Re: downpayment for REO - Posted by SCook85
Posted by SCook85 on December 10, 1998 at 16:36:19:
This was something that I have done a lot of so I feel that I can speak intelligently about it. There are many creative ways that I have heard of doing this but I have done it only one way so it is the way that I will speak of.
I always put an earnest money deposit down. My first deposit was $200. That is all I needed to do my first deal. When I assign them I get the new buyer to refund my earnest money deposit (now you have no cash into the deal). Then I get paid my assignment fee at settlement. Lately after being burned a couple of times I am trying to get the assignment fee upfront, and not wait till settlement. When I started doing a number of flips in a short period of time, I negotiated the deals, found the investors to buy them and got them to pay me and sign the contract all at the same time. I never did anything but get paid. My name was never on the contract. This is more of a bird dog fee then an assignment but still put money in my pocket.
As far as banks go and assignments. I buy 75% of what I do from banks. They always let me assign them. In the past I did not cross out the non-assignability clause in the contracts and I had to go back to them for there permission. They himmed and hawed a bit but always let me do the assignment. I always cross the clause out now, and no one has ever questioned it. The bottom line is the bank wants the property sold and they couldn’t care less who is buying it.
Last thing. If you are going to be making multiple offers, you can set up an escrow account with your attorney and put an earnest money deposit into that account. I used to write checks for every home that I put contracts on and at one point had 12 checks written at $500 each. I didn’t feel comfortable with that. So now I have $1000 with my attorney and I tell everyone who I make offers to that my funds are there. I have to add to it if I have many offers accepted but I don’t have a bunch of checks on the street.