If I get a house under an Option Contract and assign to a retail buyer do I get my spead at closing? Example 20K spread, get 1K deposit and 19K at closing. Am I missing something? Thanks, Herbster
How is your buyer paying for the property?
Cash, traditional bank financing, etc?
That’s the first thing we need to know.
If it’s cash, yes, you’ll get your fee at closing.
If the buyer is getting traditional financing, you’ll
need to structure the deal a little differently.
You definitely will not get paid via an assignment
fee, especially if your fee is that large…
Jeff Corpuz
Jeff, yes Bank Financing. I read some where that a FHA loan would only allow a $3000 assignment fee. Do you know anything about this? Herbster
The last time I wholesaled a property to an FHA backed buyer was
around 2004, where I only made $1,500 on the deal. No problems.
Nowadays, you may or may not be able to get paid an assignment
from FHA. You can definitely try it, however.
The best bet would be to not disrupt the chain of title and have your
buyer and seller go into contract together, and you get paid by way
of a release of lien, contract, or payoff, etc. This is if the end buyer’s
financing has title seasoning. If you’re making a large fee ($20,000+++),
then you may want to purchase the property first or do a double closing
and immediately sell to your buyer. This will require that your end-
buyer’s financing has no seasoning issues.
Where do you go for these no seasoning financing programs? Best
bet is LOCAL lenders. Also, if you have a good mortgage broker on your
team, they may be able to find a few for you…
Jeff Corpuz
Herbster
Don’t know what state your in, etc. But there are many ways to protect your fee/profit depending on your relationship with the parties, etc.
I had a new investor come into my area and he had tried bird-dogging in another state and got shafted enough times to give up. He then followed someones suggestion to wholesale and ran into a backdoor charlie who aced him out of the deal. I told him we had run those clowns out of town long ago but that doesn’t mean one won’t show up and he could just call me to check on local investors.
But to feel he had some control I taught him to go past normal bird-dogging and get an option on the property and not to assign it but to option the option. and in other cases again not to assign it but to option the purchase agreement. The option payment is taken care of in escrow. It gave him some control and he could sue any backdoor charlie and have grounds to do so.
If I have a large profit wholesaling I prefer to do a simultaneous close or a double close. I know this is a business but if it is really large I just include the seller into the deal and have him deed directly to the end buyer which avoids seasoning issues and he can get a bonus, we share the wealth. Also you can have the seller buy back your option with a note and trust deed and it will be paid off in escrow like any other lien and not show up as an assignment for your FHA type restricted deals.