wholesaling assignment contract pdf

Wholesale Real Estate Contract - Free Template Downloads

Table of Contents

The wholesale real estate contract is more simple that the standard purchase and sale agreement. Since wholesale deals are primarily built around the buyer paying all cash, the need for contingencies aren't necessary.

Real estate wholesaling is a two-part transaction. First the contract is executed with the seller. Second, the assignment agreement is executed with the buyer. Both of these contracts are required.

How to Write a Real Estate Wholesale Contract

When you're learning how to write a real estate wholesale contract, it can be intimidating. Executing an agreement when purchasing the property solidifies the deal. The key is to remember that there are only 5 elements that make a contract enforceable. Be sure that your contracts contain all of the essential components.

• Names of buyer and seller must be on the contract
• Purchase Price
• Consideration / Earnest Money Deposit
• Description of Property
• Signed by both parties

Since a real estate wholesale transaction is relatively cut and dry deal, learning how to write a contract will be easy.

You can use any Standard Purchase and Sale Agreement for Real Estate if you choose, or you can simplify things for your seller and use an "All Cash, As Is" Contract.

It's convenient to have contract template on hand. Just fill in the blanks and ask for signatures. Additioanlly, it's helpful to be familiar with every sentence that's in your contract.

As you build your real estate wholesaling business, you can add or remove clauses in your contracts. If they don't fit your business model get rid of them. Furthermore, always consult with an attorney for the best legal advice when it comes to contracts.

As a courtesy, you can download this free Wholesale Real Estate Contract Template and use it in your business. Full Disclosure: Property M.O.B. is not an attorney and isn't offering legal advice. Any contracts on this site are offered as a courtesy only and should be reviewed by an attorney in your state.

Wholesale Real Estate Assignment Contract

There are a few ways to sell the property to a new buyer. The easiest way is to complete a simple Assignment Contract. This simply states that your interest as the buyer in a contract is being assigned to a new person, for a higher price.

Once you find a buyer for your contract , it's easy to assign the contract to another buyer. Don't be intimidated by the use of contracts. The templates written here are written in simple terms and can be downloaded for free.

The assignment fee is collected at the time of contract, or you can get paid at closing.

Download this free Wholesale Real Estate Assignment Contract and use it in your business. Full Disclosure: Property M.O.B. is not an attorney and isn't offering legal advice.

Wholesale Real Estate Contract PDF

The easiest way to be prepared to sign a deal with a seller is to have a wholesale real estate contract in PDF format. That way you can fill out the form using your tablet or smart phone on the fly. Once you get "fancy" you can have a digital signature subscription on your tablet and request digital signs.

Download the free contracts that we offer here so you have something when you go to your appointment. Take the time to review it so you know exactly what it says.

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Thank you for the info you have given. It will help me out alot as I'm just getting started.

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Wholesale Real Estate Contracts

Are you new to the world of wholesale real estate? Look no further than our comprehensive collection of contracts, agreements, and documents designed to help you succeed in the industry.

Our free PDF and Word templates are available for download and use, and we even offer instructional videos to guide you through the process of filling out each contract in detail.

With a thorough understanding of each contract, you'll be able to confidently explain them to property sellers, cash buyers, and JV partners and even fill them out on the spot to boost your wholesale real estate business.

In the example videos below, I'll go over how to fill out the most basic real estate wholesaling contracts (listed below) so you'll have a solid understanding of each.

• Purchase agreements outline the terms of the sale, including the purchase price and closing date.
• Assignment agreement s allow you to assign your rights and obligations under a purchase agreement to another party.
• JV agreements establish a partnership between two or more parties for a specific real estate project.
• Option agreements give you the right to purchase a property at a specific price within a certain timeframe.
• Notice of cancellation forms allows you to cancel a contract within a specified period without penalty.

Wholesale Real Estate Purchase Agreement (Example)

The Purchase Agreement, also known as a "PA" or "Buy and Sell Agreement," outlines the terms and conditions of the purchase.

A wholesale real estate contract is a legal agreement between a wholesaler and a buyer outlining the terms of the sale of a property.

The wholesaler finds a distressed property, negotiates a deal with the seller, and then assigns the contract to a buyer for a fee.

The buyer then takes over the contract and completes the purchase of the property.

Who gets a copy of the purchase agreement? The seller, wholesaler, and title closing agent. (the buyer will also get a copy after they agree to the terms and sign your assignment agreement)

If you'd like me to email you editable copies of all the contracts and agreements, submit your name and email address below.

Wholesale Real Estate Assignment Agreement (Example)

The Wholesale Real Estate Assignment Agreement is a contract between a wholesaler and a buyer, where the wholesaler assigns their rights to purchase a property to the buyer for a fee.

The buyer then takes over the contract and closes on the property, while the wholesaler receives their fee without ever actually owning the property themselves.

It is a common strategy used in real estate wholesaling and investing.

Who gets a copy of the assignment agreement? The wholesaler, buyer, and title closing agent.

Wholesale Real Estate JV Agreement (Example)

The Wholesale Real Estate JV Agreement is a legal contract between two or more parties who agree to work together to purchase and sell real estate properties for profit.

