How to assign on this deal ?

[Tony Gatto]

I have a home that i just put under contract. However i have a decision to make and would be interested in some other wholesalers opinions ... so here goes

Seller agrees to prices 27k and signs contract. However i know he needs to sell but do not trust that he would back out if he found out i wholesaled it for 10k more

Investor...buyer for 37k . Knows i will be assigning and just wants the home. Does not care that i will be making 10k (well actually more like 8500)

I dont trust that the original seller would not try to back out of contract. So in my mind i am thinking to become a part of the title chain. Which creates extra costs.

Any Ideas on how to get around this?

[Bill Gulley]

I'd say you're anticipating possible problems and getting caught up in believing the fantasy. A seller can get upset if they find out, they get ticked at themselves for being stupid more than mad at you for out thinking them. Then again, that depends on what you led them to believe if you really did deceive them, is there a guilty conscious here?

You should be getting an assignment/release fee from the buyer and the seller has no part of that.

I'd have my contract with a buyer and close that first at settlement, the buyer slides his check to the closing agent and if goes in the file. The settlement agent informs the buyer of how much to bring for the total transaction.

You can sit there if you like and then the seller comes in. Introduce the buyer, chat a second and the closing agent begins the settlement process. Take the seller's side first, he sees his HUD-1 at the contract price at 27K, he closes. The seller can be excused to the lobby to pick up his check, or he can sit there. The buyer closes on his HUD-1, sale price is 27K with costs of assignment as a separate line item of 10K. The buyer then sees his expense, if you inform him prior to settlement there are no surprises, he doesn't say "what's this?" in front of the seller! The buyer signs docs and you're done.

Sometimes you get a seller who say's he's not signing anything until he sees the money. That's fine, he can go last too, the closing agent simply says "Mr Seller, I'll be taking to the buyer about their loan and personal expenses, as soon as we are done I'll have you come in for you to close".

I suggest that all new investors actually visit the closing agent's office. You can do this by delivering your documents to set up the settlement appointment.

Inform the closing agent of the deal, full details, everything! They have no issue with keeping things confidential from either party so long as the issue doesn't effect the other side. For example, the seller doesn't need to know the buyer's loan costs or what the paid for an inspection. A buyer doesn't need to know what the seller's loan payoff is or what the sales commission was. The buyer and seller can have separate HUD-1s.

Coordination between you and the closing agent keeps closings from blowing up. Understand how it closes and how it will be handled before you go in there.

We get lots of questions here from new folks about keeping one party knowing what they make. You won't keep it from a buyer in a contract assignment. If your profit is grossly out of sight and you don't think you can sell that way, then buy it using transactional funds and close, then sell to your buyer. Otherwise assignments don't need to be made public knowledge.

If the buyer and seller and you are going to be in closing together take a look at the settlement room. Usually you'll have a large table, a conference table and the buyer will be on one side, the seller on the other and the settlement agent at the end to pass documents to each and they will turn toward the party necessary to explain the documents. The settlement agent never has to mention any numbers. They can say "this is your assignment from Tony", "this is your inspection fee" "this is your total cost" "this is the amount you brought for closing and no funds are due back to you" as the speak to a buyer.

The table is usually large enough that another party can't read documents across the table upside down. A good closing agent takes a signed document and turns it face down after it's signed in the file, two things, that keeps documents in order of signing in the file and prevents other people from reading the document. Closing agents know how to present a document, get it signed and retire that document confidentially.

What you don't want is a buyer and seller sitting next to each other and a closer sitting across from both, that sometimes happens with an attorney or closer who will do a settlement at a desk, you don't want that for third party assignments.

Closings should be happy days :) not stressful. Newbies get flustered over the unknown, which is probably where you are, if you follow my advice here you'll have a smooth settlement with an experienced closing agent. I've closed tons of transactions, don't get flustered, be happy. :)