If you’re new to real estate investing, there is a term called “contract assignment.” If you have not come across this term or you are unsure of the intricate parts of contract assignment, I am going to spell it out. If need be, re-read this article again and again. Also do not be afraid to ask questions in the comment section below.
We are in the prime selling season in most markets. During this time, investors are normally busy trying to lock down as many properties as possible. In our market, Phoenix, we are seeing an influx of buyers looking for deals. I recently had a conversation with a group of investors looking to get their hands on almost anything that will generate a profit. It would seem that we have not learned from the previous market crash how the real estate climate can change in an instance. My philosophy is ride the storm and assign as many real estate deals as possible.
If you have sat through any get-rich-quick guru pitches, the majority of them will introduce contract assignment wholesaling, but without giving you all the steps involved. Here is what they are referring to when they say “make $5,000 in the next 60-90 days.”
How to Purchase Real Estate With No (or Low) Money!
One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
Click Here to Download
What is a Contract Assignment?
Short and simple. This is when you first find a property a seller is willing to sell significantly below market value. You then resell that property to another buyer, normally a real estate investor, at a higher price.
Can This Be Done?
Absolutely, I’ve done numerous transactions in Phoenix, although it is not as easy as it’s normally taught, however it is a proven real estate investment strategy with a very low barrier to entry.
How Exactly Does Contract Assignment Work?
1. Find a motivated seller.
First let’s begin with what a motivated seller is. This is an individual who NEEDS to sell a property normally very quickly. There is usually some sort of distress going on in their lives. There is a huge disparity between want to sell and need to sell. Knowing which category your seller falls into is the first step in identifying how to handle the situation.
If I want to sell, there is no since of urgency. There’s normally no timeframe in which to finalize the sale. However, “need to sell” sounds like this :”I have to sell this house now because I’m moving to Maryland to take care of my ailing mother, and I have no other family members in the area.” This is a “need to sell” scenario.
Meanwhile, “want to sell” sounds a lot different: “I’m curious to see what my house is worth because I may be selling next year.” As you can see, there is a reason behind the need to sell versus the second scenario, where there is just curiosity.
There are numerous ways to find motivated sellers, such as driving for dollars, newspaper ads, internet marketing, direct mail marketing, etc. If you begin to research real estate marketing, you will find many forms, but make sure you use a combination of multiple strategies.
Related:Wholesalers Get a Bad Rap — But They’re Essential to Investors for These 3 Reasons
2. Get the contract.
There are many assignment contract templates on the web; however, I make sure an attorney at least has laid his/her eyes on it and approves the document. There are two reasons this is so critical. First, you will have comfort knowing your document is legally sound. Second, you will be able to utilize that attorney as counsel in the event you find yourself in litigation.
There is critical verbiage that need to be added to your assignment contract “and/or assigns.” Why is this so critical? This verbiage authorizes you to re-trade the property to another buyer who is interested in the property. When you receive the signed contract, you now have equitable interest in the property and have some legal standing in what happens to the property.
To provide clarity to the seller if asked about the “and/or assigns” clause, I inform them that we buy numerous houses, and we often have funding partners that we work with. These partners ensure we have more than one set of eyes to run the numbers.
3. Submit contract to title.
This process may differ in each state, but there is normally either a title company or a closing attorney that will conduct a title search. The title search will check the historical records of the property to make sure there are no liens on the property. It is important not to sell a property with a defective title. The title company or the closing attorney is a independent third party hired to make sure the deal is fair as agreed upon in the contract.
4. Find your buyer and assign the contract assignment.
Here is another leg of marketing. Working to find your end buyer can be daunting, but once you have a solid buyer, you can begin the process of closing the transaction. First, when you find your buyer (via Craigslist ads, Zillow, email marketing etc.), you should require a nonrefundable earnest money deposit.
Having the buyer furnish an nonrefundable earnest money deposit secures your position in making a profit. This money will become yours whether the transaction closes or not. The earnest money can be as much or as little your require within reason. I’ve seen deposits of hundreds of dollars up to $5,000. When the buyer deposits the earnest money, you then know that your buyer has a real interest in the property and is willing to move forward. This fee is normally held by the title company or the closing attorney.
5. Get Paid!
This is what most of us want to hear. We get paid when the end buyer wires in the funds for the deal. This money will cover what you stated you were willing to buy the property from the seller for, as well as your fee for facilitating the transaction. As an example, if you told the seller you would buy the house for $45,000 and you then sold your interest in the property to the buyer for $50,000, then your assignment fee is $5,000.
