Why assignments contracts?

[Jacquelyn Sarpong]

Just playing curious. Why assignments contracts? I know it protects the wholesaler. But why not do two joint ventures contacts with both the seller and the buyer.  And get paid on the back end by the buyer.  That way,  no money upfront and the seller don't freak out when he sees his much your getting.  The buyer has to pay you anyway.  Any input is welcome.

[Richard Balsam]

Look at it this way- when you sell your assignment fee to your cash buyer- that is the same thing as a "finders fee" - since he/she becomes your buyer and you are charging a markup for finding and negotiating the deal. With an assignment- you are in essence- selling the contract you have with the seller. 

It is much cleaner with an assignment than with a joint venture. Why do this? Joint ventures have a way of falling apart. if you both have equal say in the deal- what if the joint partner decides to speak with the seller- because he/she doesn't like parts of the deal and feels he/she can tweak it somehow - even behind your back? They have a right - since it's a joint venture between both of you- right? What if the seller feels overwhelmed and refuses to go through- and the deal dies? Also known as "too many chefs in the kitchen".

Sometimes, the best things to do are the simplest and cleanest from a legal perspective. Of course- a double close would allow a higher markup being hidden from both sides and protect you in the future. What if the cash buyer sees what you are making - goes through with the deal this time...and refuses to deal with you since he feels taken advantage of - on any future deal? Possibly cost you far more in lost profit from a repeat real cash buyer - than the cost of the double close. Something to think about - depending on the deal.