Wholesale Real Estate Investing: Contract Assignment

Wholesale real estate investing is an integral part of a real estate investors business when they buy  properties from motivated sellers. They must buy the properties low enough so that they can sell them at wholesale prices and still make a profit.

 In contract assignment, you assign the right to buy a property to another person, usually a real estate investor.

 In other words, you simply change the name of the buyer to the real estate investor for an assignment fee.

All the terms of the contract will remain when you assign the contract.

How does it work?
 Here is how contract assignment works:

1)    Get the property under contract
Once you identify a property from a motivated seller, you place it under contract.  The contract must explicitly state that it can be assigned to another buyer.

The simplest way to do this is place the buyer with “and or assigns”, e.g. “My Company Name and or assigns”.

 You must have this small clause to assign the contract.  Of course, you need to make it clear to the seller from the beginning that you can sell the property to another real estate investor.

 I also tell them that I could partner with another real estate investor.  The vital point is to let them know that the end result will be the same, and that you will make some profit out of the deal.

2)    Get title work done
 A title company or closing attorney usually acts as the closing agent.

3)     Sign the assignment contract
Once you have identified a real estate investor buyer, you then sign a simple contract for them to take over your contract.

 You must collect earnest money when you sign the contract.   Earnest money usually goes to the closing agent.   If they do not close the deal, they stand to lose the earnest money, otherwise it is credited to the deal at closing.

4)    Close the deal
 The buyer then gets the transaction funded ready for closing.  When it closes, you get a check for the assignment fee.

Advantages and disadvantages of contract assignment
 When you assign a contract, you eliminate the need to close two transactions in incur two closing costs.

 The assignment fee stated in the contract is what you walk home with.
 The assignment fee must be shown in the contract.

 The contract fee also shows in the closing statement, meaning that all parties can see how much you make in the deal.

 

Wholesale real estate investing requires that you sell your houses quick to keep it successful .  Learn how an interactive real estate investing website  can help you sell your properties quicker by building your buyers list and using the power of social media to reach more buyers.