Assigning A Contract?

Comments(5)

• 
  KyleGatton15th April, 2004

  Each deal is different, but what has worked for me is to have your down payment paid back to you at the assignment. and any extra profit you plan to make paid to you at closing. Make sure to document everything with contracts, such as assignment of contract stating what you have and will receive, and then a secondary contract stating what you will receive at closing. Should you need to go to court, two contracts, are easier to collect on than one. Also ideally you should have a non disclosure contract in place before releasing any information to the potential buyer.
  
  The best way is to get all of your money at assignment. But that isnt always possible. At the least, unless you are running out of time, get your down payment back at the assignment, and the rest at closing.
  
  I came across one deal where it just would never happen. The contract assignment was being wholesaled to a wholesaler, then to me. Then the financing end had two mortgage brokers putting the costs ridiculously high, and the buy unacheivable. The actual buy price was 50% and after everyones greed kicked in my buy price was 90%. I walked away from the deal and laughed my head off. To knock out that situation get a deposit, make sure your buyer is for real, and not a secondary wholesaler looking to do the same thing you are with no money out of pocket. Also people act differently when they have a little money, or hard work at stake.
  
  Good Luck,
  Kyle[ Edited by KyleGatton on Date 04/15/2004 ]

• 
  JDC2115th April, 2004

  Thanks for the info. What about typical assignment fees (per acre? or flat fee?) How much of the due diligence is completed (soil tests, survey, site plan, or anything at all?) Any other pointers would be great.
  Thanks

• 
  NancyChadwick15th April, 2004

  This is based on my experience in brokering land deals that involved assignments.
  
  How much due diligence gets done at the point of assignment basically depends on several issues, including when in the timeline you're assigning your interest in the deal. If it's during the subdivision approval process, for instance, much of the due diligence and engineering will have been done already in order to submit plans to the municipality. On the other hand, if assignment takes place early on in the upfront feasibility period, much may not have been done yet. What needs to be investigated, what data must be gathered and the timing will be dictated by the particular site and development scenario as well as by the demands (contingencies) of the assignee. I'm not aware that assignment fees in residential land are done on a per-acre basis. If anything, it would be per-lot or lump sum basis.

• 
  perfecto15th April, 2004

  As usual, all previous responses were right on-the-money.
  
  In addition, I would like to emphasize that there is no substitution for repoir. Repoir between you and the other party.
  
  I ALWAYS stress the fact that I will perform exactly as I say. I'll even go the extra 9 yards to perfom beyond what I say.
  
  I go out of my way to be helpful. I break many of the rules in the CREI (creative real-estate investment) book when I do that. I lose deals because of it.
  
  Interestingly, I get some deals back when my competition fails to perform.
  
  You need to develop an ability to judge the personal character and ethics of the other person.
  
  The key is to have superior character and ethics yourself. Then you'll be able to recognize it when you see it.
  
  Easy??? Definitely not!!!
  
  But, if you're the kind of person who pays their library book fines even if no one tells you to...then you're on track.
  
  Crime pays! Honesty pays more.
  
  Naively yours...
  
  
  perfecto

• 
  JeffAdams16th April, 2004

  JDC1:
  You can get paid for your "assignment"
  at closing or prior to closing, depending on the relationship you have with your
  "Wholesale Buyers."
  
  This is a very simple process. Simply open up escrow as an "Assignment" and then when you find your "Wholesale" buyer, contact escrow and tell them who your are assigning to and they will draw up an amendment that you and the seller sign. The key is to make sure the seller signs the escrow instructions agreeing that you can "assign" the property. You will find when you get into this business, you will develop a relationship with investors who will pay you immediately all cash upon "assignment" and those will be the ones you work with.
  
  Best Riches,
  Jeffrey Adam
  [addsig]