The agreement outlines the property, terms, and conditions of the joint venture, including the responsibilities and obligations of each party, the distribution of profits, and the duration of the partnership.

This type of agreement is commonly used in the real estate industry by investors and wholesalers who want to pool their resources and expertise to maximize their profits.

Who gets a copy of the JV agreement? The wholesalers in the joint venture and the title closing agent. (neither the seller nor the buyer gets a copy of jv agreement)

Wholesale Real Estate Option Agreement (Example)

The Wholesale Real Estate Option Agreement is a contract between a real estate wholesaler and a property owner that gives the wholesaler the right to buy the property at a discounted price within a certain timeframe.

The wholesaler enters into an agreement with the property owner and can then work to locate a potential buyer for a higher price.

Once a buyer is found, the wholesaler can return to the buyer and exercise the option by entering into an actual purchase agreement.

Who gets a copy of the option agreement? Only the seller and wholesaler.

Wholesale Real Estate Notice of Cancellation (Example)

The Wholesale Real Estate Notice of Cancellation is a document used to cancel a contract for the sale of real estate between a wholesaler and a buyer.

It is typically used when the wholesaler is unable to find a buyer for the property within a specified timeframe.

The notice of cancellation must be provided to the buyer in writing and should include the reason for the cancellation and any applicable fees or penalties.

Who gets a copy of the notice of cancellation? The seller, wholesaler, and title closing agent.

Conclusion: In wholesale real estate, a thorough understanding of contracts and agreements is crucial for success. Our comprehensive collection of free PDF and Word templates and instructional videos provides valuable resources to guide you through the process.

However, it's important to note that real estate laws and regulations can vary by location, and it's essential to check your local laws and regulations and consult a real estate attorney before using any real estate contract.

This ensures compliance and protects your interests.

By familiarizing yourself with the various contract types, such as purchase agreements, assignment agreements, JV agreements, option agreements, and notice of cancellation forms, you'll be equipped to navigate the wholesale real estate business confidently.

These contracts outline the terms and conditions of the transactions and help facilitate successful deals.

Remember, while our resources provide a solid foundation, it's crucial to adapt them to your specific circumstances and seek professional advice when necessary.

Safeguard your business by staying informed and compliant with local guidelines.

Download our editable contracts and agreements to streamline your wholesale real estate endeavors. Just provide your name and email address, and we'll send them to your inbox.

Empower yourself with knowledge, consult experts, and utilize the proper contracts to build a thriving wholesale real estate business.

By downloading any of the forms, contracts and/or paperwork, You understand that such forms, contracts and/or paperwork are provided for your convenience, and you understand that real-estate law is governed state by state, and laws and regulations change from time to time.

You also understand that you may and should seek legal and professional advice before using said forms, contracts, and/or paperwork, and You agree to hereby hold us harmless from any liability by using said forms, contracts, and/or paperwork.

Written by:

David Frizzell

Your dream life filled with success and freedom begins with real

estate wholesaling

• [email protected]
• 250 Corey Ave #66873 , St Pete Beach, FL 33707

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Blog » Real Estate Wholesaling » Template & Guide To Real Estate Wholesale Assignment Contracts – FREE DOWNLOAD

Template & Guide To Real Estate Wholesale Assignment Contracts – FREE DOWNLOAD

In a real estate wholesale deal, real estate wholesale assignment contracts are the tools used to ensure that the deal finder gets paid.

What Contracts Do I Need To Wholesale Real Estate?

If you are interested in wholesaling real estate, you will need to sign contracts with sellers and buyers. 

Contracts can be in the form of a purchase and sale agreement, a lease agreement, or a deed of trust.

What is the deed of trust?

Wow, that’s an important question! 

A deed of trust is a legal document that secures a loan or debt. 

It’s also known as a trust deed or a mortgage. 

Basically, it’s an agreement between a borrower and a lender that the borrower will transfer the title of a property to a trustee until the loan is paid off. 

It’s an important document that can help protect both parties.

A deed of trust can help with wholesaling real estate by providing a secure and legal way for a wholesaler to purchase a property from a seller and then transfer it to a buyer. 

The deed of trust allows the wholesaler to act as the middleman between the seller and the buyer, and it also provides the wholesaler with the legal authority to transfer the property from the seller to the buyer. 

The deed of trust also provides the wholesaler with the ability to collect a fee from the buyer for their services. 

This fee can be negotiated between the wholesaler and the buyer, and it can be a fixed amount or a percentage of the purchase price. 

By using a deed of trust, a wholesaler can ensure that the transfer of the property is done legally and securely, and that they are able to receive payment for their services.

Please check with a local attorney in your state for every document referenced on this page.

Assignment Contract

This is another agreement that will allow you to transfer my rights and interests in a real estate property to another party. 

The details of the agreement will include the property address, the parties involved, the transfer date, and any other relevant information. 

This agreement will also outline the responsibilities of each party, including payment, taxes, and other related costs. 

I’m confident that this agreement will be beneficial for all parties involved and I look forward to a successful transaction.

Real Estate Option Contract

This is another contract that is a great way to secure a property without having to make a full commitment. 

It allows you to purchase the property at a later date, giving you the flexibility to make sure it’s the right fit for you. 

