Different wording for "assignment fee"

[Kim Hawkinson]

I haven't closed my first deal yet but I'm getting close. I've called a title company that I was told works with investors and learned that banks aren't letting people "assign" contracts in Arkansas. I would have to hold the property for atleast 6 months before I could do anything with it.

Yes, I know ideally buyers should be cash buyers but I have a retail end buyer. Any suggestions on any other possibly "wordings" for assignment fee that won't send up any red flags to anyone like lawyers/mortgage guys/anyone with authority that could throw a red flag?

Any help is greatly appreciated. Thanks in advance!!

[J Scott]

First problem: Is this a bank-owned REO? If so, you're not going to be allowed to assign the contract, and there's no magic wording that will allow you to.

Second problem: Are you trying to wholesale this deal to a buyer who is using conventional financing? If so, the buyer's lender may require some seasoning period before they will fund their buyer. If it's an FHA buyer, there is no seasoning period, but if you don't do any work to the property (i.e., rehab), it likely won't appraise for more than what you're paying for it, and therefore you won't be able to sell it for several months under that scenario either.

Solutions:

1. Deal with cash buyers if you plan to wholesale without making any upgrades/renovations;

2. Instead of assigning the contract, either do a double close or purchase the property in an LLC (or trust) and sell the LLC (or trust) to your end-buyer for a profit.