flipping and assignments - Posted by JonC

Posted by Natalie-VA on March 03, 2005 at 09:33:00:

I’ve heard that lenders don’t like to see assignment fees. I would research this part some more. I’d hate to see your deal blow up at the last minute because of the assignment.

I like the option idea better. I think it’s fair to fully inform the seller that you may not close on it yourself. I run into a lot of people who end up in foreclosure because they tied up their property in a contract with someone who couldn’t close. Everyone loses. With your way, everything is fully disclosed and the seller can continue to market the property.

flipping and assignments - Posted by JonC

Posted by JonC on March 01, 2005 at 14:00:52:

Please critique my plan:

  1. Find house I can buy for at most 90% FMV.

  2. Make sure contract with seller is assignable.

  3. Find buyer that I can get qualified with my B/C sources at 95% LTV or higher.

  4. Get 2 assignment forms signed. One with seller releasing me of all liability. Second with buyer releasing me of all liability and stating assignment fee. This fee will be equal to the difference in sales price between what I am paying seller and what the buyer is paying me.

Turn in the sales contract and assignment forms to title company.

Result: One closing, one escrow, no seasoning issues, and my assignment fee shows up on the HUD.

Also, I’m thinking of getting the seller to sign the “Joe Kaiser CYA” form. Has anyone else used this? What was the reaction of the seller?

Thanks,

JonC-NY

Re: flipping and assignments - Posted by Natalie-VA

Posted by Natalie-VA on March 02, 2005 at 16:58:54:

Just some things to consider…

Will the seller allow you to show the house to prospective buyers?

Will the seller allow your buyers to get home inspections, etc?

Will the buyer’s lender fund the loan if they see that their buyer is not the buyer on the original contract?

What if you don’t find a buyer … will you still close the transaction yourself?

Re: flipping and assignments - Posted by JonC-NY

Posted by JonC-NY on March 03, 2005 at 09:10:30:

Thanks for the reply.

  1. I plan to make sure the seller knows that I am an investor who will find and qualify the end buyer. In my contract I will have an addendum stating that I, or my assigns, will have access to the property for inspection with a 24 hour notice. Will every seller go for it? Of course not, but some will depending on their current life situation (divorce, lay off, etc…).

  2. Same answer as #1.

  3. The lender should have no problem with the assignment of the contract, as long as the buyer qualifies for the new loan. Remember, the lender will see the sales contract and the assignment form, so yhey can put 2 and 2 together.

  4. This is always the sticking point, isn’t it? If I cannot find a buyer, then I do not intend to close myself. But, this point will always be fully disclosed to the seller. See, I want this setup as a non-exclusive option, so the seller can continue to market the property until I have a buyer lined up and qualified. That should settle any concerns the seller may have about taking the house off the market. Plus, if record some kind of Memorandom of Option that will show up on title, then I will prevent the buyer and seller from going aroung me.

Come to think of it, maybe that’s the way to go after all: a short-term non-exclusive option! If I couple that with an assignable sales contract, I can accomplish the same goal (spread profit), without any question as to being liable to close with the seller.

What do you think?

Thanks again,

JonC-NY