It’s a great way to protect yourself and your investment. I highly recommend exploring this option if you’re considering buying a property.

This is the contract I used for my first deal.  I made $10,000.

Can you wholesale without a contract?

Absolutely! You can definitely wholesale without a contract. 

It’s a great way to get started and can be a great way to test the waters. 

You don’t have to worry about signing any long-term agreements and it’s a great way to start building relationships with other businesses. 

It’s a win-win situation!

How do I set up a wholesale contract?

Setting up a wholesale contract sounds like a great idea! It’s a great way to ensure that you get the best deal possible when purchasing items in bulk. 

To get started, you’ll need to research what type of contract works best for your business.

Consider the terms of the contract, such as the payment terms, delivery dates, and any other relevant details. 

Once you have all the information you need, you can start drafting the contract. 

Make sure to include all the details you’ve discussed, and be sure to get it reviewed by a lawyer to ensure everything is in order.

How do you assign a wholesaling contract to real estate?

That’s a great question! Assigning a wholesaling contract to real estate is actually quite simple.

All you need to do is find a buyer who is willing to purchase the contract and then have them sign an assignment of contract form. 

This form will transfer the rights of the contract to the buyer, and they will then be responsible for closing the deal. 

It’s a great way to make money in real estate, so I definitely recommend giving it a try!

Look around this page for access to a free wholesale real estate contract pdf or template that you can check with your local attorney.

Where To Get Wholesaling Contracts

Wholesaling contracts can be found in a variety of places! 

You can find them through real estate agents, online marketplaces, or even through word of mouth. 

It’s great to have so many options when it comes to finding wholesaling contracts – it makes it much easier to get started in the world of real estate investing. 

Plus, it’s always a good idea to network and build relationships with other investors in your area, as they may be able to provide you with leads and other resources.

What is a wholesale assignment contract?

Finding and creating real estate wholesale deals is an awesome way to make $20,000 – $40,000 every month.

In order to do that, a person who is essentially a marketer would:

• Find motivated sellers from lead sources such as unwanted inheritances, pre-foreclosures, tax defaults, expired mls listings, for sale by owners etc
• Put a house with an accepted offer under an assignable contract with a purchase price = 65% of the after repair value minus repair estimate.
• Then assigns the contract to a end buy who now pays a fee for finding the deal.

This contract and its content varies from state to state. Therefore the best place to find the appropriate one is at your local rein (real estate investing association)

Gurus and coaches may have generic version embedded inside their course.

But it’s better to find the one use consistently by asking active real estate investors and wholesalers in your local market.

That can also mean that you have to offer to work with or for existing investors for free.

The bottom line is that a good relationship can become handy here.

Even as you build relationships by bringing value to them, you can download or send the PDF version of the whole assignment contract to yourself by email from the investors computer.

It’s not stealing? It’s friendship.

In my opinion, finding a wholesale assignment contract is the least of your problems.

Your focus should be in finding deals, finding motivated sellers, finding and building a list of end buyer.

WATCH THE VIDEO FOR MORE.

Without an agreement as evident by an executed real estate wholesale assignment contracts, you can’t collect an average of $25,000 per deal from wholesaling real estate.

This document is what initiates everything and it is the main commodity that you acquire rights to so that you can sell that right to others.

That’s essentially what we call wholesale real estate; a very lucrative business model.

About Real Estate Wholesale & Assignment Contracts

There are 2 types of contract usually involved in any given real estate wholesale deal.

But that’s not it; there are also 2 different types of contracts combinations that you can have with any deal.

Let’s talk about the 2 real estate wholesale assignment contracts first.

At least one simple but assignable real estate purchase contract is always present in any wholesale transaction.

This represents the agreement between you as a buyer and the seller of the subject property.

In addition to that one contract, a 2nd type of contract is needed to secure your finders fee when you do find an end buyer for the deal.

You have 2 choices:

(1) You can either assign the contract between you and the seller to an ended buyer using a real estate assignment contract

• (i) Simple Real Estate Purchase Contract
• (ii) Real Estate Assignment Contract

(2) Another simple real estate purchase contract may be execute between you as a seller and the end buyer…

• (i) Simple Real Estate Purchase Contract-A
• (ii) Simple Real Estate Purchase Contract-B

In which case, a 2nd transaction and/or closing will be conducted by the closing agent(s).

This is called DOUBLE ESCROW or DOUBLE CLOSING which means 2 sets of closing cost will be incurred to consummate the deal and go home with $5,000 – $82,000 each time you do it successfully.

The 1st choice which is to assign the original contract to an end buyer with an assignment contract will only involve that same ONE transaction.

The disadvantage of it however is that your seller will be exposed to your fees which can trigger unnecessary greed.

They may start asking for more money than they initially agreed to.

In fact, it happened to me on my first deal back in 2005.

When you download my book Smart Real Estate Wholesaling for free, you will also gain a free access to a Simple Real Estate Purchase and Assignment contract PDF.

Also, look out for a contract PDF generator with all information pre-filled for you.

We are working on that at the moment to make your life easier when it comes to cranking them out and locking them under contract with speed.

7 Essential Parts of a Real Estate Wholesale Assignment Contract

This is the part of the contract that specifies who the seller is and who the buyers is.

