I have heard the safest way to get your assignment fee is right away rather than wait till closing. This being, no investor you are assigning it to will have too much chance to dump me and assign the contract to someone himself, thus ripping me off. You don’t want to do that to me, by the way.
Second, the better fee amount for an assignment fee would be at closing, if a person wishes to wait for the fee till then. Would you give your comment to how you see it, please?
bjean
I want to tell you up front that I am still learning the details about flipping, and my answer to your question is based on things I’ve read, other investors and gurus that I listen to on podcasts. I have heard that to protect yourself from getting ripped off, do the following: After you have signed a contract with the seller of the property, you should file whats called an Affidavit Of Memorandum Of Purchase And Sale Agreement.(Its a 1 or 2 Pg contract) You get it notarized, then file it in the county in which the property is located. This makes it so that who ever wants to purchase that property has to go through you.
I’ve recently noticed a number of posts concerning getting “ripped off” by new wholesalers/birddoggers. To that end, I’ve got to say simply GET OVER IT.
REI is a business, and like all businesses, at some point, you are (or at least stand a good chance of) going to get “ripped off,” as in you’re either not going to get paid for your efforts or you’re going to get paid less than expected. Yes, you can make efforts to prevent this and you can have multiple contracts “protecting” you, but unless you are willing to move to a lawsuit (and spend more money to do so), you’re still in the same boat. My only suggestion is if this severely bothers you, don’t get into this business.
Now, the best time to get an assignment fee is WHEN the assignment is signed. However, some people don’t want to do this. You’ll have to decide if you want to assign it to them or not. IF you do assign it, then it is THEIR contract to do with it as they see fit. IF that is to assign it to another investor, then they are within their rights to do.
I don’t think that you’ll get any more or less per se whether you wait to closing to collect or if you collect upfront.
Raj
If you control the deal and the seller you can get your “Fee” at the closing. Be sure you file the “Memorandum” though it protects you from the “sharks” they are in every market always have been.
Yeah, we would have to get over it, if this happened and move on. I feel my questions have been answered, and I do realize the sharks are always around no matter where or what we do. I do like the affidavit to file, though. So thanks everyone. As usual you all are so great and appreciated.
bjean
DEFINITELY get that money at the time of assignment, don’t assign it and then hope you u get paid.
Why not just use a double closing so that all the money is in the escrow account and the escrow company can disperse your money to you…
If you must do an assignment, sign as the money is handed/transfered to you - I mean this literally!!
Personally…I’m not paying any wholesaler until it closes. What happens if there are title issues, liens discovered, oops forgot that there was a 2nd mortgage, etc. etc. If your buyer is solid, reputable, and not jerking with you then it shouldn’t be a concern. Even if your new to this business you need to do your due dilligence on your buyers. Basically…interview them and get to know them before you sign a contract with them. If you feel like they are going to rip you off, then press on.
Nate-WI
Hansleyward is right, you should file an Affidavit Of Memorandum of Purchase and Sale Agreement to protect your interest. Here is a link to a sample form.
http://www.totalrealestatesolutions.com/realestateforms/html/AgreementForPurchaseAndSale.html
Normally you get paid at closing as a HUD-1, because the funds (including your payment) may be coming from a financial institution. But, you should ALWAYS request $500 or more in earnest money up front, at the signing of the assignment.
Due Dilligence should be done before you actually purchase the contract from the wholesaler…
As a wholesale, my defense would be…“What if you don’t close, like you say you will?” That is one of the main reason wholesalers want to get paid up front.
As long as you do your due dilligence, suprises will be rare if any.
-Lamar
Another thought is to get a lease option signed from the seller then when you close at the end with the buyer and seller it can be included on the HUD 1 as a payoff to you as the option holder. If done correctly it works similar to a back to back closing without having 2 rounds of closing costs, or the need to search for a back to back closing title company.
Good luck