I'm Evelyn Caldwell with Rei investment society. And we are going to talk about assignments and how do assignments work and who uses assignments. Well, assignments within the real estate industry generally pertains to wholesalers. Those are the individuals whose pretty much are going to resale properties slash technically assign a contract. So they're not actually selling the property they're selling the contract. So how an assignment of a contract plays out depends on many factors, especially the language of the contract.

Some contracts may contains a clause prohibiting assignments. Other contracts may require the other party to consent to the assignment. Some contracts may include a guarantee that regardless of an assignment, the original parties or one of them guarantees performance that Is that the assignee will fulfill the terms of the contract. So who uses this time is well, wholesalers Of course, wholesaling is a pretty simple concept. When an investor which is buyer a Pfizer great real estate deal and signs a purchase contract with the seller, they have the option if their purchase agreement contains the right language to assign aka sale this piece of paper to another investor buyer B. So buyer A is the wholesaler by your B is that in buyer.

So, when buyer a the wholesaler assigns the purchase agreement to buyer B. They do it with a simple one page document called an assignment agreement. This document legally transfer all the buyers A's rights which is the wholesale To buy your B which is the end buyer. It also releases buyer a a signer, who is the wholesaler from any liability or obligations and substitutes a buyer B, which is the assignee in their place and the assignee is now the end buyer the investor. Essentially buyer B which is the assignee slash investor jumps into the shoes of buyer A, which is you the wholesaler and can purchase the property directly from the seller at the same price. At the same terms with the same debt lines.

Everything that was stated in the original purchase agreement now applies to buyer B instead of buyer a, but as a wholesale, you don't want to sell it at the same price. You want to sell it for a higher price because that's the purpose of it. Because that's how you're going to get your feet. As a wholesaler you're essentially setting up the game for others. Play your job is to act as the liaison, the middleman the person make it happen, you're to locate the potential deals secure the rise, how much a real estate agent would and then assign the contract to the real estate investor. The concept of real estate wholesaling contract is similar to a purchase agreement, but the mechanics is slightly different.

So as a wholesale, you're going to get paid more or less a marketing fee per se, you're not going to get a commission, a real estate agent gets a commission. The difference between a real estate agent can paid on this type of deal depending upon the competence in entities they're with because they are licensed real estate agent, they will have to split that fee which is their commission with their brokerage. You Mr. Mrs. wholesaler don't have to split that fee. Because I'm sorry split that commission because you're not getting a commission you're getting a fee for assigning a contract which will be your marketing The now what steps are taken when doing in an assignment and assignment of contract workers will one party have an existing contract, the assigned or which is a wholesaler, hands off the contracts, obligations and benefits to another party, the assignee, which is the end buyer slash investor.

Ideally, the assignor wants the assignee to step into his shoes and assume all the contractual obligations and rights. In order to do so the other part of the contract must be properly notified, and the other party of the contract is obviously the seller. To better understand how real estate wholesale contracts works. wholesalers will need to first familiarize themselves with the basis of a purchase and sale agreement. The framework of this legal agreement which provides control of a property and documents the agree turns between The whole seller and the seller. This will include but isn't limited to the purchase and sale agreement.

Parties involved the names of the buyers sellers including a signatures from all parties listed on the title, the description of the real estate which is generally the property address, legal description and property type. And a legal description sometimes generally is not the full descriptions on title is just simply the pin number the property identification number, personal property included in the sales price, which is anything not attached to the building or the land and in most cases, it will usually include the home fixtures. Also included on it will be the purchase price and financing terms, the purchase price, the deposit, which is the earnest money and financing terms. Is this going to be a cash deal? Is this going to be a hard money deal? Is this going to be conditioned financing.

But generally this is going to be a assignment is usually going to be cash or it's going to be hard money or some type of private funds, where the deposit will be held. There's a light on all contracts where the deposit will be held. And it just basically means is the deposit the earnest money going to be held at the sellers attorney's office with a buyer's attorney financing contingencies Are they any contingencies, outlines of financial terms, if this buyer is going to be paying with cash, the conditions of the premises highlights the physical condition of the property that will be presented to the buyer. And generally on the contract you want to just kind of put as is simple as that, leave it as that because this is why you're getting it for the price that you're getting it for inspection contingencies. If the property does not meet the standards of a buyer, as listed from the condition of the premises.