In an assignment contract, the parties would be the buyer and the assignor and the end buyers as the assignee.

(2) Property

Your contract have to specify the address and/or legal description of the subject property whose deed is being transfer to another owner.

In legal terminology, some call this the consideration.

Basically, what is being exchanged for the subject property.

(4) Deposit

The earnest money deposit (EMD) is the amount that the buyer is willing to put as downpayment and goodwill at the point contract execution.

For the end side of the transaction, I require the EMD to be non-refundable as my security to protect time and ensure that the end buyer is serious about the deal.

This is possible because we only deal in deals that are actually good deals and steals for an average buyer investor.

(5) Term & Terms of the Real Estate Wholesale Assignment Contracts

When I say ‘term’, I mean a limited time for inspection, funding commitment and closing must be specified.

In addition to that, terms and condition for the transaction must be explicitly specified on the contract.

This may include disclosures and disclaimers with desire clauses to property the parties involved in the sales agreement.

(6) Signature

The contract has to be signed by all parties involved in the transaction.

Spouses of involved parties may also be required to sign the real estate wholesale assignment contracts if involved in qualifying for funding the deal.

Last but not least, the contract must be dated while signing it so that accountability and requirements from each parties between execution and closing can be properly controlled and monitored.

In addition to these essential 7 parts, a real estate assignment contract need to reference the original sales contract between you (as the original buyer) and the seller.

Double Close Contract PDF: Double Closing vs Assignment Contracts

In the world of real estate wholesaling, the methods of double closing and assignment contracts play a significant role in facilitating profitable transactions. 

Wholesalers use these techniques to exit deals with profits as title transfers from a seller to a buyer. 

While both methods have their advantages, this video will focus on using a simple double close contract PDF document and explore its benefits over the assignment method.

1. What is a Double Close Contract?

A double close contract, also known as a simultaneous closing or “double escrow,” involves two separate transactions. 

In this process, the wholesaler acts as the intermediary between the original seller and the end buyer, facilitating the sale of the property without using their own funds.

The wholesaler will be the buyer of the SIDE A transaction and the seller of the SIDE B transaction.

2. Understanding Assignment Contracts:

An assignment transaction, on the other hand, involves using an assignment contract to transfer the equitable rights of the original sales contract to the end buyer. 

In this scenario, the wholesaler does not acquire the property but instead sells the contract to the buyer for an assignment fee.

3. The Question: Double Close vs. Assignment

One common question that arises is whether to choose double closing or assignment. 

While assignment contracts may seem simpler and require less capital, there are limitations. 

Hard money lenders, for instance, might impose restrictions on the amount of assignment fees, potentially limiting the wholesaler’s profits.

4. Benefits of Double Closing:

A) avoiding assignment fee restrictions: .

Double closing allows wholesalers to bypass assignment fee limitations set by some hard money lenders. 

As a result, they can handle deals with larger spreads and generate higher profits without facing unnecessary hurdles. 

This is precisely how I did my $82,000 deal and how I lost $10,000 out of the $20,000 I was supposed to make on my first deal.

B) Reduced Scrutiny: 

Assignments can sometimes raise red flags for lenders, who may view them as unconventional fees for unlicensed realtors. 

Double closing eliminates this concern as the wholesaler actually takes ownership of the property briefly before selling it to the end buyer.

C) Increased Profit Potential: 

With double closing, wholesalers can explore deals with more significant equity spreads. 

This opens up opportunities to find properties with higher potential profits for both the end buyer and the seller.

5. How to Execute a Double Close:

A) Step 1: Finding the Right Deal: The process starts by identifying a property with substantial equity spread and potential for profitable reselling.

B) Step 2: Securing Financing: For the first transaction (SIDE A), the wholesaler arranges for transactional funding or uses their own cash to purchase the property from the original seller.

Transactional funding will cost less than 3%.

C) Step 3: Second Transaction (SIDE B): With ownership of the property now in the wholesaler’s name, they proceed to sell it to the end buyer in a separate transaction. 

This transaction is funded by the end buyer’s financing, which might be provided by a hard money lender.

D) Step 4: Documentation: Proper documentation is essential for a smooth double closing process.

This includes drafting and signing the double close contract, purchase and sale agreements, and other legal paperwork.

6. Downloading a Double Close Contract PDF:

To assist wholesalers in conducting double closings effectively, we offer a free downloadable Double Close Contract PDF in our programs that can be tweaked by your lawyer to fit the property’s local jurisdiction. 

This document is designed to streamline the process and ensure compliance with legal requirements.

Conclusion:

In conclusion, while both double closing and assignment contracts serve their purposes in real estate wholesaling, the double close contract PDF offers several benefits that make it a preferred choice for deals with substantial equity spreads. 

By using this method, wholesalers can increase their profit potential, avoid unnecessary scrutiny, and optimize their real estate ventures for success. 

Remember to exercise due diligence, consult legal professionals when needed, and utilize the free downloadable Double Close Contract PDF for seamless transactions. Happy wholesaling!

By following the tips in this blog post, you can increase your chances of successfully double closing real estate deals.

