How to decide assignment fee on multiple property deal

Question

Hi There,

I have a multiple investment property sale I am working on (8 plex, duplex and two single family homes).  He is willing to cut a deal if all of the properties are purchased together or at least three of the 4)  I am wondering if I should just keep my assignment fee's per property or just a percentage of them all?

Henry M. · Answer

Mandy,

I would go the per property route... However, that might not work considering he wants a minimum 3 of 4 sold.

Percentage is nice and can have many benefits without having to worry about renegotiating with the seller when the buyer decides to low ball an offer... Which you will get many of.

Flat fee on the other hand can also be effective bc of the above. If a buyer decides to push the envelope and take the whole package or three out of four and offer's below asking price, then this doesn't affect what you earn.

The bigger picture is knowing what the properties are worth individually, then sell as it comes. If you try to sell as a package, you may not sell them at all. If you sell them individually, then what if you only sell two of the four?

Are they all equal or are some better than others? This is probably why he wants them sold together. Or he wants to deal with just one buyer... But if he does want to deal with one buyer, he may have to discount in order to sell as a whole/package deal.

*** Lol... Sorry for the rambling... I was texting my thoughts outloud.***

Either way, make sure you have everything in writing and push to sell individually.  Otherwise, if your assignment is contingent on selling as a package, then you may be out of an assignment fee if they don't sell.

Always under promise and over perform...

Don't tell the seller you can sell all four of them just to lock in the wholesale deal... Otherwise, you'll paint yourself in a corner unless all these properties are in great areas at a fair price.

It is all about due diligence my friend... And keep one more thing in mind. Investors (as many are greedy or have a high money cost) have a tenancy to tear down all your due diligence.

So be prepared.

Lastly, your exit strategy for a couple of properties may have to differ from the other two... Such as marketing  and selling multiple units to investors and SFHs to citizens.

Again, I don't have all the details of your deal, I am just trying to throw a few things in your direction, if they apply.

Just my two pesos.

Big Henry

Mandy Klein · Answer

Thanks guys.  I appreciate the feedback.  The properties are already pretty well priced so that is good we are just working out some details on the 8plex.  David...I did respond via email today.

:)

Brandon Ingegneri · Answer

@David Huynhis right in my opinion.  If you have a good shot at unloading the package as a whole, keep that seller happy. There will be residual.  Generally though what I do... I try to lock up the property at such a discounted price where I can then sell my contract for 12-20k more but still have the aggressive price to my buyer.  Your going to make your money when you lock it up, not when you sell.  If you can make a nice hit but spread it out amongst the individual properties comprising the deal, it may allow you to market that aggressive price and get more attention.

David Huynh · Answer

I think you should tell me about the deal:)

And then we can arrange something that makes us both happy.

If you can move them all, keep a percentage. That's what I personally would do. Looking for multiple investors for a package could be a headache for you and him. It's better to find someone who is looking for the package, because you'll probably want to work with them in the future - move them up to your "A" buyers list.