Can’t handle another rehab at this time, so I’m wholesaling a deal. I have an assigment of contract form, my only question is what is typical regarding payment of my assignment fee. It will be $13K, and buyer is going to be paying cash on the purchase of the property.
I’d of course like the $13K when we notarize the assignment, but if that’s pie in the sky, how should it work to make sure I get paid?
Try to get a upfront portion of the assignment fee.
Some birdgogs and wholesalers have contract set up for the fee but most just take their word. A invester doesn’t want the bad word going around if they screw over a birddog. You will get the remainder of your fee as closing time cut to you. Great job that is a nice fee you got for yourself.
It is not terribly uncommon to ask for the fee upfront especially if the buyer is paying cash. If the buyer is worried about the seller not closing on the deal then you might put the money in escrow at a title company. Once you assign the contract then it is up to the buyer to uphold all ends of the contract. The only way he should get his fee back is if the seller decides to back out of the deal
The common practice in real estate is that everyone gets paid when the deal closes and the deed gets transferred. Any money that exchanges hands before hand is considered earnest money and is really designed to show commitment from the buyer to the seller.
I would get a portion of the $13,000 assignment you are going to be getting from the buyer at the time you sign your paperwork with them, and then the rest at closing.
I just fax in all of the paperwork to the title company (purchase contract, and assignment agreement), and let the title company handle the rest. I show up to closing and get a check for my assignment fee (minus the deposit they have already given me).
I know some people try to get paid the full assignment before close, but I have never had that happen. I don’t mind waiting as long as I have a nice non-refundable deposit from my buyer.
If the buyer is indeed paying cash and you cant get him to pay the full amount up front, but you want to be sure that you get your fee, talk to the title company about adding your payment onto the HUD statement at closing. You usually can’t do that if your dealing with financing, but with cash it’s no problem.
Tell the buyer that it will work to his benefit because it will create a perfect paper trail when it comes time to pay taxes.