Friday, October 31st, 2014

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Carving Up The Real Estate Contract Assignment (Free Form, Plus Video)

OK, friends – it’s time for yet another riveting episode of me giving you a free real estate investing form, and walking you through it on video.

Yay!

In case you missed the others, you can back track ‘em here.

Today’s installment brings you my Assignment Agreement, which is in my opinion one of the most important core forms any real estate investor should have handy and ready to whip out at a moment’s notice.

Three Things You Should Do Next:

1) Start by downloading a copy of the form for yourself…

To do this, right-click here and select “Save Target As…” from the Windows menu that pops up.

Easy as A-B-C:

A) If you’re still unsure of how to download the form above, please click here to watch a short screen-capture video I made for you

B) If you’re a Mac user, then you’re on your own.  Just do whatever it is you Mac folks do to download stuff.

C) The form is in MS Word (.doc) format.  If you don’t already have MS Word on your computer, then Open Office should do the trick for you, and the price is right (free).

As always, I’m giving you a personal license to use this document in your own real estate business.  But please don’t sell it or give it away yourself. If you’d like to share it with someone please send them to this page to get it.

Why?  Because I’d like to give them the chance to become an REI Tips subscriber…just like you. :-)

2) Enjoy these two “how to” videos…

Here’s my short, 2-part video walking through this form, how to fill it out and how I use it specifically.

I hope you find it useful, and I’d really appreciate hearing any comments you may have if you could please share them below.

Thanks.

Carving Up the Real Estate Contract Assignment, Part 1…

Carving Up the Real Estate Contract Assignment, Part 2…

3) Tell me what you think!

Enjoy the videos?  Got some feedback?  Please comment below!…

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About 

JP Moses is a roughly-hewn man-child who first got into REI after reading Rich Dad, Poor Dad back in Y2K and went full time in 2002. He's tinkered in everything from landlording to short sales to rehabs to Realtoring to REOs to notes to owner financing, blah, blah, blah...Till he finally stuck his flag deep into wholesaling and has since flipped somewhere north of a couple hundred deals.

JP's not a “guru” but also doesn't think it's a bad word. Among his core values are authenticity, creativity, big honkin' value, general fun-ness and being unshaven. He's super proud to be chief blogger guy at REItips.com and host of the free REIology podcast. He also thoroughly enjoys sharing his 53 best real estate investing forms with anyone who wants them. You should totally check that out. :-)

  • Demetri

    @Demetri – How are investors with wholesalers making big assignment fees or does it just depend on how big the deal is or is there a certain percentage for the assignment fee that you should strve for?

    There isn’t a “standard” per se. It’s all in how good of a deal you can get and what you can negotiate. I’d also say it has something to do with how much you feel you’re worth.

    Admittedly for years I was only getting $1,000 a pop on average per deal I wholesaled. But that was b/c I didn’t see myself as worth enough, so I was only doing marginal deals and/or passing more profit along to the next guy than I needed to.

    Most investors I know commonly strive for $5,000 min per wholesale deal, and many won’t look for less than $10,000. Steve Cook is one of them.

    …jp

  • Demetri

    @Demetri – How are investors with wholesalers making big assignment fees or does it just depend on how big the deal is or is there a certain percentage for the assignment fee that you should strve for?

    There isn’t a “standard” per se. It’s all in how good of a deal you can get and what you can negotiate. I’d also say it has something to do with how much you feel you’re worth.

    Admittedly for years I was only getting $1,000 a pop on average per deal I wholesaled. But that was b/c I didn’t see myself as worth enough, so I was only doing marginal deals and/or passing more profit along to the next guy than I needed to.

    Most investors I know commonly strive for $5,000 min per wholesale deal, and many won’t look for less than $10,000. Steve Cook is one of them.

    …jp

  • Demetri

    Sorry but I forgot one last question my last comment. So there are 3 contracts that need to be signed when assigning a contract right? The original Purchase Contract(Seller to Wholesaler), Assignment Contract (Wholesaler to Rehabber, Investor, etc.) and Purchase Contract(Wholesaler and Rehabber, Investor, etc.)?

    No, when you’re assigning a contract, you just sign a purchase and sale agreement between you and the seller, then an assignment agreement, turning your interest over to your investor/buyer.

    Make sense?

