Re: Need answer from experienced Flippers - Posted by JohnBoy
Posted by JohnBoy on July 20, 2001 at 12:25:00:
When you assign the contract to your buyer, you get the amount of your assignment fee up front. If your buyer has a problem with that, then have the amount of your assignment fee put up to be held in escrow with the title company as NON-Refundable earnest deposit, subject only to your buyer being able to get clear title to the property at closing.
This way if your buyer tries to back out for ANY reason (other than being able to deliver clear title to the property), you still get paid your assignment fee! This eliminates having some investor trying to just tie up the property from you while they either try to flip it to someone else or trying to wait out your contract with the seller to expire so then can back door you and deal with the seller directly, avoiding having to pay you the assignment fee.
Once you get your buyer lined up to assign your contract to, then get the seller to sign a release of liability to you since you have someone else that is assuming your contract and will be the one actually buying the property. You only need this if your buyer is paying you the assignment fee up front where you can just walk away with your money and be done with the deal! If you will be escrowing the assignment fee then you don’t need a release from the seller since you will be remaining in the deal until closing in order to get your money.
Since your buyer will be putting up the full amount of your profit as NON-Refundable, then it’s unlikely they wouldn’t show up to close unless they like losing their money!