Are you ready to take your real estate wholesaling to the next level? Join our masterclass and access comprehensive step-by-step guidance and valuable resources on double closings. In fact, you get 3 free books as soon as you register for the class.  Click here to learn more.

Frequently Asked Questions

A double closing contract is a legal agreement used in real estate wholesaling that facilitates two separate transactions: buying the property from the seller and immediately selling it to the end buyer.

To do a double closing, purchase the property from the seller in the first transaction and then sell it to the end buyer in a separate transaction, ensuring proper documentation and financing.

Yes, you can double close with no money by using transactional funding for the initial purchase and relying on the end buyer’s financing for the resale.

The difference between a double closing and an assignment contract is that a double closing involves two separate transactions where the wholesaler briefly owns the property, while an assignment contract transfers the contract rights to the end buyer without taking ownership of the property…

Micro Flipping in Real Estate: A Comprehensive Guide

In the ever-evolving world of real estate investing, new strategies and trends often emerge. 

One such trend that has gained traction in recent years is micro flipping. 

This innovative approach to real estate investment has captured the attention of investors looking for a quicker and potentially more profitable way to turn properties. 

In the next segment of this blog post, we’ll delve into the concept of micro flipping, explore its differences from wholesaling, discuss the 70% rule, delve into the pros and cons, and provide guidance on how to get started with micro flipping.

What is Micro Flipping in Real Estate?

Micro flipping is a real estate investment strategy where investors buy properties, often distressed or undervalued, at a discount and quickly resell them for a profit. 

Unlike traditional house flipping, which involves significant renovations and holding periods, micro flipping focuses on rapid transactions with minimal renovations. 

The goal is to identify and capitalize on quick profit opportunities by purchasing properties below market value, and then immediately selling them to another buyer, usually an end-user or another investor.

Micro Flipping Vs. Wholesaling

While both micro flipping and wholesaling involve the quick turnover of properties, they differ in certain aspects:

1. Strategy: Micro flipping involves a faster process and usually minimal or no renovations before selling the property. 

In contrast, wholesaling focuses on finding deeply discounted properties and assigning the contracts to other investors without taking ownership.

2. Ownership: In micro flipping, the investor takes temporary ownership of the property before selling it. 

Wholesaling, on the other hand, does not involve actual ownership transfer; instead, it revolves around assigning the contract rights.

However, wholesale real estate sometimes uses double closing which involves title passing through a wholesaler’s name for a brief moment.

3. Profit: Micro flipping aims for relatively smaller profits on each deal but completes transactions at a higher volume. 

Wholesaling typically targets higher profits per deal, but the volume of deals may be lower due to the longer acquisition process.  Time is worth more than money.

How much profit is the 70% rule?

The 70% rule is a widely-used guideline in real estate investing, including micro flipping and traditional house flipping. 

It states that an investor should not pay more than 70% of the after-repair value (ARV) of a property, minus the repair costs. 

The formula for the 70% rule is:

Maximum Purchase Price = (ARV x 0.70) – Repair Costs

In other contexts, it may go down to 65% and others, as high as 85% in very busy cities with high demand.

This rule helps investors ensure they acquire properties with enough built-in profit potential or equity to cover expenses and still generate a satisfactory return on investment (ROI).

How do I avoid capital gains tax on a flip?

Capital gains tax can significantly impact the profits made from flipping properties. 

However, there are several strategies to minimize or avoid capital gains tax:

1. 1031 Exchange: Under Section 1031 of the Internal Revenue Code, investors can defer capital gains tax by reinvesting the proceeds from the sale of one property into a like-kind property of equal or higher value.

2. Primary Residence Exemption: If the property being flipped was your primary residence for at least two of the past five years, you may qualify for the primary residence exemption, which allows you to exclude up to $250,000 (or $500,000 for married couples filing jointly) of capital gains from taxation.

3. Real Estate Professional Status: If you are considered a real estate professional by the IRS, you may be able to offset your real estate gains with real estate losses, reducing your overall tax liability.

Please check with your local tax professional.

What is a good profit on a house flip?

The profit margin on a house flip can vary depending on factors like location, property type, market conditions, and renovation costs.

However, a good rule of thumb for a successful flip is to aim for a net profit of 10% to 20% of the after-repair value (ARV). 

For example, if the ARV of a property is $300,000, a satisfactory profit would be between $30,000 and $60,000.

What is the Rule of 70 (Doubling Time)?

While it may be confused with the 70% rule used to secure a healthy ROi as discussed earlier, it’s different in the broader world of real estate.

The Rule of 70 is a mathematical formula used to estimate the time it takes for an investment or economy to double in size. 

It is calculated by dividing 70 by the annual growth rate. 

For example, if an investment is growing at a rate of 7% per year, it would take approximately 10 years for it to double (70 ÷ 7 = 10).

To Recap, what is a Microflip?

A microflip refers to the act of conducting a micro flipping transaction. 

It involves identifying and acquiring a property at a discounted price, and then rapidly reselling it to another buyer for a profit, often without significant renovations or improvements.

What is a Micro Real Estate Portfolio?

A micro real estate portfolio is a collection of properties acquired through the micro flipping strategy. 

Investors who specialize in micro flipping may accumulate several properties in a relatively short period, leveraging the faster turnover to build a diverse portfolio.

