Anyone ever done an assignment this way??? - Posted by Barbara_NY

Posted by Barbara_NY on December 03, 1999 at 16:25:32:

Hey Jim,

Good points all. First, technically the down payment I refer to is earnest money. However, in the New York City area earnest money, when asked for by a realtor, is minimal ($100 - $500) and provided along with the OFFER and held in escrow (usually not even cashed, just held by the realtor or the seller). If the offer is accepted it is applied to any contract price.

Being that the New York city area is a hugh seller’s market it is rare not to be expected to put down a down payment at the time the contract is signed. I’ve been working deals on a full time basis for nearly 9 months and two years prior on a part time basis. I consider myself very creative, but have never been successful at getting a seller’s attorney to allow a contract to be signed without receiving a down payment. I usually pay between $1,500 & $5,000; otherwise there are plenty of others behind me who will and get the deals. The investor market here is strong. Please also note that a deal cannot easily be closed without an attorney in New York so the attorneys have really set the rules.

I’ve done my deals as you have when the earnest money (or in my case the down payment) is paid by me and reimbursed by my end buyer. However, I’m finding more deals and getting more investor requests that I have funds to place down as a down payment. That’s why I’ve been seeking another solution so I don’t have to miss out on any opportunities. For example: I had a single investor ask for 26 properties by the end of the year. There is NO way I can front that kind of money and I don’t work with enough private investors who could front it to me either.

I do have strong and loyal relationships with several of the investors I work with and would feel comfortable doing the referenced assignment; however, I agree that placing their name (if the bond isn’t as strong or the unexpected happens) leaves me in a state. Got me to thinking… maybe an alternative would be to have the contract read: “John Smith, seller…” to “Barbara Karnes and assigns, buyer(s).”

The whole reason behind using their name instead of not addressing the matter at all or using the generic “and assigns” is to provide a binding reason for the end buyer to provide the down payment funds at the time the contract is signed. If I don’t identify the assignee the end buyer/investor may be trepedatious to give the money without anthing official to protect their position. I would. But… I guess the contract could read “and assigns” or nothing at all, and the Assignment agreement could be executed at the time of the contract anyway; thus affording the same protection to the end buyer. It just opens up the possibility that seller’s attorney will ask why they have a down payment check from someone who isn’t on the contract. Of course the downpayment could be put into my account and I could issue the check but now we’ve added at least a week to the process, as the banks around here won’t release the full amount of a check (even if it is certified) without a 5-7 day period to assure it has cleared.

Seems like things are easier in the burbs of Chicago. Thanks for the reply. Hope all is well.


Anyone ever done an assignment this way??? - Posted by Barbara_NY

Posted by Barbara_NY on December 03, 1999 at 09:08:19:

I’ve been wholesaling directly to other investors and now have them tell me to look for this or look for that. I’ve done double closings and assignments but either way I’ve had to put down a small downpayment. My attorney and I brainstormed about how best to do an assignment where I wouldn’t have to put anything down (when down payment money is expected) and still assign. Here’s what we came up with and I wondered if anyone has done anthing similar…

Have the contract drawn up to read “Joe Smith, seller…” to “Jane Doe and John Johnson, buyers…” where I am Jane Doe and John Johnson is the end buyer. When John Johnson and I sign the contract we also execute an assignment of my interest to John Johnson so he is now the sole buyer. The contract is sent to the seller with the required downpayment and as soon as a fully executed contract is returned to me and Mr. Johnson I notify seller that my interest has been assigned, thus finalizing the transaction.

What do you think?

Re: Anyone ever done an assignment this way??? - Posted by Jim IL

Posted by Jim IL on December 03, 1999 at 14:26:29:

Hello to you.
After reading your post, I am a bit confused. You mention that you need to give “Downpayment money” as you submit these offers? Wouldn’t that be called “Earnest money” or a “Binder deposit”?

I always thought that “Downpayment money” was paid at close, or signing of a Land contract type of arrangement.

As far as covering the “Earnest money deposit” when we did our flip deals, we went ahead and paid the earnest money, and then got earnest money from our end buyer.
If it was an assignment, and the assignment fee was paid upfront, before close, then we made the assignment fee reflect the earnest money, thus re-imbursing us for it.
If the assignment fee was to be paid at close, then we would collect earnest money from our end buyer, usually in excess of the deposit we had put up.

And, when we did a simultaneous close, we collected earnest money, just as any seller does from our buyer. And of course it was always more than we paid out.

So, please let us know which you are talking about.
Earnest money?

And, your idea may work, if you know your buyers well, and have a relationship with them. I personally would not do it, because of that buyer flakes out, then you may need to get another one. And with the original buyers name on the contract, you may have a hard time getting them to assign there interest to another buyer.

Have a nice day,
Jim IL

Re: Barbara - you’re WHOSALING in NY? - Posted by Joanne(NY)

Posted by Joanne(NY) on December 03, 1999 at 12:32:41:

I expect to be able to do same soon, also in NY. I am working on one deal in particular, I believe it has some potential, and I’d like to be able to wholesale it when the time comes. Are you working with any REI club/team? If not, what would you think of creating one? So many peope on CREO recommend it, yet those REI listed on this site do not exist any more or so it seems.

Where in NY are you? I am in Orange County. The suggestion you gave above sounds good. I’ll also wait for some more comments on that.


Re: Anyone ever done an assignment this way??? - Posted by Ken

Posted by Ken on December 03, 1999 at 11:17:44:

I always just give the seller a note to be redeemed when the contingencies are taken care of. I sign it John Doe and or Assigns. I assign the contract before the contingencies are taken care of so I have no money out of my pocket.