This will also allow for an inspection period to occur, typically 14 days in which points the buyer can back out. But generally, I always tell my students to go with a contingency period of 21 days, because as a wholesaler, they give you time to go ahead and find your end buyer and realistically come up with the earnest money so you don't have to use your earnest money. And the earnest money you generally will use would be the end buyers earnest money. So this is why it's important to make sure that the earnest money is hell with your attorney or the sellers attorney and not the end buyers attorney. That way it makes them really have some skin in the game and not try to back out of this deal that you so diligently worked hard to put together. Also on the contract statement regarding lead based paint, this disclosure needs to be included in their occupancy and possession and closing date.

Establish a deadline for the closing date. So again, if you have 21 days, you want to make sure that this deal is closed within 21 to 30 days. And that's their contract your contract. You want to put a little leeway out there because it gives you time to go ahead and find that in buyer. The D type confirms the D type to be conveyed. marketable title.

If the seller is unable to pass title or the buyer is unable to obtain title insurance, this option will automatically cancel the deal in your earnest money must be returned buyers default clause. This outlines the right of the seller if the buyer is default on the agreed upon terms of the contract sellers default clause. This outlines the right of the buyer the seller defaults on the agreed upon terms of the contract, which means of course, their earnest money should be returned Now as you can see the contract will be signed between you buyer A, which is the wholesaler and the seller. So, as you can see the wholesaler which is you by a you're the Assign or you will be acting as the middleman. You will be getting paid in the form of an assignment fee or marketing fee however you want to say it but you're not getting a commission from the outside investor which is buyer be the assignee and the process what you want to do is you want to be able to make sure all of your documents are in order all of your forms, your purchase agreements, your fee agreements, assignments, everything is correct.

Now, once you get your payment a portion of this payment is made with assignment agreement. is signed by both parties and the remainder is paid when the deal is close, and the property officially changes hands. So what I'm going to do is break down this assignment agreement. The typical process. Step one, you want to find a motivated seller. So now that you have an idea how your contract should be written up and what needs to be on the contract to make sure you're protected.

Now it's time for the assignment process. Find the motivated seller. When you start making offers to these motivated sellers, you all your offer needs to actually be accompanied by a thorough explanation of what you intended on doing. wholesaling is a very different type of transaction than buying a property outright. The seller needs to know that you're planning to assign the property, you need to be upfront with them. The seller generally doesn't have any problem With this, they just want to make sure that this deal gets closed and so on.

So, if you don't explain your intentions to the Salar, they're going to get confused and probably be upset with what you're doing. And this can kill the deal. Because when you fail to properly set a person's expectations, things can get ugly. And the last thing that you want to do is lose out on your assignment fee and lose this seller, or even that just lose the seller. If you've already pretty much pre sold the property, then investor you can piss off because investors don't play when it comes to their money. So now as a wholesaler, which you're the buyer number A, you've already located a motivated seller, you found someone who's ready to sell their property.

Now you need to make sure you find An outside investor, which is going to be buyer B. So to simply put it, there's a few points your seller needs to be aware of. Number one, you're not planning to buy their property yourself, one of your partners is going to buy the property, you're planning to sell the contract slash assign that contract to someone else who's able to buy a right now, because you have the resources, and they're going to buy it outright, you will make sure you communicate with the seller throughout the entire process so they will never be left in the dark. If you aren't able to find a buyer, the contract will expire and this transaction won't happen. So you want to make sure of course, you do have a nice amount of time to locate the proper buyer for this property. And like I indicated before, you want to try to go with a 21 days due diligence calls last year out calls as a worst case scenario.

Given that a wholesale transaction involves a couple of additional steps along the way, it might be tempting for you to overcomplicate things, when you try to explain things to your seller. So don't over explain things you don't want to confuse the seller because rather than being made looking crazy, the best thing is just to be honest and say, Hey, I have partners, and I'm going to assign my contractual interest over to my partner, but you will be dealing directly with me in this behalf. So this is how you pretty much going to let them know. In order to assign your purchase agreement, you need to make sure your contract attains an assignment clause as I indicated before, allowing you to assign it to a third party, which is your buyer B which joy investor slash technically your partner in this particular case Because without this call the rest of the processes isn't gonna work.