Pros and Cons of Micro Flipping

Like any investment strategy, micro flipping has its advantages and drawbacks:

Quick Turnaround: Micro flipping allows for faster transactions, enabling investors to generate profits more rapidly.

Lower Risk: With minimal renovations, there is less exposure to renovation costs, construction delays, and market fluctuations.

Less Capital Intensive: Compared to traditional house flipping, micro flipping requires less upfront capital, making it accessible to a broader range of investors.

Market Agility: The ability to adapt quickly to changing market conditions can be advantageous in dynamic real estate markets.

Lower Profit Margin: Each microflip may yield smaller profits compared to traditional house flipping, necessitating higher transaction volumes to achieve the same earnings.

Market Dependency: Success in micro flipping heavily relies on finding an active market with enough demand for quick property turnovers.

Limited Upside: Since micro flipping involves selling properties as-is, there may be missed opportunities for higher profits with significant renovations.

Transaction Costs: Rapidly buying and selling properties can incur higher transaction costs and fees.

Best Micro Flipping Software

Several software tools can assist investors in streamlining their micro flipping endeavors. 

These tools typically offer features such as property analysis, deal tracking, lead generation, and marketing automation. 

While the best software will depend on an investor’s specific needs, some popular options include PropStream, DealMachine, Realeflow, and Zoho CRM.

[Click Here for the Best One: link to http://empirebigdata.com]

How to Start Micro Flipping

Getting started with micro flipping requires a well-thought-out approach:

1. Education and Research: Familiarize yourself with the micro flipping strategy, study local real estate markets, and analyze successful micro flips.

2. Build a Network: Connect with local real estate agents, wholesalers, and other investors to find potential deals and buyers.

3. Financing: Secure adequate funding or partner with investors to have the necessary capital for acquisitions.

4. Marketing: Develop a marketing strategy to reach potential sellers and buyers, using online platforms, direct mail, and other targeted methods.

5. Property Analysis: Conduct thorough property analysis to ensure potential flips meet the 70% rule and offer a favorable profit margin.

6. Negotiation: Hone your negotiation skills to secure properties at the best possible prices.

7. Legal and Tax Advice: Seek guidance from real estate attorneys and tax professionals to ensure compliance with regulations and optimize tax strategies; especially after you start closing more than a few deals.

Micro Real Estate Investing and PIN Micro Flipping

Micro real estate investing is essentially the same as micro flipping, focusing on quick transactions and fast profits. 

The term “PIN micro flipping” may refer to utilizing Property Identification Numbers (PINs) to identify and track properties for potential micro flips.

Why Flipping Houses Is a Bad Idea

While flipping houses can be lucrative, it is not without risks and challenges:

1. Market Fluctuations: Flipping relies on a stable and active real estate market. 

Economic downturns or local market shifts can negatively impact profitability.

2. High Competition: The popularity of house flipping can lead to increased competition, making it harder to find profitable deals.

3. Renovation Risks: Renovation costs and unforeseen issues can eat into profits, especially if not accounted for in the initial budget.

4. Holding Costs: If a property takes longer to sell, holding costs like mortgage payments, property taxes, and maintenance expenses can accumulate.

Flipping Houses TV Shows Lie

Flipping houses has become a popular subject for television shows, with programs showcasing the challenges and successes of real estate investors as they flip properties for profit. 

These shows have contributed to the increased popularity of real estate investing and have given rise to new investment strategies like micro flipping.

In conclusion, micro flipping in real estate is a strategy that offers a faster and potentially more accessible way to generate profits by identifying undervalued properties and quickly reselling them. 

It differs from wholesaling and traditional house flipping in terms of strategy, ownership, and profit expectations. 

While micro flipping has its pros and cons, investors can leverage software tools, networking, and proper education to embark on a successful micro flipping journey. 

As with any investment endeavor, it’s crucial to thoroughly research the local market and have a clear plan in place before diving into micro flipping.

If you like this blog post, you will the one we wrote on “ Do I need an llc to wholesale real estate? “:

If a state requires a state issued contract, what parts of a contracts for wholesaling real estate should include from your contract?

When it comes to wholesaling real estate contracts, there might be instances where a state mandates the use of a state-issued real estate contract.

In such cases, it’s important to understand which elements from your wholesaling contract should be incorporated into the required contract.

While it’s somewhat doubtful whether such a requirement truly exists, typically real estate agents are bound by regulations imposed by the realtor board if there is any such obligation.

However, to be fully prepared, seeking advice from a title agency or attorney experienced in real estate investment matters can provide accurate guidance on this matter.

It’s advisable not to overly concern yourself with this aspect until you’re in the process of finalizing the deal with a title agency or attorney who understands the real estate investor landscape.

It’s worth emphasizing that rectifying any contractual issues is possible even at the eleventh hour before the closing.

This can be achieved through the addition of an addendum to the contract, particularly if the seller is genuinely motivated to swiftly dispose of a property that has been causing significant challenges.

In an extreme situation, if complications persist, a combination of approaches like double closing, transactional funding , and building a network within the local real estate investing community can effectively address the issue.

This solution is especially viable when dealing with a motivated seller who is eager to proceed with the transaction despite any procedural hurdles.

