Posted by Kristine-CA on April 16, 2007 at 13:57:24:
There is lots and lots and lots of answers to your questions about the
differences between double closings and assignments in the archives.
An assignment is an assignment of contract–you can assign it at any
time. You step out and the assignee steps in, performing (hopefully)
exactly as written in the contract. You don’t need the help of escrow
people to assign your contract. But you may find it challenging to
collect your assignment fee. You can try to get cash from your buyer,
but they are often using lender funds…so where and when are they
going to pay you? There are various solutions to all of this.
I suggest some researching and reading in the archives. You can
search on assigning, wholesaling, double closing, simultaneous
closing, etc. and you will be busy for days. Kristine
This to me sounds like a concept of wholesaling/flipping…however, I’ve had too many escrows tell me that its not legal. I found several properties @ 70% loan to value that I want to put into contract to purchase…basically I found a seller thats willing to get lets say $200k for his property that is worth $300k…I also have a buyer that is willing to purchase this property at $250k…however, I’m having a hard time putting the contracts together…I want to be able to assign the originall contract bet myself and seller of $200k to my buyer for $250k…however, the escrow companies that I have been trying to escrow the deal through is telling me that what I’m trying to do is not legal? Any thought on this? I will be calling the CA Dept of Real Estate on Monday to clarify this issue, but from all the articles and postings on this site, it doesnt seem like I’m doing anything illegal…any thoughts?
Posted by Kristine-CA on April 14, 2007 at 17:08:23:
Allan: post where you are located in CA so people can refer you to an
escrow agent who can help you.
I suggest that you do not call the CA Dept of RE. It may be that you are
not describing accurately or clearly what you are trying to do. Asking a
bureacracy such as the Dept of RE is sure to be trouble. And provide
more confusion.
You use assignment and double escrow interchangeably in your
description. They are separate types of deals. There is no assignment
involved in a double closing. For a deal with the numbers you
mention, I would use a double close.
What you tell the escrow agent (not a title rep or cust service person at
the title company) you want to do is this:
Deposit your purchase contract into escrow
Deposit your sale contract for same property into escrow
Have the escrow agent use your buyer’s funds to close your
purchase with the seller. You would receive the remaining
proceeds as the seller on the second escrow.
This involves two sets of fees, two title policies, two of everything. A
double close, in my experience, is all based on the willingness of the
escrow agent to provide this service.
You may run into problems involving disclosures. I have to disclose
everything to everybody per my title companies–both my buyer and
seller are aware of the double closing and the both escrows are
contingent upon the other escrow closing.
It absolutely can be done, but finding someone who understands what
you are trying to do is very important. You should consider asking
other investors who they use. The other solution is to do some public
record research. Where I am I have data where I can see who is double
closing (sale and purchase the same day, with different prices). I have
checked their deeds to see who was doing their escrows. Escrow info
is often on the deeds and you can see you might be able to help you.
Thanks for the info…it sounds like a double escrow procedure…now how does this differ from assignment? Wouldn’t you have to go to escrow prior to being able to assign a contract? Sorry, I’m a newbie and although I’m reading up on a lot of books, I’m very much a student of the game…In your opinion, is assignment better than double escrow? I would like to avoid the doubling of fees, transfer of title, etc…if at all possible. Also any ideas on how you would get tax on either double escrow or assignment of contract? Will it be considered income or short term capital gains?