I’m new to the wholesaling business and I noticed one comment made
that suggested a double closing would be absolutely neccessary if the
seller or the buyers’ lender wouldn’t allow a contract assignment. In
this scenario, would it possible for the investor to pay the assignment
fee when an assignment agreement is reached and put in writing, or
would it have to be paid at closing and be detailed on the hud1?
Thanks in advance for your knowledgable responses.
If there is a double close there is no assignment and no assignment fee. An assignment is where you assign (actually sell) your rights in a contract tio another party. if there is a double close there is no such assignment.
In a double close, you go through with the complete transaction and purchase the property. Then you immediately (sometimes within seconds/minutes in simultaneous closes) resell to another party.
With an assignment, the end-buyer pays you the assignment fee and you are basically removed from the contract. You don’t worry about closing costs, or anything else, you should simply receive your assignment fee either completely at the time of the assignment, or is some cases part of the assignment when you sign it over, and the remainder at closing. In either case, you should receive a credit for any earnest money you put down. That’s it. Your profit is the assignment fee. Normally, your fee shows up on the HUD-1.
In a double close you pay all fees associated with purchasing the property. You then pay all fees associated with selling the property to the end buyer. Your profit is the difference paid in the selling prices, minus the costs of two closings. There is no assignment fee on either of the HUD-1’s.