How many purchase contracts do you need?

Question

So basically what I am asking, do I need to do a purchase contract with the seller, and a purchase contract as well to the investor/buyer (with my new price)? and than soon after have him sign the assignment contract? or with the investor do I just have him sign the assignment contract with no purchase contract?.

Jackie Lange · Answer

Matt, The answer is -- it depends. If you plan to assign your contract, then all you need is a purchase contract with the seller then an assignment contract to the buyer. But, if you plan to do a simultaneous close then you need a purchase contract with the seller and a purchase contract with the buyer. The advantage of the simultaneous close is that the seller will not know that you immediately resold the property and the buyer will not know how much profit you made. But, if you're honest with the seller and tell them what you plan to do up front then the assignment of contract is fine... UNLESS If you're just making a $5,000 or less then I've found that sellers and buyer rarely object to your profit But if you're making more than that you can be sure the seller could get upset with your profit and they could back out at the last minute and not close. If you assign a contract and you're profit is a large amount, the buyer could get greedy and try to go around you. If you assign the contract, the amount of profit you make will be a line item on the HUD-1 and the seller will know how much you made. You will get paid after closing.

Aaron Mazzrillo · Answer

If you are assigning the contract to him, he will have to abide by the terms of the contract. You can make him put a nonrefundable deposit into escrow. That way, if he doesn't close, you can get paid for the hassle.

Michelle Murray · Answer

Hey Matt, Assigning a deal requires 2 documents (1) Purchase and Sale contract (1) Assignment of Contract Your Purchase and sale contract will be used with your seller. After your seller signs and agrees to those given terms. You will use an "Assignment of contract" with your new buyer at your (new price), and attach your original "Purchase and sale contract" with your seller as exhibit A. Your new buyers signature is not needed on your original contract. The reason that you would attach it will be for review only. Your new buyer will be stepping into your shoes as the new buyer and has to follow the same terms you agree to with your seller, thus would need to see what those terms are FYI, since you will be providing a copy of your contract to your new buyer. Make sure to white out any pertinent info, such as sellers address, phone number, so they don't get any ideas of going around you.. Best of Luck!!

Account Closed · Answer

You don't see the property first???

Aaron Mazzrillo · Answer

I don't even want to tell you that I stopped sending out contracts a year ago. Total waste of time when dealing with private sellers. They get nervous. They ask questions. Instead, we come to an agreement over the phone (stopped meeting them over a year ago as well), then I tell them escrow will be mailing them escrow instructions. The deed in the instructions has my buyer's name on it. What's Ron LeGrand say? "The less I do, the more I make!" Yeah, works for me.

Matthew J. T. · Answer

Thanks Aaron, so basically my contract Assignment I can personally edit it so that I require a deposit and how soon the deal needs to be closed? Because I wouldn't want him to just "sign it" and from there nothing happens, or he takes forever to close.. Also, if I require a deposit, how soon is he supposed to pay it? Does he pay it to me at the time of him signing the contract or?..

Matthew J. T. · Answer

Ok I understand what Jackie said, but I am lost because if I just assign a contract to the end buyer, don't I have to collect some kind of earnest money/deposit to know he is serious? I mean, signing a simple assignment contract, doesnt state how soon he needs to close, or how serious he is, so how do I make sure that I collect some kind of deposit/earnest money, and make him pay within a reasonable time, if the assignment contract only requires a signature?

Matthew J. T. · Answer

You summed it up PERFECT Jackie, much more understandable, I appreciate you guys, really answered my question!

Matthew J. T. · Answer

Thanks on the good response Michelle. I'm still a little confused I have been told that you need to have purchase contract for your new buyer as well though? That is where you list it at a higher price and have them put a deposit on it to make sure they are really securing the deal . With just an assigment how do you collect a deposit from them? Because on the Assigment all it's going to show is your fee "10,000". Hope you or someone can clear this up for me lol thanks fast forward to 10:30 of the video: http://junkers101.com/thanks.html he says you have to make a purchase contract to the the investor as well but this time you will become the "seller" and he is the buyer, he says that includes closing dates, the new cost the house and a deposit..