OfflineI'm in the process of doing my research and trying to get as familiar as I can with various investment techniques before I make my first deal. I had a few questions on the assignment process and was hoping someone on here could offer some helpful insight.
This site provides great templates for things like agreement to purchase and assignment of contract but do most people simply draft their own based off these examples? I would assume that you would meet with an attorney and work with them to draft whatever contract you needed, that way you could legally add in your escape clause if you wanted one. I was just curious what some of the more experienced REI's have done.
Also, a lot of the threads talk about the basics of an assignment deal. Find a buyer, lock it under contract, assign the contract to end buyer, but I haven't found a thread that talks about opening up escrow, or how you agree to pay for said property? Usually once an offer is accepted, an escrow account is opened by the buyer, but in this case I would be assigning the contract to another investor for them to purchase. So do you not have to open up escrow? How would that work?
This is a piece from the agreement to purchase contract on the student resources section
The Buyer agrees to pay _________________________ Dollars
($_____________) as the down payment on the property. From this down
payment shall be subtracted the Earnest Money previously paid, and the
amount required for repairs agreed to be done by Seller.
In addition, the Buyer shall deposit monthly with an escrow agent
designated by the Buyer the amount necessary to make the payments to
the following mortgage and lien holders and none others. Included is
the mortgage to the Seller:
Holder Of Mortgage And Address
Amount DueMonthly PaymentYears RemainBalloon If AnyInterest
RateTax/Ins Account
A.
B.
Based on what it says it seems like buyer would already have an escrow account set up to pay for their loan/mortgage? I'm just a little confused on this part of the process. Any help would be greatly appreciated.
Thanks in advance,
-Zach
Great questions Zach. Let me begin by saying that the contract you have referred to above is one that appears to be used in a situation where you are going to assume the loan or do a subject to purchase. When doing an Assignment of contract you are purchasing the property out right and will not be making monthly payments on the property. (In reality you can assign that type of a contract but it's more rare).
I'll try and give you a summary of what you will do on a typical AOC.
1. Find the Buyer
2. Find the Seller
3. Make an offer and get the property under contract (includes placing Earnest Money)
4. Present the deal to your Buyer(s)
5. After one of your buyers agrees to purchase, you and your buyer will sign the AOC form/contract (Yes, I use the standard one on the site but, it's a good idea to have an attorney review just in case)
6. Buyer will reimburse your Earnest Money when they sign the AOC
7. Make sure the AOC gets in the hands of the Title Company/Closing Attorney to prepare the closing documents, etc
8. Follow through until closing to ensure no problems occur
Keep in mind this is a CASH deal and is not as complicated as when loans are made.
I hope this gives a little more clarity to how an Assignment of Contract transaction works.
Chris
"Faith is the eternal elixir which gives life, power, and action to the impulse of thought.
"Faith is the starting point of all accumulation of riches!"
- Napoleon Hill, Think and Grow Rich
Thanks Chris for the response. The contract I posted above was from the forms and docs section under student resources titled "agreement to purchase". I guess what I'm unsure of is how I would "lock up" a property when I don't have have the cash funds to buy it outright? I understand that you shouldn't need a POF letter for FSBO's or other properties not represented by a realtor but I'm concerned with how the contract is worded and what information you provide on the contract. Alot of the contracts I've seen ask for the buyers loan or mortgage information, so in that case what would someone do? To go along with that can you proceed with a contract as if you were to buy the home and take out a loan/mortgage for yourself, while still having an assignment clause in the contract. Then if you find a cash investor, just assign that deal over to them? And how does this process work when a realtor is involved in said property?
I'm doing a lot of research and learning a lot but there are a few things that seem hard to find answers for. I really appreciate the help!
-Zach
The term "lock up" the property refers to when you have it under contact
A signed purchase contract by both you and the seller
When a seller agrees to sell their property to you, they cant go around you, they cant agree to sell this to someone else, hence the term "locked up" it is your property to market while you have it under contract with the seller.
And it is at that time we can utilize "control without ownership" & market this property we have no owner ship in to our buyers but we have the right & control to.
Were making cash offers, there is no loan information to provide.
Even if you are working with an agent to represent you in your offer & then you assign that contract to your buyer. Understand nothing changes on the contract in the assignment, other then who is closing on the home. Your agent is still the buyers agent & they still get paid their commission
money or contract Not valid
Mike
https://tvallc.isrefer.com/go/RehabLite/renvestr/ Free tools
Thanks harold for the responce. I think that clarified some of the things I was having trouble with. What if the seller has a realtor that has marketed that home, would the same methods apply here?