As a professional investor, broker and auctioneer and have done hundreds of these assignment deals for $10,000 to well over $5 MM. It is essential to have your contracts and your contract terms well in line. Terms understood by all parties (sellers, lawyers, and judges) and what to do if your assignment goes wrong. Or if you can’t find an assignee to take you out or if you are making an unusually large amount of equity profit.
Recently we were under contract (my skinny contract) for $10,000 and sold it on an assignment contract for $40,000. So what do you do – go to settlement and the owner gets $10,000 and I walk away with $30,000?
What would you?
Not long ago we were under contract for $4.4 MM and assigned it for $4,950,000, a profit of $550,000. It went well due to full disclosures. A ton of many other small deals that profits us from $10- 30,000 within three weeks are a common thing in our real estate and auction company.
Yesterday I controlled a property for $123,000 and sold it (assigned) for $156,000.
What I do and others I have counseled have done to do the deal right – what’s what? Use a “skinny contract offer” a one-page offer – easy to understand and explain.
Have full disclosures – let sellers know what to expect and that you are in this deal to make a reasonable profit – honesty is the best way to negotiate.
Use a Hybrid offer – make the seller your partner Have only one contingency on the table – make it clear
Always: – get right of possession or right of entry – you need to get it shown to get it sold to an assignee
– get rights of marketing – always ask the seller for contribution to marketing
– get automatic extension build into your offer – you never want to run out of time to settle or assign
– have rights of delayed settlement – use particular clauses to accomplish this
Make sure your title company is aware of your transaction and who gets paid what and when. Don’t fall for those selling the world in courses on how to wholesale and flip properties – most of them don’t know what they are talking about and only want a seminar fee from you
Understand agents and brokers hate you and will do anything to hurt your business. I use a system called CONTROL and Roll, and it has worked very well for me in the past 20 years.
Don’t forget; you can always reach out to me at the school. I would be happy to go over things with you.
~Charles Parrish, CEO
Investors United School of Real Estate Investing