    …jp

  • Demetri

    Sorry but I forgot one last question my last comment. So there are 3 contracts that need to be signed when assigning a contract right? The original Purchase Contract(Seller to Wholesaler), Assignment Contract (Wholesaler to Rehabber, Investor, etc.) and Purchase Contract(Wholesaler and Rehabber, Investor, etc.)?

    No, when you’re assigning a contract, you just sign a purchase and sale agreement between you and the seller, then an assignment agreement, turning your interest over to your investor/buyer.

    Make sense?

    …jp

  • Demetri

    @Demetri

    Thanks JP. You are the man!

  • Demetri

    @Demetri

    Thanks JP. You are the man!

  • Demetri

    When wanting to sign a purchase contract, most Realtors want a pre-approval letter. Is there any way of getting around this? I want to assign a contract to a ready investor. When I make an all cash offer, won’t I need to show proof of funds when doing that or should I just go the standard route by saying that I am working on financing through my broker???

    Hi, Demetri. Yes, it’s true that most Realtors worth their salt will ask for a pre-approval letter before submitting your offer. Though in today’s market, you’ll find them increasingly willing to consider ANY offer that’s put in front of them, because they’re desperate for some action. FDIC listed properties have even started accepting verbal offers if you can believe that.

    Here’s the deal: As a wholesaler, even though you don’t plan to actually OWN the property, you should still be able to close if you had to. This means you need to source some funding of some sort in order to be able to stand behind your offers. That’s my opinion anyway. You can’t, with integrity, say you’re able to close on an all-cash deal unless you really have access to that cash, either through private funding, a friend, HELOC or something.

    Bob Norton is a private lender and he talked much about that in our second call session, which you can listen to free here if you like.

    If you honestly can’t get a prequal letter from someone…anyone…then you might want to consider dealing with option contracts instead of purchase agreements. And making fewer offers where Realtors are involved. I have yet to ever have an actual homeowner (non-licensed) ask me for proof of funding, and I always just tel them “We’ll most likely be closing this in one of my partners’ names”. And they never seem to bat an eyelash.

    Hope that helps – thanks for the question.

    …jp

  • Demetri

    When wanting to sign a purchase contract, most Realtors want a pre-approval letter. Is there any way of getting around this? I want to assign a contract to a ready investor. When I make an all cash offer, won’t I need to show proof of funds when doing that or should I just go the standard route by saying that I am working on financing through my broker???

    Hi, Demetri. Yes, it’s true that most Realtors worth their salt will ask for a pre-approval letter before submitting your offer. Though in today’s market, you’ll find them increasingly willing to consider ANY offer that’s put in front of them, because they’re desperate for some action. FDIC listed properties have even started accepting verbal offers if you can believe that.

    Here’s the deal: As a wholesaler, even though you don’t plan to actually OWN the property, you should still be able to close if you had to. This means you need to source some funding of some sort in order to be able to stand behind your offers. That’s my opinion anyway. You can’t, with integrity, say you’re able to close on an all-cash deal unless you really have access to that cash, either through private funding, a friend, HELOC or something.

    Bob Norton is a private lender and he talked much about that in our second call session, which you can listen to free here if you like.

    If you honestly can’t get a prequal letter from someone…anyone…then you might want to consider dealing with option contracts instead of purchase agreements. And making fewer offers where Realtors are involved. I have yet to ever have an actual homeowner (non-licensed) ask me for proof of funding, and I always just tel them “We’ll most likely be closing this in one of my partners’ names”. And they never seem to bat an eyelash.

    Hope that helps – thanks for the question.

    …jp

  • Waren

    I can not down load your forms, other then that thank you for your knowledge its very good.

    Waren, what are you experiencing? Can you be more specific? They’re Microsoft Word forms, so you’ll need Microsoft Office or Open Office in order to open them.

    My best,

    …jp

  • Waren

    I can not down load your forms, other then that thank you for your knowledge its very good.

    Waren, what are you experiencing? Can you be more specific? They’re Microsoft Word forms, so you’ll need Microsoft Office or Open Office in order to open them.

    My best,

    …jp

  • Demetri

    What if you run into a contract with a Non-Assigabilty Clause. I know that you can purchase the property in the name of an LLC and then sell the company for that assignment fee, but what would you call that fee on the HUD1?

  • Demetri

    What if you run into a contract with a Non-Assigabilty Clause. I know that you can purchase the property in the name of an LLC and then sell the company for that assignment fee, but what would you call that fee on the HUD1?