There are many different ways to state this in your contract. But if you need an example, I'm going to break it down for you. an assignment buyer has an unqualified right to assign his rights under his contract to a third party, which will be the buyer be no notice to the seller of an assignment is necessary. Such an assignment will create a Novation and release the original buyer from this contract and substitute assignee in his place. So your contract should re wholesaler Davis and or assign needs to assignees his buyer Be who you assign the property to because you put their name on there. Even though there's no actual name.

Your assignment agreement is going to indicate who the assignee is. So that's like the addendum to that contract. When you sign a contract to purchase a property from a seller, you now have an equitable interest in the property under what is known as the doctrine of equitable conversion. This enables a buyer to become an equitable owner of the property while the seller maintains bear legal title to the property under the terms of the agreement. Although you won't have the title to the property, and you don't actually own the property, you'll be able to control it by means of a contract. On that note is important to mention that every state and county will have their own laws pertaining to wholesaling and the formalities of the real estate wholesale contract.

So remember, the seller is going to have a contract with you. And then you wholesaler buyer a is going to have a contract with buyer B, and C. I'm in agreement with Bob. Now you the wholesaler, buyer a assigns the contract to the outside investor via B and get paid a non refundable deposit, which would be your fee that you're going to get. The next step will be then for you to assign your contract your rights to this investor, which will require an assignment of real estate purchase and sales agreement. This contract your document will basically state the new buyer which is fired up the assignee is a Sony your responsibilities including the purchase price of the property to be agreed upon by you, and buyer be the assignee in the purchase and sales agreement. It is vitally important the new buyer is informed of the stipulations and layout of your contract that you have with them, which is buyer be the assignee that you agreed upon all the prices, the terms contingencies, as well as the conditions.

That is why wholesalers should attach a copy of the purchase price sales agreement to the assignment of the real estate purchase and sale agreement. This one is sure the new buyer which is buyer be the assignee is not only aware of the original sales agreement, but has a copy that discloses all addendums that were made in the deal. Now, when they get a copy of the original sales agreement, just so they can have there's no discrepancies and they know how much you're buying the property from for under no circumstances, you want to make sure that the sellers information is being disclosed. That is the information that will be taken out and basically blocked. down. So you want them to know that you are being open and honest about how much you're paying for the property.

But the reality of it is they don't mind paying that extra 510 1520 25,000 for the property when they know that as is the property has a substantial amount of equity into it. And after his rehab, it has double the equity. So you are acting as the middleman or middle girl, you are basically working for them you're bringing them goods, goods and services that has a lot of value that's going to make them money in the end. So now it's time for you to get paid. You didn't found the seller. You didn't found the end buyer the assignee.

Now it's time for our wholesaler our students to get paid, outside investor buy or be called is with the seller and you buyer a good pay the balance of their assignment fee. So this is how this work. Once you find the buyer, you assign the contract, you're going to collect your deposit, you're going to collect your assignment fee. As part of this contract. The assignment, the wholesaling, wholesalers will collect a profit for their work. The terms of how they get paid will be included in the assignment of real estate purchase and sell agreement.

Generally speaking, wholesalers are typically paid a deposit when the assignment of real estate purchase and sale agreement is signed. The rest of the profits comes from the transaction closes as a reminder is best to have an attorney review the documents and contracts to assure they're correctly written for what you're trying to accomplish. wholesaling real estate and host in real estate investing overall is ongoing education. So wholesaling is A great way to make money within a real estate industry. Please remember that each deal is different and may require a different technique every single time. If you have any questions regarding wholesaling real estate, how to do an assignment, how to do an assignment of real estate purchase and sell agreement, and basically the put your whole deal together, please contact your coach and or mentor and they will assist you all the way from the beginning to the end.

I'm evany Caldwell with Rei investment society. And get out there go find your buyer. Go find your seller, and start collecting your assignment fees.