Contract Concept Confusion
OK folks, I am struggling with something here, and that is Contract Assignment. I have read two different things, and are unsure of which is better, or more viable, or if they are simply rewordings of the same thing. So here it goes
1. Find a motivated seller
2. Submit an offer, sign a contract to buy with a clause stating 28 days without buyer found, contract is null and void
3. Find a buyer/investor/rehabber, credit checks out
***4a. Sign contract with buyer for increased price, submit both contracts to attorney, setup settlement, collect check.
<I believe that that method was outlined Stephen Cook>.
***4b. Take a "finder's fee" and basically sell your contract to buy to the investor.
Which of these is the real deal? Or are they both? I would think that 4a would be better, since the buyer wouldn't know how much you got the property for, and wouldn't try to cut you out of the deal all together. Thoughts? 
~Ryan
Any ideas on this???
Steve Cooks book is still fresh in my mind.
When you say finders fee are you referring to your profit from the deal?
Finders fee sounds like bird dogging.
SC would verify the buyer’s funds. If the buyer didn't have sufficient funds he'd check their credit and hook them up with one of his private lenders.
The method mentioned in 4a from my understanding of it doesn't allow the buyer to see what you signed a contract to buy the property for. All that says is you're showing your lawyer both contracts not the buyer. **4b. Take a "finder's?
[ Edited by Future-Multi-millionare on Date 03/19/2003 ]
Quote:
On 2003-03-19 14:49, Future-Multi-millionare wrote:
Steve Cooks book is still fresh in my mind.
When you say finders fee are you referring to your profit from the deal?
Finders fee sounds like bird dogging.
SC would verify the buyer’s funds. If the buyer didn't have sufficient funds he'd check their credit and hook them up with one of his private lenders.
The method mentioned in 4a from my understanding of it doesn't allow the buyer to see what you signed a contract to buy the property for. All that says is you're showing your lawyer both contracts not the buyer. **4b. Take a "finder's?
<font size=-1>[ Edited by Future-Multi-millionare on Date 03/19/2003 ]</font>
Yeah, by finder's fee, I mean my profit by assigning the contract. I guess that I am foggy as to how I would get paid using contract assignment. By submitting both contracts to the lawyer/title company, I would get paid at settlement... that is when the buyer actually purchases the property? For instance, I sign a contract to buy with Joe the seller for $50k, and then I find John the Rehabber and contract to him for $65k. Take both contracts, submit them... then what? I get my $65k, and purchase the property, then sell it right back again? That sounds redundant, and not what Steve meant at all. Or, I setup an assignment contract with John the Rehabber. Which, as I understand it, basically means that I assign him my contract for a fee of $xxxx amount of dollars. What am I missing here??
~Ryan
You were correct with the assignment thing. In that scenario you would be selling your spot in the contract for $$$$$ (your profit). On the assignment your buyer will be able to see you profit which shouldn’t matter to him away because he is going to make more money off of the home than you. Steve uses an assignment form.
When you use two contracts one for the you and the seller and one for you and your buyer than it has to be double closed. On the double close your buyer won’t know your profit. The double closing is actually to different contracts closed simultaneously
You can look over an "assignment form" if you check out the Freebies link and click on Real Estate Forms.
The first form is an "Assignment of Purchase Agreement." You should look over the form and get an idea of how you assign it using that form.
From my understandings, this is what you should do:
1. Sign an contract with the seller for $50K
2. Have the seller sign the "Assignment of Contract" form.
3. Sign a contract with the new buyer/investor for $65K
4. Find a title company that knows how to do this type of transaction.
Your assignment fee is $15K (65K - 50K). I may be wrong, but this is how I thought it was done.
Tanya[ Edited by tanya1215 on Date 03/20/2003 ]
Hey Tanya whatz the deely!
The SC wholesaling book says when you double close you have two sets of closing cost. When you assign there is one closing cost.
Steve cook pushes more for the assignment (in this book) than double close. Of course he recommends using what’s best for the situation.
Maybe Scook85 will jump in this one!
I honestly don't know how the title company handles it concerning two closing costs. I would think you only need to pay one, but that's my opinion.
I guess I would ask my title company or closing agent what the "deely" is...
Tanya
Thanks everybody for all the input. In talking at length with a title company yesterday, I got the woman to actually apply the same title search and exam to both contracts in the case of a double close, saving me about $200. Works for me! Thanks for all the input, I think the way I have figured it, that the course of action is dependent on the profit to be made. Using a program I wrote incorporating various formulas I have found, I can calculate closing costs, repair costs, buyer profit potential, and my own profit potential. I figure that if my personal profit is high, to go with the double close, since I will incur additional closing costs but overeall profit margin will be greater. Lower profit will use an assignment, since I will basically have no closing costs whatsoever. Final thoughts as to where I might be slipping up are ALWAYS welcome
~Ryan