Assignments of Contracts

I've received a number of questions from people experiencing a similar problem with Assignment of Contracts that I want to address here.

They are putting a property under contract and then assigning it to another buyer. The problem they are having is that the new buyers were not closing on the properties which resulted in the loss of their reputation. This was the first concern they told me about.

When I delved deeper into how they were actually doing this, I found out that they were only receiving a small amount of money for the contract at the time of the assignment, typically just enough to repay them for the deposit that had been given to the seller, and the balance of the assignment fee was to be paid to them when the new buyer closed on the property.

I realize that some people do practice in this manner, but I will not. You are operating a business here. Experience has shown me that the above scenario is precisely what can and has happened! You end up not only with a damaged reputation, but you have lost your assignment fee AND you have lost the contract on the property because your new buyer has failed to honor his contractual commitment.

By accepting only a small portion of the assignment fee up front, you are setting yourself up for a possible failure. Your buyer does not have enough money invested in the deal to prevent him from not closing. It's simply math and human nature .... if you had $100 down on a property and couldn't close, it would be very simple to walk away from the loss of that money. But .... if you had $5000 down and already paid out for an assignment fee and invested in that same property, how easily would you walk away from that? Certainly if you've come up with some financing challenges that may or may not prevent you from closing on the property, it may be difficult for you, but I doubt you would give up very easily when you already have that amount of money invested. You would be diligent in making sure the deal would close!

After all, who wants to walk away from $5000 and just lose it! Understand the human dynamics at play, and ensure that you operate your real estate investing business as a business because that is precisely what it is!

Once you have assigned your property to another buyer, make sure you have been paid in full for your assignment fee and that you are released from all further interests and claims in the property. I also have a very specific time frame to receive the payment of these funds from a buyer, if they have not paid within this time period, usually 48 hours, then the assignment of contract is null and void and I offer the property to another buyer.

Assignment of contracts is an excellent vehicle for you to earn quick amounts of cash as long as you protect your interests at all times. Hope this helps!

Warmly,
Mary

"The beauty of the soul shines out when a person bears with composure one mischance after another, not because he does not feel them,
but because he is one of high and heroic temper." Aristotle