Assignment fee situation and questions

[Christopher P.]

[b]Seller asking for $175,000(firm), market value is $230,000 and ARV is $330,000 minimum. The end buyer is a investor looking to close all CASH and will pay for closing cost. Both sides will be aware of the assignment fee and the profit margin.

[/i]-If the investor decides to fix&flip, can the assignment fee be as much as $15-30k without performing a double closing? which process would be easier when it comes to big numbers?

I just read a blog before posting this about some dude who made $15k a flip on assignment contract NOT double closing. But most the forums on here are saying to double close instead when it comes to big numbers. However, I do know that some lenders will not lend to buyer to pay the assign fee, which we'll have to perform a double close in that case? but I did mention it will be a CASH buyer.

If you're giving me an answer that the assignment fee are limited and double closing is the way to perform such a deal, Why?

What's the most you made on assignment fee?

Thanks

[Nancy Roth]

Very interesting stories here, thank you to all who participated.

Let me ask this, Christopher: do you have relationships with any buyers who would tell you the end price they want to pay for the property?

Properties are scarce and in demand in my area (Washington DC), and while rehabbers do put some effort into identifying them, wholesalers definitely have a role in helping them keep up their flow of acquisitions. So buyers who are really in the business (as opposed to amateurs looking for a quick buck) would not bilk the wholesaler. They know that lost trust would come back to bite them later when they least expect it. The industry is very interdependent, and your network is key in getting deals done, so you work to extend it, not shrink it.

That's why, called in advance of a deal, a number of buyers I know will tell a wholesaler their end price point for a property, setting the wholesaler free to negotiate any price they can with the seller, and take the difference as their fee. As wholesaler you should be able to offer your buyer an accurate idea of the likely rehab cost.

The seller should understand early in the conversation that he/she pays nothing for your service in bringing them a reliable cash buyer and enabling them to make a smooth, predictable, hassle-free transition out of ownership of the property--unlike they would get in the retail market. They should also know that you will negotiate your fee with the buyer and you will try to get as much as you can, as anyone would. The important thing to them is, they don't have to pay it, as they would have to pay agent commissions and settlement fees in a retail sale. That is thousands of dollars in their pocket, which the buyer pays.

Also, I commend you for being transparent with both buyer and seller about what you are doing. Maybe I'm crazy idealistic, but I think everyone involved in the deal should get a problem solved and a goal fulfilled. I don't know how you accomplish that unless all parties are informed and on board with what you are doing.

A transparent process should mitigate in favor of an all-in-one closing, unless there are inescapable logistical reasons to do two closings back-to-back.

Nancy E. Roth