Assignable Contracts
If I tell an investor that I have a contract for sale for x amt os $, what is stopping him or her from going around me directly to the seller??
Can someone give me the wording to use when notifying an investor that I have a contract for sale. I know I can always do a simultaneous closing but I want that to be my last result b/c of the fees involved.
Thanks everyone.
A seller cannot sell his/her house to someone else if they have a contract with you.
Exactly, they have a binded contract with you so there is no way they can go around you. Just make sure it is in writing that they are paying you an X dollar amount to receive the contract.
Quote:
On 2004-09-08 12:41, reinatalie wrote:
A seller cannot sell his/her house to someone else if they have a contract with you.
The original post stated:
"I want that to be my last result b/c of the fees involved."
My question is: What fees are involved in a simulataneous close or double close? Please explain.
On these assignable contracts what should you use for "subject to" and how many days do you have to activate the contract
You may to go as far as to recording the contract.
" On these assignable contracts what should you use for "subject to" and how many days do you have to activate the contract "
1. Subject to financing
2. Subject to inspection
3. Subject to partner's approval
Be careful as to how you use these "sub-to" clauses as they may reduce the sellers confidence in you fulfiling the contract. Agree to a time period that will suffice you enough time to find a wholesale buyer. My .002 cents
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Question about assignable contracts. I am planning on using a option to purcahse with assign clause, now when I get an investor and want to sell the option to purchase, does the assignment of option to purchase contract have to state the amount I'm selling it for? Or is that a seperate thing like a receipt or something? I don't if the price I'm selling the contract for should be stated in the assignment contract it self. Any help would be greatly appreciated.
Chakib, as for the "subject-to" clauses you always want to use risk-free subject-to clauses which allow you to completely walk away from a deal prior to closing with no further obligation. This could be simply because you decide not to go through with the contract, because of an unkown lein, damage, etc. This may scare a buyer at first but just explain that it is for your protection, everyone needs and wants protection and he would too. If he is still a little unshure and you are almost positive it is a good deal, include "The Seller shall keep the Buyer's deposit in the event or Buyer default as the Seller's only recourse for buyer's non-performance of contract." This is not too favorable to you, and should be used wisely; however, it is better to lose your deposit than to go through with a lousy deal and lose alot more!
Some risk free clauses include but are not limited to:
1. Subject to financing satisfactory to the buyer.
2. Subject to buyer's approval of cash-flow statement (ask if you need more detail on this)
3. Subject to Buyer's attorney's approval
4. Subject to Buyer's partner's approval
5. Subject to approval of buyer's inspection
NOTE: You don't have to use all of these. Just make sure you can walk away. An don't be afraid to talk through things like this with the seller--you should be in control but always make him feel in control! In other words, put in more Risk Free clauses than you need. If he objects, agree with him and take out a couple. He will feel in control and you will still know you are safe!
[ Edited by zinvest on Date 10/22/2004 ]
Honestly, there is nothing stopping an REI from going around you on a Assignable Contract if you do not close on the property first to protect your interest. A scrupulous REI can simply wait for your contract to expire and then approach the homeowner if they want to. Not likely though.
If you have a transaction with a lot of equity in it and you want to protect your interests then it would be in your own best interest to do a double close so that the REI you are going to sell the property to never sees how much profit you will make. Granted this does require you to purchase the property before flipping it but if you are going to make a lot of money from the deal then it is in your best interest to protect your position.
HTH
Larry Brusatori
I agree with Larry. A good investor will know whether you have the money available to close the deal or not...If they sense you don't, they might string you along until your contract is set to expire, then lowball you with another offer...If you don't accept, they know you'll either have to up with the funds to close or lose and they'll pick it up without giving you a dime...
In a close-knit investment community, that usually doesn't happen...But then again, money talks...
Jay C.
Birmingham, AL
As to what LarryTX was mentioning> I'm concerned about that myself. I'm currently in my first deal, which I'm planning to wholesale. I contracted for well below the market value and this is a hot area which moves quickly. I wrote the contract to read "<myname> & or assign" as the buyer. (did I do that right?)
I advertised it for sale/rent/lease option to attract investors. Even at my asking price, it will still have positive cashflow & I'll get to walk away with a nice chunk for my time.
I'm still a little sketchy on how this works though. I know I have to execute if I cannot find a buyer in time. So I've already made application for financing, etc.
If we do a simultaneous close, do I still pay the closing costs, doc stamps, etc.? That'll be like $4k out of my net. Is that necessary? Do I have to wait to the closing date? Can I just collect the difference from the buyer (assignment fee) and turn over the deal to them at that time or do I have to wait till the contract date?
HELP??? Thanks!
Quote:
On 2004-10-23 12:20, LarryTX wrote:
Honestly, there is nothing stopping an REI from going around you on a Assignable Contract if you do not close on the property first to protect your interest. A scrupulous REI can simply wait for your contract to expire and then approach the homeowner if they want to. Not likely though.
If you have a transaction with a lot of equity in it and you want to protect your interests then it would be in your own best interest to do a double close so that the REI you are going to sell the property to never sees how much profit you will make. Granted this does require you to purchase the property before flipping it but if you are going to make a lot of money from the deal then it is in your best interest to protect your position.
HTH
Larry Brusatori
I disagree,
You can draw up a disclosure contract that disallows that investor from making contact with the owner concerning the property BEFORE you tell them anything! You should never disclose any information about a property especially when you don't own it. Further, you can also give the REI a time limit that does not exceed the period of the option which will force him to make a transaction or the deal goes to someone else. More than likely (by common sense) a REI will not play games with you when you already know the game. The mere presence of the disclosure contract would shut 'em down.
I, too, am a beginner, but I have studied extensively on flipping and have learned to avoid the mistakes before they happen.
I made that mistake before and got burned... over the telephone!
How do you do that exactly?
I'm listing mine in a local paper here and have received several calls already, many of whom had already seen the property when the seller was showing it before. I went so far as to only give the general area, and no address, stating that it was "occupied" and I didn't want them disturbed. How would I go from phone calls to "sign a disclosure agreement" ?? I want to make this work, but it's very challenging since I don't understand the procedure. I purchased Legrand's book at the bookstore, but it doesn't go into any great detail on any of the techniques. It's more of an overview and invitation to get other courses.
ABOUT CLOSING COSTS, YOU WILL HAVE TO PAY A RECORDING FEE TRANSFER TAX & SETTLEMENT FEE. THE TITLE INSURANCE SHOULD NOT BE NEEDED. THIS IS WHAT MY TITLE COMPANY TOLD ME.
Shamund:
To protect yourself you should open up escrow as an 'assignment' and make your sellers sign them.. Then find your wholesale buyer and 'assign'. You then contact the seller and tell them that you are closing in your partners name for tax reasons.
Best Riches,
Jeff Adam
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Jeff
What about on REO's? Now I know you can wholesale REO's by assigning the beneficial interest in a land trust or by selling an LLC. So my question is where does assignable escrows come into play using these two techniques? Or are you not referring to REO's??
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