Assignment contracts vs. double closings

A to B and then B to C for a double close.

This is the order for a "wet" double close. If you are doing a "dry" double close, it is B-c first and then A-B.

Karen

Not all title co's do double closes so you have to find one that does & even less do dry double closes(using the end buyers to fund the A to B part or you buying it from the seller).

But they do exist, you just have to find them, ask at reia's, best place, thats how I found the one that does that here in san diego, the other one was thru networking.

Assignments are easier than double closes, when you assign a contract to an end buyer they take it from there, you are not present at the closing, unless you want to be but you dont have to be.

Now it's just between the seller & the end buyer in an assignment. And to explain further, in a closing a double closing a wet one, where you have to close on the prop with your own funds(or a transactional funders funds)

You are at the closing(or not it can be done without you I live in san diego & I closed 3 props in KC from san diego) with the seller(or not, the seller could not be there)I believe the seller can sign with a mobile notary & overnight doc's like I did.

So at the closing, you close with the seller first-the A to B(you are the B) & then you close with the seller an hr later or right after your 1st closing. wheew.

Ok hope I didn't convulude the issue. I did just have a cocktail.

Sorry, but can you clarify the letters with the seller, wholesaler and end buyer because I can't relate to who A, B, and C represent. Also, define a "wet and dry" double close please.

Thanks.

A-Seller
B-Wholesaler
C-End Buyer

An Assignment is used when an agreement as to the price is made between the wholesaler (B) and the end buyer (C). C will step into the position of B on the original contract agreeing to take over the terms and conditions specified in the original contract. The wholesaler "assigns" his/her position for an assignment fee. This can be paid at the time the Assignment Contract is signed (this is when I get mine) or at the closing.

An Assignment Contract is between the wholesaler and the end buyer ONLY. It does not involve the seller and is not executed at closing. It is executed when you and your buyer come to an agreement on the price that he will pay. You will then take the Assignment Contract to your closing entity (title co, atty or whoever does closings in your state) They (closing entity) should already have a copy of your original contract. You will also leave a copy of the original contract and the Assignment with the C party. Then you are finished. You DO NOT attend the closing. I usually do an assignment if my profit will be below $20K. Some investors cap it at $10k.

A double close is usually done when you do not want the A and C parties to know what your profit will be. All three parties are never at the same table. C will be at both. One is A-B, the other B-C. The order they are done will depend on the way it is set up as a "wet" or "dry" closing.

Title companies don't really care which one they do. The assignment closing is naturally faster because it is only one closing. A double closing is two.

Karen

Thanks, you didn't confuse me. You answered each question that I asked and with very clear explanations. I wasn't sure which party represented which letter!

So, assignments are much easier for the wholesaler so wy would an investor want to go the double closing route? Can you give me a situation that would call for a double closing (wet or dry)if the wholesaler isn't planning on using any of their own funds.

If doing an assignment closing with only the seller and the end buyer there. When does the wholesaler get paid, at the time the assignment contract with the end buyer is completed or after the seller and end buyer have concluded the closng? If after closing, how soon after?

Thanks.

All funds that will be used in a closing must be wired or deposited into the closing entity's account 24 hours before the closing.

In a "dry" double close, B does not actually have to bring their own cash or funding to the table at all. The B-C segment of the closing will take place first and right after will be the A-B segment of the closing. C's funds will be used for both sides. This can ONLY be done when C is a CASH buyer. It will not work if there is a mortgage company involved. This used to be a very common practice, but it is much more difficult (but not impossible) to find a closing entity that will do them. But they ARE out there. Just keep asking. Cannot be done on any bank properties. Both sides of this double close MUST be done on the same day.

In a "wet" double close, both parties (B and C) must be able to fund the side of the closing where they are the buyer with separate funding. ALWAYS used when you are reselling a bank owned property. Both sides DO NOT have to be done on the same day. The end buyer may have funding from a mortgage company OR cash on this deal.

Karen

Thanks, that was a great explanation.

In the assignment closing do you always control when you get paid(i.e.,at the signing of the assignment contract) or will C(end buyer) try to get it paid at or after closing?

You said some investors will cap it at $10K. Who is making that cap, the wholesaler "B" (me) or the end buyer "C"?

How and why do you use a 20K cap to do assignments? Any special reason?

Thanks.

Most wholesalers get pait at closing, our out of closing. So when the closing is done that same day you can either pick up your check there or if you live far have it wired to your acct like I did.

Some wholesalers like Matt get paid upfront, but you have to have a solid buyers list & have the guts to ask for it upfront. I am slowly asking my buyers for upfront but I may have to ease my way in to it.

I have heard that wholesale deals or fees have been calculated at 5% of ARV but it is what your buyers will pay basically I think. I calculate my fee on what I tihnk is fair & how much my buyer will make. So if my buyer is going to make 60-70k I feel ok about charging 20k, if they are going to make like 20k-30k like in KC then I charge less fees, like 5k minimum to 10k

Thanks so much for your input. It was very informational and definitely cleared up some of my questions. Very much appreciated your help.

Just to throw in my 2 cents... I'll do an assignment if I'm not making that much money because it will all be out in the open to both the seller and the end buyer. If I'm making more I will do a double closing because the two transactions are separate and the seller or buyer will not know how much I made. You don't want either party to get upset over the amount of money you are making, so sometimes it makes sense to do a double closing. The seller will have to sign a document (well, in AZ they do) that says they know I'm am re-selling the property for profit, but they don't know how much.

How much I make just depends on how low I can get the seller's price to me and what the market says I can sell it for.

Thanks. Good information. I always thought that the end buyer would have all that information. But, wouldn't and end buyer know that is probably the reason you are doing a double closing and protest that?

Thanks.

True, in Ca double closings are transparant is my understanding here from several Title Co's.

Verna, you just don't tell the end buyer (if your St is confidential with Dclosings) I would tell them it is confidential.

That makes me feel better. So in assignment deals all the information will be on the table for all to se exactly what I'm making from the deal but in double closings it is not.

When does the end buyer know that it is a DC, at closing or is the type of closing included in the assignment agreement?

Thanks