Related:The Harsh Truth About Wholesaling Newbies Need to Know
It is important that everything is disclosed because I’ve seen transactions stall at the closing table due to the seller or the buyer does not agreeing with you as the assignor making money. Again, this is why you inform you seller specifically that you are going to make a profit; however, ensure them that they will still receive the amount agreed upon for the price.
It is standard practice that assignments are done only on profits of $5,000 or below. But if you are comfortable with the seller and the buyer, it’s possible to assign a contract for a much higher fee.
In the event you are not comfortable with all parties in the transaction, a double close or simultaneous close will keep both legs of the transaction anonymous. Be aware not all title companies will agree to conduct a double close, so this needs to be discussed in advance.
Contract assignment cannot be done on all transactions. HUD homes, REOs, and listed properties present many barriers when trying to perform this type of transaction. With many REO properties, the lender will ensure there is a seasoning period — normally 90 days — before you can resell the property.
As you can see, there are some clear benefits to contract assignment for big paid days.
Investors: Have you ever assigned a contract? Any questions about this process?
Let me know your thoughts with a comment!
Contract Law Assignment Writing Help by Aussie Experts
Facing issues while writing your Contract Law assignment? Instant Assignment Help provides the best Contract Law assignment help to the college students of the Australia who are pursuing a course in Law and are given assignment on Contract Law by their university professor. If lack of time and insufficient subject knowledge are your concerns, then do not worry and approach us today!
We have a team of expert writers which comprises of ex-professors or professionals in the field of Law who provide exceptional assignment writing services on Contract Law to help the scholars in getting top grades. Our native writers offer academic services across the Australian cities like Sydney, Melbourne, Brisbane, Perth, Canberra and many more. If you too have been allotted an assignment on Corporate Law and find issues in completing it, trust our expert writers who will deliver you an excellent final document.
ASSIGNMENT HELP AUWe Aim At:
- Offering the best assignment writing help
- Delivering the orders as fast as possible
- Providing maximum satisfaction at affordable rates
Order NowView Sample
Call Now : +61 879 057 034
Contract Law As Explained by Our Law Assignment Writing Experts
Contract Law deals with the study of the business activities involving the use of contracts for various business transactions. The students who are pursing a degree in Law from the prestigious colleges of the Australia like The University of Sydney, University of Tasmania, University of Melbourne Law School, University of New South Wales and many more; can avail our top-notch Contract Law assignment help services. Homework on Contract Law is closely related to the commercial law and the business law assignments. Our in-house team of legal writers is adept with the concepts of all forms of Law and thus provide the best Contract Law assignment writing services to the college students.
Topics Covered by Our Contract Law Assignment Helpers
You can take professional Contract Law essay assignment help from our law experts to submit an excellent Contract law assignment on any topic. Our expert writers provide exceptional Contract Law homework help on a list of topics some of which are:
|The Common Law||Breach of Contract||Contract Law of Australia|
|Contract Formation||Express Contract||Implied In-Fact Contract|
|Implied In-Law Contract||Privity of Contract||Performance and Breach|
There are many more Corporate Law topics over which we provide effective assignment help services. In addition to the Corporate Law assignment help, our writers also provide help with Corporate Law homework, Corporate Law essays, Corporate Law dissertations, reports on Corporate Law, Corporate Law research paper and many more. Hurry now to upgrade your academic performance!
How Are We the Best Contract Law Assignment Service Provider?
Instant Assignment Help is Australia’s leading assignment writing help provider and has assisted thousands of college students in submitting excellent Corporate Law assignments and homework. When we receive a request of completing an assignment on corporate law, our writers perform in-depth research over the assigned topic before beginning to write the paper. In addition to this, the scholars are also benefited in various services offered by us. Some of them are:
- Our writers are highly experienced and certified and have ample expertise in delivering excellent law papers.
- Affordable rates for the completed documents.
- Fastest delivery of the final document much before the submission date.
- Assurance of the delivery of top quality documents with no plagiarism in it.
- The students can ask for a unlimited number of revisions of the final document in any case of dissatisfaction, which is free of cost.
- Round-the-clock availability of the customer care support team to assist the students at all times.
- Quality checks assurance by the efficient team of editors and proofreaders.
The college students of the Australia can be assured of our excellent assignment writing services on Corporate Law by reviewing our assignment samples and examples available on our website. So wait no more and contact us right now!