As a wholesaler, your primary focus should remain on streamlining your processes, becoming proficient in marketing and identifying potential sellers.

Micro flipping in real estate is a strategy where investors buy undervalued properties and quickly resell them for a profit without significant renovations.

The 70% rule in real estate suggests that an investor should aim for a net profit of 30% after subtracting the purchase price and repair costs from the property’s after-repair value (ARV).

Capital gains tax on a flip can be avoided through strategies like a 1031 exchange, primary residence exemption, or qualifying for real estate professional status.

A good profit on a house flip is typically between 10% to 20% of the property’s after-repair value (ARV).

The rule of 70 (doubling time) is a mathematical formula used to estimate the time it takes for an investment or economy to double in size by dividing 70 by the annual growth rate.

Micro flipping in real estate refers to a strategy of quickly buying and reselling properties without significant renovations for rapid profits.

A Microflip is a real estate transaction where an investor rapidly buys and sells a property to generate quick profits.

The 70% rule in flipping homes advises investors not to pay more than 70% of the after-repair value (ARV) of a property, minus repair costs, to ensure a satisfactory profit margin.

A micro real estate portfolio is a collection of properties acquired through the micro flipping strategy, often consisting of multiple quick turnover deals.

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Wholesaling Real Estate Contracts [Template Downloads]

If you're a real estate wholesaler, you understand the importance of having the right contracts in your arsenal.

This comprehensive guide is designed to help you navigate the world of wholesaling real estate contracts. From understanding the role of wholesalers to successfully closing deals, this guide will provide you with the insights and knowledge you need to thrive in this exciting aspect of real estate investing.

We’ll also give you some wholesaling real estate contract templates you can download right away!

Understanding Wholesale Real Estate Contracts

Real estate wholesaling is a strategy where you secure exclusive buying rights from a seller without needing a real estate license. You then flip that contract (not the property) to a cash buyer for an assignment fee.

Of course, it’s important to understand the various types of wholesale contracts and the legal aspects involved to facilitate successful transactions.

The Wholesaling Real Estate Contracts Lifecycle

If you’re just getting started, it can be a little confusing when to do what and what to do when… Here's a breakdown from Tyler Austin of the entire contract lifecycle when you’re wholesaling properties. 

Types of Wholesaling Contracts

Wholesalers require two key types of contracts, purchase agreements and assignment contracts, to secure deals and assign them to investors. A purchase agreement, also known as a Real Estate Purchase and Sale Agreement, is a contract that outlines the terms and conditions of the real estate transaction, guaranteeing your right to buy or sell the property to someone else. Being cognizant of any clauses that may prohibit assignment is crucial, as it could impact your capacity to wholesale the property.

An assignment contract, on the other hand, allows you to sell your buying rights to another buyer without actually purchasing the property yourself. This is the basis of a wholesale real estate assignment, where wholesalers connect sellers and buyers, making a profit from the assignment fee without owning the property. After signing the original purchase agreement, the next step involves ensuring your contractual rights are assigned to another investor. You can do this through an Assignment of Real Estate Purchase and Sale Agreement.

Disclaimer: These templates are meant to just be a starting place for your wholesaling real estate contracts. Please consult with a lawyer to customize the templates so that they’re legally binding for your local jurisdiction. 

Legal Aspects

Legally binding contracts are the backbone of any successful wholesale real estate business, and understanding the legal aspects of these contracts is crucial. For instance, awareness of the rules and regulations applicable to the state where the property is located is vital. Contingency clauses are another vital aspect of wholesale real estate contracts, allowing a party to back out of the agreement without negative consequences if certain conditions aren’t met.

Restatement Second of Contracts 317 states that assignments are generally allowable within contracts. Unless the contract itself prohibits it, an assignment is permissible. To ensure a smooth transaction and avoid potential legal issues, make sure to consult a real estate attorney and include all the necessary elements in your wholesale contract, such as the parties involved, property description, purchase price, and financing terms.

Key Components of a Wholesale Contract

A well-crafted wholesale real estate contract should contain several key components to ensure it is legally binding and effective. These essential elements include:

• Clearly defining the parties involved
• Providing a detailed and accurate property description
• Outlining the agreed-upon purchase price
• Specifying the financing terms

Incorporating these components into your contract equips you to navigate the complexities of wholesale real estate transactions and safeguard your interests.

Parties Involved

In a wholesale real estate contract, clear definition of the roles and responsibilities of the buyer, seller, and wholesaler is vital. The roles are as follows:

• The buyer: the party purchasing the property from the wholesaler at a discounted price.
• The seller: the original owner of the property who contracts with the wholesaler to sell the property at a negotiated price.
• The wholesaler: plays a pivotal role in securing the contract from the seller and finding a suitable buyer to purchase the rights to the contract, ultimately making a profit from the difference in price.

In addition to the primary parties, a title company plays a significant role in wholesale real estate contracts. The title company is responsible for ensuring that the property title is legitimate and providing title insurance to protect both the buyer and seller during the transaction. Including all relevant parties in the contract helps to establish roles and responsibilities, minimize misunderstandings, and ensure a successful deal.

