I am new to this forum, my question is when dealing with a first time home buyer or someone who’s planning on living in the property, how do I get my assingnment fee. Will the seller pay me, do I get my funds form the sellers profit. Help me out?
Hi,
If your doing an assignment of your existing contract you fill out an assignment form.
If your contract is for $100k, and you want a $5k assignment fee then your end buyer agree’s to buy the property for $105k plus closing cost’s and you maybe ask for $2k upfront and $3k at closing. Buyer (from you) pays your fee.
I have one if you need it?
GR
So let me get this correct…If i have an owner selling their house for 100,000, and the home is worth 170000. The contract price has to reflect my assingment fee if the home is being purchased by someone who will be living in the property. So my assignment fee will increase the sales price or will the contract still state 100,000, and then have an assignment contract shown my fees. So will my cut come from the sellers proceeds? Who pays me in this type of transaction. I understand how it works with an investor but not a person intending on living in the property.
Hi,
Your example is a little more extreme for an assignment, if you buy a property for $100k that is worth $170k I would suggest doing a back to back closing where you take title (Transactional Funding) and then close over to your end buyer the next day.
Assignment of contract is great if your assignment fee is less than say 5% to 10% of your end buyer sale price, but most people do not have $70k to put up and generally your end buyers mortgage lender does not see the additional cost of the assignment fee.
Last time I did an assignment was Vegas in 2004 / 05 and we were contracting for purchase homes in the $300k to $500k range and assigning contracts for quick cash of $5k to $30k per contract. We were following the raising market where homes were going up $10k or more per month.
When you assign your contract your end buyer from you pays your fee, either all upfront, part upfront and part at closing, or maybe just puts up the same amount as your earnest money and pays your fee at close of escrow. Your borrowers lender can only loan against the contract, so in your example someone would come out of pocket over and above there mortgage lender $70k to $90k with 20% down plus closing costs.
Contract $100k
Down $20k = 20%
Your contract value $170k = Assignment
Cash down $90k
Seller does not pay, they sold it to you for $100k!
Assigning a contract is great for quick cash flow in a stable or growing market, as I said above Vegas home values were growing every month so tying up a property for $300k and assigning it for a $10k assignment fee with closing 45 days later was a good deal for a buyer as theoretically the house was worth $315k the day of closing in a market raising $10k a month on homes over $300k
End buyer always pays you the difference between your original contract purchase price and the assignment fee for a total!
GR