How Do I Handle A Contract Assignment And A RE Agent At The Same Time????
Could anyone please tell me what would be the best way to structure a "flip deal" If there is a RE broker handling the property? I have an investor that wants to purchase a certain property and the homeowner is a VERY difficult person to deal with and not at all pleasant or friendly!! I explained to the homeowner(before he relisted with another agent) that we had a private investor that wishes to purchase his home and can close QUICKLY, but, he went ahead and relisted with the RE agent anyway without even giving my partner and I a second thought. We want to move forward with the "flipping/selling" of this property to the investor anyway, but, neither of us has attempted a deal in which we were not in direct contact with the homeowner. If this wansnt such a lucrtive deal, I wouldn't even pursue it, but, basically its TOO good of a deal to pass up even though the homeowner is a major road block. My question is how do I structure the contracts or "the deal", where the RE agent will work with us and the buyer/investor and seller/RE agent remain anonymous to each other(becuse I REFUSE to hand over my investor to the RE agent for a 500 dollar refferal fee). So ,what would be the best way to approch this deal and make sure it goes as smoothly as possible and doesnt blow up in our faces at the closing ? Any information that any of you are willig to share with us will be greatly appreciated. 
Hey Jewel,
The real estate agent isn't really an obstacle, they want to make money too. Just make them an offer (3% or whatever you can give up) toward their commission, add it to your deal as a cost, and do the math. If the numbers (purchase price + your profit + re commish + repairs/rehab) are still far enough below the Comp/Retail value to interest your investor it's still a deal. If not, pass.
You're offering an immediate cash sale I would guess, and that's the end of the story.
If the seller is motivated to accept your offer, they'll take it. Otherwise move on.
You may have to structure your deal with the investor to be more of a "finder's fee" arrangement than a contract assignment, but so what? Just structure the finder's fee deal outside the real estate deal, and turn the investor over to the agent. You don't have to "settle for $500.00" by any means, set whatever fee you can agree on -- The investor either likes the numbers or not.
Jewel:
Thanks so much for asking this question because I always wonder about it.
RealMember, your response makes alot of sense, but I only have one question. When we structure our finder's fee arrangement outside of the re deal what contracts should we include to avoid the investor going right to the re agent and cutting us out of the deal? Because technically the house is listed so the seller and re agent would not be hard to find. Any suggestions? I heard an intent to purchase would be helpful but I am not sure....
What about using a purchase option agreement? Where you slip the seller some cash for the option that ties it up for the needed amount of time (60-90days) and then make sure that your option is assignable. Assign it to the investor for whatever your fee is going to be.
That would tie up the property, set the value at purchase, bypass seasoning requirements (if you were going to take possession prior to the investor) and avoid any hassles with the realtor. Depending on the size of the deal I would think that 1-2K might not be a bad deal and the owner might go for it. I am sure the realtor would, especially if he comes in for a part of it.
Just a thought, I am sure there are more creative ideas out there.
Results one (& Jewel),
I'm just talking about a basic contract for services rendered. Or even just take the buyer an invoice, and pick up a check.
If the buyer's so tight for funds that they can't swing you a couple thousand for birddogging, maybe you need to find some more substantial buyers. I write multi-thousand dollar checks to contractors all the time, and I'm not rich, I just have previously saved funds to cover 'em.
Again, at that point, we don't care what the seller and buyer do -- we got paid, and we're on our way to the next deal.
Even just a promissory note due before/after closing would do it.
The point is to not focus so much on a "Real Estate" answer to a "Payment for Services" issue. If you paint someone's house, you hand them a bill and take a check. This isn't any different! If the deal is attractive enough to the buyer, they'll find the money to pay you.
Be creative! You're offering a valuable service, you deserve to get paid for it.
A complicated closing with multiple parties is the meat & potatoes of a lawyer who does RE escrows, or a title/escrow co., so their attendant expense is worth it in my book.
Make some calls & lay out the facfs and take some bids...this really is NOT complicated to an experienced closer, as some closings might involve dozens of parties!
Jewel,
You need to put the property under contract and tie it up. If you don't have it under contract, then you are not in control.
So I would make my offer to the real estate broker and get it tied up. Then I would simply assign my rights in the contract to my buyer.
If the contract is non-assignable you can do two things. One you can cross out the "non-assignability" clause, and often you can get away with this because the seller is a private party and not an institution such as a bank. Or you can make your offer in the name of an LLC or trust, then you can assign your interest in that entity to your buyer for your assignment fee. As far as the seller and broker are concerned at settlement, the buyer will still be the same LLC or trust that made to offer. It just so happens that some one else owns the LLC or Trust.
[addsig]