Posted by Robert S.C. on January 19, 2001 at 23:39:35:
VO…Your seller and buyer should not know the purchase and selling price. Close with your seller at least 2hrs prior to closing with your buyer(simultaneous closing). Inform your closing agent that this is what you intend on doing, and if the agent has a problem with that get another one. Agent will tell your seller that money will be paid later that day. Your buyer will bring all cash to closing(later on). Checks will be cut and you get your monies with no one knowing the amount except the agent. If you elect to assign the contract your buyer will know your profit. I would only assign to an investor that understands the business. The investor cannot complain if you leave enough in the deal for him or her…Good luck…
I’m a newbie at R.E. and have been reading alot of info on this site. I have found a few properties that I would like to get into contract and then assign it to another investor. What would it have to say for the seller and buyer?
My main concern is about the buyer paying me.
Can the buyer try to out bid me to keep all the profit?
How will I know for sure when the closing is so that I won’t get stiffed for my money?
Will the seller and buyer get upset when they see that the buyer is paying more than what the seller sold the property to me for?
Will the buyer use me again if they don’t like what I made?
These may be silly questions but I’m just nervous. Any response would be great. Thanks
Posted by Frank Chin on January 21, 2001 at 07:23:12:
If you’re a newbie at this, make sure you use a good attorney, preferably one experienced in Real Estate. Now as to your concerns:
1- What to say to Seller and Buyer
Seller- Sell him on the advantages of assignable contract, you can offer a better price.
Buyer- You improved the property, and selling it for the seller, and you can offer a better price doing it this way.
Be as open as you can about it. Explain why you’re involved.
2- The Buyer outbidding or Paying You.
My attorney filed a Vendee Lien, which essentially is a public filing of the Purchase Contract. This supercedes any other Purchase contract of other buyers trying to outbdid you. Search of the public records should be done to insure no other contracts are filed to insure the Seller did not enter into an agreement with someone else.
3- Buyer keeping the Profit
In my case, I had an additioanl clause inserted where if the Seller breaches the contract, and sold it to another buyer despite the above, a penalty equally my profit is assessed. This way, if someone outbids you, and the sale went ahead anyway, the profit is mine.
You should consult an attorney since laws differ from state to state.
Posted by Ed Copp (OH) on January 20, 2001 at 12:27:53:
Do business with people you trust, not con artists.
It would be my suggestion to have a buyer lined up ahead of time. A buyer who knows and understands what you are doing and does not object to you being paid for the work that you do.
The buyer should have cash. Of course everyone does not have cash but that is the most desirable situation. You might take a note for your equity in the contract, but be careful. I like to secure my notes with a mortgage on the house that my prospective buyer is living in now. There should be no objection to this under normal circumstances.
A double closing is a very poor way to accomplish an assignment of the contract. It is overcomplicated, and overpriced. Oh the title company will love it they get paid twice. Just draw up an assignment and hand the assignment to the buyer for cash, and move on. A lot simpler deal.
No deception needed. I am clear in my offer to purchase that I may re-sell the property before closing (assign). If I do this the seller knows that I intend to make a profit. When I assign the buyer of my contract knows that I will be making a profit (and is usually ready to write a check to me for that amount).
Making a profit is the American way. Most people do not work for nothing.