  • Ed

    Thank you for sharing JP. Videos and forms are both outstanding. Production value on the videos is first class.
    Best regards,
    Ed

  • Ed

    Thank you for sharing JP. Videos and forms are both outstanding. Production value on the videos is first class.
    Best regards,
    Ed

  • http://mjhssolutions.com/ maurice

    in wholesaling when i put a option on a property do i still need to jump on the title process or should i just let my buyer start it when i assign the it to him ?also should i use a assignment of option or assignment of purchase agreement ?

    Hi, Maurice. Personally I don’t usually spend time/effort on the title work until/unless I have an interested buyer…and if it’s an assignment you’re using, then an assignment of option would be what you’d want to use to assign it.

    My best,

    …jp

  • http://mjhssolutions.com maurice

    in wholesaling when i put a option on a property do i still need to jump on the title process or should i just let my buyer start it when i assign the it to him ?also should i use a assignment of option or assignment of purchase agreement ?

    Hi, Maurice. Personally I don’t usually spend time/effort on the title work until/unless I have an interested buyer…and if it’s an assignment you’re using, then an assignment of option would be what you’d want to use to assign it.

    My best,

    …jp

  • jason

    JP,
    What do you think of Thomas Lucier’s book “How to make money with Real Estate Options” as an educational read?
    Thanks!

    I’ve never read it! What do you think about it? ;-)

  • jason

    JP,
    What do you think of Thomas Lucier’s book “How to make money with Real Estate Options” as an educational read?
    Thanks!

    I’ve never read it! What do you think about it? ;-)

  • jason

    I went ahead and got the book, I am about halfway through it. It has opened my eyes up to using options in ways that I never thought about. So it has helped me to think more creatively. I will give more feedback when I finish! ;)

  • jason

    I went ahead and got the book, I am about halfway through it. It has opened my eyes up to using options in ways that I never thought about. So it has helped me to think more creatively. I will give more feedback when I finish! ;)

  • Jared

    Does the assignment agreement have to be used with an order to puchase contract?

    I’m not sure what an “order to purchase contract” is. Do you mean a purchase and sale agreement? If so, you’ll probably want to replace the option with an actual P&S; when you decide to exercise your option. That’s what I’ve done. Not sure if you have to or not…I just do. :-)

    …jp

  • Jared

    Does the assignment agreement have to be used with an order to puchase contract?

    I’m not sure what an “order to purchase contract” is. Do you mean a purchase and sale agreement? If so, you’ll probably want to replace the option with an actual P&S when you decide to exercise your option. That’s what I’ve done. Not sure if you have to or not…I just do. :-)

    …jp

  • Jared

    Should there be an “as-is” statement on the contract or is it not needed?

    Hi, Jared.

    An “as is” statement isn’t needed…because it’s your option whether to purchase or not. This is a unilaterial agreement, not bilateral. Basically means the seller’s contractually stuck with you if you (at your option) decide to buy during the contract…but you’re not obligated to. Hence the name. :-) That’s all the “out” you need.

    Hope that helps!

  • Jared

    Should there be an “as-is” statement on the contract or is it not needed?

    Hi, Jared.

    An “as is” statement isn’t needed…because it’s your option whether to purchase or not. This is a unilaterial agreement, not bilateral. Basically means the seller’s contractually stuck with you if you (at your option) decide to buy during the contract…but you’re not obligated to. Hence the name. :-) That’s all the “out” you need.

    Hope that helps!

  • Jared

    Thank you,by the way,for having this web site. It is really helpful to someone who is new in some of these areas. I believe this site will be very helpful to me to expand my buisiness. It is deeply appreciated that someone would share this information when most investors would keep it a big secret. Bless you J.P.

  • Jared

    Thank you,by the way,for having this web site. It is really helpful to someone who is new in some of these areas. I believe this site will be very helpful to me to expand my buisiness. It is deeply appreciated that someone would share this information when most investors would keep it a big secret. Bless you J.P.

  • Jared

    When I ask about the “as-is” on the contract I was refering to the wholesaling of a contract to another person.

  • Jared

    When I ask about the “as-is” on the contract I was refering to the wholesaling of a contract to another person.

  • Jared

    When wholesaling a property would you only need the assignment contract page or the options page to do the transaction with the buyers and sellers and which do you recommend?

  • Jared

    When wholesaling a property would you only need the assignment contract page or the options page to do the transaction with the buyers and sellers and which do you recommend?

