How To Work Assignment of Contract Situation?

How would the assignment of contract work in a situation where one would buy a property from an investor? After one buys from the investor, one would then sell to a buyer.

  • Investor has contract on a property.
  • Innvestor assigns the deal to you with assignment fee due at closing
  • Your intent is is to sell to a buyer at a higher price for a profit

Guess I’m trying to understand how I could work with Investors that already havediscounted properties under contract since I have buyers and financing for buyers.

So if the contract is assigned, I would have to follow the clauses as stated in the contract unless some new cluses were added?

I thought the assignment of contract gave up all rights to purchase the propertry by the Investor.

What happens if one does not find a buyer and does not close?

Is some sort of clause added to the assignment contract to allow the Investor to continue to market and sell the property as well, just in case he finds a buyer before I do?

If the contract is assigned to you, that means the old investor is out of the equation 9or should be). You bought them out of the deal and you now hold their rights. however, many investors will continue to assist with the deal to make sure it closes, as most of the time you don’t get the full assignment fee until the property closes.

It is possible to assign, and reassign the property many times. I’ve known of some situations where properties hvae been assigned through 5 different investors before it found an end buyer. So in theory it isn’t a problem. The practical side is that each assignment sucks profit out of the deal for each assignment fee, and you easily reach a point where there is no longer any profit to make a sale.

As far as the clauses int he contract, they are unaffected by any assignments. So for instance the orignal purchase contract gave 10 days to do inspections - and you purchase the assignment five days later - you have only five days left to do whatever inspections you are planning, unless you get an extension from the seller.

If you can’t close the deal - you’ll have a pd off seller. More importantly, you’ll have a pd off investor who probably won’t do a deal with you again. You’ll also quickly get a reputation of an investor that doesn’t follow through with contracts and wastest peoples time. that is a great way to find all the good deal closed to you. If you are going to go for an assignment of a wholesaled deal, it is better to already have a viable and vetted buyer in hand before you go screwing up a good deal for everybody.

Good answer Salverston!

One more point-
There is a Purchase and sale agreement from seller to investor.

Investor assigns contract to Peter114- (you are actually purchasing the Purchase and Sale agreement) and you usually have to put down a non-refundable deposit.

Since an assignment is actually just purchasing the P&S, what ever terms were set in the agreement usually can’t be changed. (unless everyone agrees)

So from what I’ve read, it seems it’s best to deal only with investors that are the actual owner of the property (on title)…not investors that have property under contract, but who really own the property.

Then I could get an option contract on a property and it’s possible for the seller to still have selling/marketing rights.

An option where the seller can keep selling is worthless.

You seem to be operating backwards. For wholesaling - normally the best way to work is find buyers first - then find properties that they buyers want to buy. better yet, develop an extensive buyer’s list - a mix of rehabbers and landlords - different ones interested in different neighborhoods and price ranges. That way when you find a hot deal you can either tie it up on a PC. if it is borderline call your buyer’s first, say"I got this situation, are you interested?" If they express interest and you know they are a bona fide buyer then, again, tie it up, but the deal should be 50% done.

Your main idea is you should already know how you will get rid of the property when you sign it up - ie “I have those three buyer’s who are wanting cookie cutter 3bdrms in this area, at this price I know one of them will jump on this!”

If all you are doing is signing up a property on a wing and a prayer just hoping you’ll find a buyer somewhere - it just doesn’t work well in wholesaling. It is okay if you are doing things like sandwhich lease-options or rehab-flips, but not wholesaling.

Something else to keep in mind… if the last assignee in this string of investors/wholesalers is trying to sell to a buyer using traditional financing, think again. That buyer’s lender won’t allow all of the assignments - or any assignments (usually) for that matter.

Actually a non-exclusive option is not worthless. I’ve used them in several areas of the nation producing a six-figure income.

I just have a couple questions:

What would you then do if you think you have a buyer who may be interested and they are usually reliable, but this time the deal falls through and you are left with a P&S that you can’t buy yourself. What would be a good way to make sure you can get out of a deal if know you can’t actually purchase but your putting it under contract strickly to assign to an end buyer?

Is there some kind of clause that you could input to get you out or is this a no no?

Also is it possible to put a property under contract with out you personally have the mortgage? if so How

You would have an exit strategy like an inspection contigency. If you have no exit strategy and no means of buying it yourself, then you are screwed. That’s why you need to have multiple potential buyers in the hopper when you are planning on assigning a deal