to lose the property to be shady when they know that there are other interested parties that aren’t going to play dirty like they do in your scenario. When playing craps, I like to load the dice in my favor.
Thanks for the response…that makes sense. I guess I am still trying to figure out exactly what to disclose to who and at what time. Once you have the contract, is it safe to assume you can be upfront with everyone? I would imagine it makes things alot cleaner that way. Do most just assign the contract and collect their fee to avoid being part of the closing, or actually give your buyer another sales price above yours and get paid at closing?
I don’t tell my buyer about the assignment until they agree on price. For instance, if I have a house on contract for 19K and I want to make 3K profit and use the assignment technique, I would get the buyer to agree to a purchace price of 22K. When they do, I have them sign my assignment form. I would also collect some earnest money. My investors do not pay me an assignment fee until closing, so I send the assignment contract to the title company. The reason my buyers like that is that it shows my fee on their HUD statement so it is easier for accounting purposes to show the IRS what they bought the house for (22K, not just 19K).
So after you assign the contract to a buyer and escrow is closed, you get a check from the title company? It’s never the case where the buyer will cut you a personal check? I’m just wondering with the whole trust issue thing since the buyer can easily cancel the check when he/she gets home.
I’m still learning. Newbie here. ;D
Exactly. The check is cut by the title company. Your buyer will have to bring certified funds for the purchase price and your assignment fee to the title company. They, in turn will apply the purchase amount to the purchase contract and cut you a check for your assignment fee. That way, there is no trust issue to deal with. I have yet to see a title company check bounce or be cancelled. ;D
ok so im new and i went around this suggestion i got membership to a foreclosure website and did my research on my own found few very good deals in IL and couple of them have the appraisals and everything and the equity on one is over 60k+ has all the papers and everything stating that and he is even ready to go get it under a contract for $700 that will be 50% refundable in case of my backout NOW THE problem is that i did not find any buyers in the process now do i contact ppl like 1800buyhouses and companies like that how much do they pay the actual figures are 190k fixtures 60k appraised value ARV is around 380k even if sold for 350k that is a very good profit for an investor if anyone is interested let me know this is located in Chicago , IL im looking to get atleast 10k finders fee there is A LOT of built in equity as well as after fixing equity please guide me someone