  • Jared

    Yes, it is the same as a Purchase and sales agreement. You will probably undrestand what i’m wanting to know in my question on wholesaling. thanks

  • Jared

    Yes, it is the same as a Purchase and sales agreement. You will probably undrestand what i’m wanting to know in my question on wholesaling. thanks

  • Michael

    What I heard of the assignment of contract was great, BUT the second video stopped playing at about 6 min 41 sec.

  • Michael

    What I heard of the assignment of contract was great, BUT the second video stopped playing at about 6 min 41 sec.

  • Verice

    Do you have a clear contract assignment?

    I don’t understand, Verice. After watching the videos above, is the 1-pager I’m giving you here not clear to you?

    …jp

  • Verice

    Do you have a clear contract assignment?

    I don’t understand, Verice. After watching the videos above, is the 1-pager I’m giving you here not clear to you?

    …jp

  • Samuel

    hello um honestly I’ve been searching for the agreement and still have yet to find it I even searched dodeals.com and searched for the agreement which was included in one of the forms in the bonus section I was going througha nd sadly I didn’t find it please if anyone can give me a link to it or a way to get it or fax it to me that would be much appreciated

    Hi, Samuel. In right the blog post above, my friend.

    But hey, here’s a shortcut for you: Just CLICK THIS LINK and the form will download right to your computer. Easy as pie ;-)

    My best,

    …jp

  • Samuel

    hello um honestly I’ve been searching for the agreement and still have yet to find it I even searched dodeals.com and searched for the agreement which was included in one of the forms in the bonus section I was going througha nd sadly I didn’t find it please if anyone can give me a link to it or a way to get it or fax it to me that would be much appreciated

    Hi, Samuel. In right the blog post above, my friend.

    But hey, here’s a shortcut for you: Just CLICK THIS LINK and the form will download right to your computer. Easy as pie ;-)

    My best,

    …jp

  • John stigers

    In the purchase of sell agreement there is one line for the buyer and two lines for the seller. Do I sign as the buyer and have the seller sign twice?

    Hi, John. No actually the two lines for the seller is in case there are two sellers…as in husband and wife, or whatever. ;-)

    …jp

  • John stigers

    In the purchase of sell agreement there is one line for the buyer and two lines for the seller. Do I sign as the buyer and have the seller sign twice?

    Hi, John. No actually the two lines for the seller is in case there are two sellers…as in husband and wife, or whatever. ;-)

    …jp

  • Erin

    Hi JP,

    With regard to contract assignments, I’m confused about what my responsibilities are as opposed to my potential investor’s responsibilities; and the timing of everything. Your input for the following would be much appreciated:

    So after you get the seller to sign the Equity Purchase Agreement…

    1. Who sets up (and possibly pays for) the contractor’s estimate for repairs? You or your potential investor you will flip it to?

    Hi, Erin. I estimate my repairs myself for the most part. I might bring my contractor in for an assessment on something everyone once in a great while if I’m uncomfortable with it for some reason…but even that can be handled with a quick phone call most of the time. I typically provide my rough repair estimates to my buyer if I’m quick flipping a deal via assignment…but always urging them to do their own repair estimates and take mine with a grain of salt. What is a $10k rehab to me might be a $5k rehab to another guy and a $15k rehab to another. But don’t spend money on it – my opinion.

    2. Who obtains and pays for the termite report if one hasn’t been completed recently? You or your potential investor?

    Definitely the end buyer. I’ll do a visual inspection for termites myself, as part of my own assessment. But unless I have a real reason to suspect termites, I’ll leave that piece of due diligence to the end buyer I’ll be assigning to.

    3. With regard to researching clear title, should you specifically order a “Preliminary Title Report” or can you research it another way?

    Personally I just make sure the contract is contingent upon clear title (most always are) and then let the closing title company let me know if there are any problems. They’ll be running full title for the sake of the buyer’s title insurance.

    4. Who orders and pays for the Title Insurance?

    Around here it’s the end buyer…but I guess anyone technically could. If for some reason you wanted to include it as a benefit of the deal that you’re paying for all closing costs including the buyer’s title insurance…then you could. But I never have. It’s just part of the buyer’s closing costs in my mind.

    5. If the buyer is supposed to reimburse you for these things, is it on top of your finder’s fee?

    Try to avoid things you need to be “reimbursed” for. Just set a fee you want to make, and if you have any expenses to incur (which should be rare and few) then be sure you’re making enough money to feel OK with eating those expenses — consider them covered by your gross profit. Make sense?

