I made an offer of 95K on a house and I told the tenant that I would cover the closing costs and appraisals (I think). Before I put the house under contract I would like to know how I could make a profit (or the steps) to assign the contract. Also, would the people I sell the property to keep the title company that I have assigned?
The procedures may vary state to state on what you can do, slightly, but here’s how I’d do that deal in Texas:
- The first thing I would of done prior to making an offer, is run a comparative market analysis (along with checking the tax rolls & analyzing the house for the amount of repairs it needs) to know what kind of offer you could give.
- After THEN make an offer & try to get it accepted…
- I would put it under contract with as long of an option period as possible; on that contract you’d simply specify the name / location of the title company that you want to use
- Put together my marketing package (pictures & videos, integrated professionally with lots of data on the property … into my website & advertisement emails) .
- Market it to my buyer’s list, and a few real estate investor websites
- Once I find a buyer, sign an Assignment of Contract document and get a non-refundable deposit to lock in a guaranteed minimal profit (and the deal)
- Close with both parties prior to the option period ending, that way there is 0 risk for me in case something happens like the buyer backing out…which is rare, but can happen.
- And I walk away with a check at closing to go on top of my deposit check.
I did a deal just like that a couple days ago (bought & sold a house in 48 hours).
It’s not long-term steady income like rentals, which is one of 3 forms of real estate investing I also do by the way, but it’s easy money and quite fun!
First you have to remember what terms you and the seller negotiated! Then you must make sure that the property you are assigning is assignable. One way is to use an residential as-is contract and on the buyers line after you put your personal name, or entity make sure you add And or Assignees. Once that is done you can use a simple one page assignment to assign the property to your buyer.
In regards to your question does the buyer use the title company of interest? That answer to that question is yes, you are the buyer on the original contract, which means you are the seller of this property and you are in control of it, meaning every potential buyer has to come through you if they are interested in purchasing the property. Seller ALWAYS has preferred rights when it comes to choosing title company. Hope this helps! To your success! :beer
Putting “and or assigns” or “and or nominee” under the buyer line of the contract is a dead give away that you do not intend to close on the property especially if that contract is going through a realtor and/or the seller’s attorney.
A more effective way is to just sign your name on buyer line then add an addendum to the contract. An addendum is something every attorney is familiar with and easily accepts as part of contract negotiation. The addendum overrides what is originally stated in the contract thereby can turn any contract into your type of contract.
On the addendum, you can add that the buyer has the right to assign the contract to another entity or partner for investment purposes. And you can add any other clauses that you want; just don’t go over board on the clauses or the seller’s attorney will balk at it.
When an attorney asked me why I want an assignment clause I replied, I buy properties for investment and sometimes I will create a separate holding entity for the property. Or a partner of mine my want the property for their own portfolio. The seller’s attorney never had a problem with it.
Then follow the steps motivatedceo laid out.
From my experience, if an attorney’s going to freak out about adding “And or assigns” to the signature section on the contract, they’ll also freak out about adding an addendum to the contract that say’s and does the exact same thing.
If the seller really wants to get rid of a property, they normally won’t hassle you a ton about whether or not it’s you that ends up closing on it.
One of the tricks I use to set the stage for this is to make is clear from the beginning that the seller and I both want the same thing and neither of us will get ahead if I don’t end up closing on their home.