Question About The Assignment of Contract Process

[Darvin Ezell]

1.Once you get a property under contract and you locate a buyer, how do you assign the contract over to them? Do you have him sign the original contract that you had with the seller, or create a whole new contract with your price? 

2. Also, how long do I have once I put the house under contract to locate a buyer and assign the contract to them and other than and assign clause, is there any other clauses that would be smart to include if I needed to exit out of the deal?

3. Are you guys up front with the seller of your intentions or do you act as if you intend on purchasing the property and then find your own buyer and do a double close to keep them from knowing what you made?

Thanks in advance for any responses.

[Chris Piper]

@Darvin Ezell It's up to you what you tell the seller. If you want to act like you are buying and closing yourself, you can, if you want to tell them you're a wholesaler you can do that too. I would suggest saying you're an investor and that's it. If they ask more about your plans, tell them I may rehab it, I may resell it, etc. I wouldn't directly tell them you are just a middleman looking to profit of of their need to sell.

When you wholesale a deal, you need two documents:

1. Purchase agreement

2. Assignment Agreement

You sign the purchase agreement with the seller for whatever amount you both agree on. Then, you add on your profit to that amount, and sign the assignment agreement with a cash buyer/investor for that agreed upon amount. Always make sure your purchase agreement says "Assignable." If not, the seller may back out or sue if you try to assign it, or you may end up having to do a double close which will cost you an extra couple thousand you might not have planned on and cut your profits down.

You should always typically have 30 days to close. Once you get a property under contract, start marketing to get it sold to cash buyers only asap. If after 1 week, no buyers, then drop your price. If no buyers after the second week with the price drop, start contacting every wholesaler in your area and see if they have a cash buyer interested, and JV with them and split the profits. Also, the buyer will know how much time they have to close when they see the purchase agreement after they sign the assignment agreement. And, it doesn't really matter because they should have cash to close anytime.

Earnest money only on any property once you get it under contract, and ONLY pay that to the title company, not directly to the seller, and get a receipt. Earnest money is negotiable between you and the seller. I personally never put up a crazy amount like some sellers want like $3,000 or $4,000. I'll walk away from a deal if the seller wants a big EMD from me. Plenty of deals out there.