    Thanks!
    -Erin

  • Erin

    Hi JP,

    With regard to contract assignments, I’m confused about what my responsibilities are as opposed to my potential investor’s responsibilities; and the timing of everything. Your input for the following would be much appreciated:

    So after you get the seller to sign the Equity Purchase Agreement…

    1. Who sets up (and possibly pays for) the contractor’s estimate for repairs? You or your potential investor you will flip it to?

    Hi, Erin. I estimate my repairs myself for the most part. I might bring my contractor in for an assessment on something everyone once in a great while if I’m uncomfortable with it for some reason…but even that can be handled with a quick phone call most of the time. I typically provide my rough repair estimates to my buyer if I’m quick flipping a deal via assignment…but always urging them to do their own repair estimates and take mine with a grain of salt. What is a $10k rehab to me might be a $5k rehab to another guy and a $15k rehab to another. But don’t spend money on it – my opinion.

    2. Who obtains and pays for the termite report if one hasn’t been completed recently? You or your potential investor?

    Definitely the end buyer. I’ll do a visual inspection for termites myself, as part of my own assessment. But unless I have a real reason to suspect termites, I’ll leave that piece of due diligence to the end buyer I’ll be assigning to.

    3. With regard to researching clear title, should you specifically order a “Preliminary Title Report” or can you research it another way?

    Personally I just make sure the contract is contingent upon clear title (most always are) and then let the closing title company let me know if there are any problems. They’ll be running full title for the sake of the buyer’s title insurance.

    4. Who orders and pays for the Title Insurance?

    Around here it’s the end buyer…but I guess anyone technically could. If for some reason you wanted to include it as a benefit of the deal that you’re paying for all closing costs including the buyer’s title insurance…then you could. But I never have. It’s just part of the buyer’s closing costs in my mind.

    5. If the buyer is supposed to reimburse you for these things, is it on top of your finder’s fee?

    Try to avoid things you need to be “reimbursed” for. Just set a fee you want to make, and if you have any expenses to incur (which should be rare and few) then be sure you’re making enough money to feel OK with eating those expenses — consider them covered by your gross profit. Make sense?

    Thanks!
    -Erin

  • Trent Nieffenegger

    JP,

    Thank you for your generosity in offering such valuable forms. I did a quick scan and found a few that I can implement right away. Keep up the great job of “paying it forward” for those of us two steps behind you.

    God Speed,

    Trent Nieffenegger

  • Trent Nieffenegger

    JP,

    Thank you for your generosity in offering such valuable forms. I did a quick scan and found a few that I can implement right away. Keep up the great job of “paying it forward” for those of us two steps behind you.

    God Speed,

    Trent Nieffenegger

  • Bridgewayproperties1

    Hi JD, I really enjoyed the video…how simple it can be to make 10k.  However I’m new to all this and was wondering when Rhonda the rehabber enters into the assingment with you is she now responsible for the closing cost, attorney fees etc…  And if so does this now increase the amount she will buying the property for by that amount?

  • http://twitter.com/RONOLE Ron Smith

    Thanks for posting. Good stuff.

  • http://REItips.com/ jp moses

    Hi, great question. And the answer is, YES. When the new buyer (Rhonda Rehabber) enters the deal, she steps into your shoes. So whatever you would have been responsible for, she is not responsible for – including closing costs, etc. But she’s well aware of that going into the deal, and it’s not a problem. Make sense?

    …jp

  • TAWANDA

    HELLO, WILL THE INVESTOR BACK OUT IF THEY SEE THE WHOLSALE FEE I WILL RECEIVE
    ?

  • katrice

    Hi how do I receive your news letter

  • Troy

    OUCH! (All Caps?)

    Hi Tawanda, not sure if you know this, but in the online world, ALL CAPITALS are considered to be “shouting” (or worse . . “Anger”). I’m sure you don’t mean either of those, but just thought you may appreciate knowing if you don’t already (??)

    I’m also new to Wholesaling. Something I read a few days ago might be worth considering:-

    You’ll need to decide if either your buyer (Investor), and/or your vendor (seller) will be OK knowing you’ll be making a spread on the deal.

    If they are, then a simple “single close” via Escrow should be OK. If you have concerns that either of them may have a problem with you taking a fee for your services, better to go for a double close (blind close). You will need to ensure your Escrow/Lawyer is OK with these methods of closing before you get them involved.