I’m understanding that closing laws are different from state to state.
How do assigned contracts and closings work in Georgia since I can’t deal with the title company?
I’m trying to get started quickly, and I can’t find help in Atlanta so I’m just going to jump out there.
Nikki, I’m also in Georgia and have the same question. Have you found out any answers to your question? If so, if you wouldn’t mind sharing what you found out that’d be much appreciated.
Thanks! ;D
Hey Darren,
I haven’t found everything I need yet. I have found out that we can assign contracts but the closing/contract process still baffles me. I would really appreciate a “walk through”.
I’m attending the local real estate club meeting on Monday. It is $25 for guests. Being there and networking with actual people in our area looks to be the only way to get some straight answers.
this is what I will be visiting.
www.gareia.org
Where are you in Georgia? I’ll let you know what I find out if you can’t attend. Feel free to email me. My address is in my profile.
Thanks, Nikki, for your response. I agree that going to local meetings would be the best way to learn (or at least find some info out). I probably can’t make it Monday because of some pre-existing obligations. But I will check out that site and perhaps make it to a future meeting. I’m in Smyrna (Cobb County). Actually just moved here from Utah about a month or so ago, so EVERYTHING in Georgia is still new to me, let alone Real Estate.
Oh, just thought of something from your last post regarding closings, assigning contracts, etc.
The way I understand it is this…you can avoid going to closing altogether by simply assigning the contract to the end buyer (i.e. your investor). Here’s a brief “step-by-step” guide as I have come to understand the process:
You find a buyer (or list of buyers) who is able/willing to purchase rehab properties for cash (is best) unless they can for sure secure financing. Many investors will be willing and able to pay cash, and if yours isn’t you can almost always find someone else who will.
You find out what kinds of properties they are looking for (area, price range, margins, renovation work required, etc.)
You then find properties that match what they are looking for. Basically you find a hungry fish, find out what he likes to “eat”, then go and find the “food” he wants. It’s almost a guaranteed sale.
You contact the seller and make an offer (try to make it as low as possible). Be sure to work in your profit and a profit for the end buyer (your investor). So, an example: Maximum offer = ARV (after repair value) - 20 or 30% profit for buyer - estimated repair costs, closing costs, title, etc. - your profit (about 3-5K).
—> So, if the ARV of the property is $200,000, then you would substract $40,000 for buyer’s profit, and about $20,000 (or whatever it is) for estimated costs in repairs and fees, and subtract $5,000 (for your profit). This would mean that the maximum offer you want to make is $135,000. Any higher, and you’re cutting into YOUR profits (which you can do, if you want to make less) and the END BUYER’S profits (which may make it harder to sell).
If the seller agrees, GREAT! If not, negotiate but keep your end buyer in mind (remember, from interviewing him, you already know what profit margin he’s looking for). If he’ll be happy with just $20,000 profit, then you can negotiate up to $155,000. You sign a contract with the seller (a “Purchase Agreement”) with your terms (be sure to put “YOUR NAME and/or ASSIGNS” as the buyer so you can assign the contract to someone else; and put a clause in there that you have the option to purchase the property, assign it to someone else, or back out subject to inspection within 10 to 14 business days (check out the forum for many opinions on how best to do this).
Once the seller signs the contract, you then go to your buyer.
NOTE: There are a number of ways to do this (one involves “double closing” which is more expensive and where you’ll have to deal with the title company, and the other one takes you out of the closing altogether, which is probably best when just starting out and with lower profits of $5,000…if your profit is $10K or more then you’d probably want to double close). For a “double close” check out the forum on how this works. Basically, you’ll close with the seller and the new buyer at the same time (either together or in different rooms/locations). The money from the buyer will fund the purchase from the seller, and the title company will cut you a check for the difference (your fee). But since we want to avoid the title company, here is how to stay out of the closing altogether…
You tell the buyer you have a contract on the property, what the purchase price is, and tell him what the ARV is (what he can expect to make as profit). When he agrees to purchase it, you have him sign an “Assignment Agreement” that states how much he is buying the contract for (this is where you tell him your “fee”…if you don’t want him to know how much you’re making, then you’ll have to do a “double close”, but on a $5,000 profit most investors won’t care what you’re making if their deal is good). You can either have him cut you a check on the spot (non-refundable, even if he doesn’t end up closing, to protect you so you have your money either way) or you can make the payment due on closing (which you’ll then need to send the “Purchase Agreement” and the “Assignment Agreement” to the title company so they can send you a check when it closes, but you won’t actually have to be at the closing…note that some title companies won’t do this because they won’t pay unlicensed third-parties or “bird dogs”, and if they do then you won’t get paid until the property actually closes so you’ll want to have a motivated seller AND buyer to speed things up. I think you could also charge the buyer a non-refundable “deposit” up front for “earnest money” to protect you if he doesn’t close).
That’s pretty much it, in a nutshell. Now you’re out of the picture, and all the responsibility of closing, all the closing costs, inspections, etc. are on the new buyer, and not you. You walk away with your $5,000 and your buyer gets a great deal on a property.
Keep in mind this is a basic overview of how I’ve understood the process to work. There are many ways to handle it, many different “contracts” you can use, etc. I would recommend reading all the posts in this forum, because there is a lot of great advice on how to do this.
Hope this helps! I will e-mail you an article I found about wholesaling, that it informative and might help a little too. I also have some sample contracts and “assignment agreements” I can e-mail you if you’d like.