Posted by Stacy on July 13, 2008 at 15:11:26:
Thanks to you both for the replies.
I’m in MA…anyone doing wholesale deals in MA?
Thanks,
Stacy
Wholesaling - Getting Your Assignment Fee - Posted by Stacy
Posted by Stacy on July 11, 2008 at 08:29:11:
Hi Everyone,
What is the best method for obtaining your assignment fee when wholesaling?
Option A - Do you ask the buyer to pay you your fee outside the closing so the seller doesn’t know what $ amount you’re getting?
Option B - Do you tell the buyer that you are selling him the house for more (for example - $10k more than the sale price) so you get paid the $10k difference at the closing? If you do this, doesn’t the seller get upset that you are getting paid the extra $10k and he/she is not receiving it?
I would think Option B is safer in the sense that you can get that money from escrow at the closing, but doesn’t it cause problems with the seller, especially if your assignment fee is quite large? Can Option B be done without a double closing?
Thanks,
Stacy
Re: Wholesaling - Getting Your Assignment Fee - Posted by Natalie-VA
Posted by Natalie-VA on July 14, 2008 at 16:07:39:
I just ask the settlement agent not to show the buyer’s side of the HUD to the seller. So far, it’s worked just fine.
–Natalie
Re: Wholesaling - Getting Your Assignment Fee - Posted by Chad (MD)
Posted by Chad (MD) on July 11, 2008 at 18:06:54:
Hi Stacy,
If you are assigning the contract, the process is as you describe in Option B. The buyer will get a copy of the contract, so he or she knows exactly how much you have it under contract for. The difference between your buyer’s and your price is your assignment fee, and it can go directly on the HUD.
This method shouldn’t cause a problem with the seller because they receive the amount they expected. It could, however, cause a problem with your buyer. But if they are are experienced – i.e. they know it’s a good deal for them regardless of your profit – everything should be fine.
Re: Wholesaling - Getting Your Assignment Fee - Posted by Chad (MD)
Posted by Chad (MD) on July 14, 2008 at 18:08:23:
That’s a good idea, Natalie. But I was still surprised by the original poster’s question, because I have never worried about the seller’s reaction, and I haven’t had any problems with them so far.
I have, however, worried about my end buyer’s reaction – their reaction to the fact that I had the property under contract at a much lower price than I sold to them for --, but so far I haven’t had any complaints from them either.
Re: Wholesaling - Getting Your Assignment Fee - Posted by Glen
Posted by Glen on July 12, 2008 at 10:00:27:
I am in Oregon, and have been wholesaling 20-30 deals a year for the past five years, and as of the last six months, due to recent laws being passed locally, if doing Short Sales, the local title companies will no longer allow simetaneous closes without disclosures signed by all lenders involved, and HUD-1 from Buyer(s) and Sellers being sent to all lenders involved disclosing all details of the transaction. So I have to do my assignments outside of closing. Many lenders closing instructions will not allow any transfer of title or assignment. The purpose if this email is if you are doing buisness in Oregon, beware, no longer is easy to do assignments and the fee cannot be on the HUD-1. Specifically if doing Short Sales.
Re: Wholesaling - Getting Your Assignment Fee - Posted by Natalie-VA
Posted by Natalie-VA on July 15, 2008 at 06:58:20:
I haven’t had problems with buyers, but I’m selling to investors. Are you selling to retail buyers? I could see where that might be a problem.
–Natalie
Re: Wholesaling - Getting Your Assignment Fee - Posted by IB (NJ)
Posted by IB (NJ) on July 14, 2008 at 18:35:33:
Chad- try a $30k assignment fee and see if the seller doesn’t squawk. Most won’t but some will. Over a certain amount I go for the double closing. But a lot depends on the mentality of the seller.
Ib