Property Description

A detailed property description is vital for a legally binding and efficient wholesale real estate contract. This description should include:

• The property’s legal address
• Property type
• Specific features such as the number of bedrooms, bathrooms, and other relevant details

Providing a thorough property description enables all parties involved to understand the property’s condition and value, helping to prevent disagreements and ensure a smooth transaction.

In addition to the basic property details, it’s important to include any disclosed issues, such as structural problems, termite damage, or lead-based paint, that may affect the property’s value or require repairs. Outlining the property’s condition clearly allows for an accurate assessment of the potential profit margin and negotiation of a fair purchase price with the seller, thus setting the foundation for a successful wholesale deal.

Purchase Price and Financing Terms

Outlining the agreed-upon purchase price and financing terms is another integral component of a wholesale real estate contract. The contract should include:

• The purchase price, which should be based on factors such as market value, necessary repairs, and the potential profit margin for the wholesaler.
• The payment method, specifying how and when the payment will be made.
• Any financing arrangements that both parties have agreed to.

When it comes to payment methods, wholesalers typically receive a deposit upon signing the Assignment of Real Estate Purchase and Sale Agreement, with the remaining profit paid at closing. However, it’s important to note that title companies may have restrictions on the types of payment they accept, such as not accepting credit cards, checks, or cash due to ‘good funds laws’. Clearly stating the purchase price and financing terms in your wholesale contract ensures a smooth transaction and safeguards your interests as a wholesaler.

Crafting a Wholesale Contract: Best Practices

Creating a solid wholesale real estate contract is essential for a successful deal, and there are several best practices to follow when crafting your agreement. These include:

• Conducting due diligence to research properties, laws, and potential buyers.
• Consulting an attorney for legal advice and contract customization.
• Utilizing pre-made contract templates to streamline the process and ensure all necessary components are included.

Implementing these best practices can enhance your chances of closing deals and making profits in the competitive realm of wholesale real estate investing. In the following sections, we’ll delve deeper into each of these practices, providing you with valuable insights and tips to help you craft an effective wholesale contract that meets your needs and protects your interests.

Due Diligence

Conducting thorough research on properties, laws, and potential buyers is critical to ensuring a successful wholesale deal. This process, known as due diligence, involves:

• Inspecting the property
• Performing a records search
• Seeking legal advice
• Preparing any special disclosures

Conducting due diligence enables you to gain a better understanding of the property’s value, condition, and potential issues that may arise during the transaction.

Due diligence also extends to researching the local laws and regulations that govern wholesale real estate contracts in the jurisdiction where the property is located. This knowledge can help you ensure that your contract is legally binding and compliant with all applicable laws, reducing the risk of disputes or legal issues down the line.

Investing time in thorough due diligence can improve your success chances as a real estate investor in the fast-paced domain of wholesale real estate investing, attracting real estate investors with similar goals.

Consulting an Attorney

Seeking legal advice is another crucial best practice when crafting a wholesale real estate contract. A real estate attorney can review and customize your contract template to ensure it complies with all relevant laws and regulations, as well as protect your interests in the transaction. This can be particularly important when dealing with contract assignment restrictions or navigating complex financing arrangements.

In addition to providing legal guidance, an attorney can also help you:

• Negotiate the terms of your contract, ensuring a fair and mutually beneficial agreement for all parties involved
• Avoid costly mistakes
• Safeguard your investment
• Increase your chances of success in wholesaling real estate

Consulting an experienced real estate attorney can provide you with benefits that even a skilled real estate agent might not be able to offer.

Utilizing Templates

Leveraging pre-made contract templates can greatly streamline the contract creation process and ensure all necessary components are included in your wholesale real estate contract. The use of a template can save time and effort, while enabling the crafting of a legally binding and effective agreement that suits your needs and protects your interests.

There are several reliable sources for wholesale real estate contract templates, such as:

• Real Estate Skills
• FortuneBuilders
• Property Mob
• Rocket Mortgage

While templates can provide a solid foundation for your contract, it’s important to remember that customization may be necessary to comply with local laws and regulations, as well as to address the unique aspects of your specific deal. Utilizing templates and seeking legal advice for customization to suit your situation allows the creation of a robust wholesale real estate contract, setting you up for success.

Strategies for Success in Wholesaling Real Estate

To thrive in the competitive world of wholesaling real estate, it’s essential to implement effective strategies that help you source properties, build a strong buyers list, and generate a consistent flow of leads. Focusing on these core aspects of your business positions you well to close deals quickly and maximize your profits as a real estate wholesaler.

In the following sections, we’ll explore some proven methods for sourcing distressed properties , establishing a network of potential investors, and generating leads through various marketing channels. By implementing these strategies, you can propel your wholesaling business to new heights and achieve long-term success in the real estate industry.

Sourcing Distressed Properties

Identifying undervalued properties, such as distressed property, is a critical step in the wholesaling process, as it allows you to secure deals at a lower price and sell them at a higher margin to your end buyers. To source distressed properties, it’s essential to conduct thorough research and utilize various lead generation channels, such as online real estate marketplaces, foreclosure listings, and local real estate agents.

Networking is another key strategy for finding motivated sellers and distressed properties. By attending local real estate events, joining real estate clubs, and leveraging referrals, you can establish connections with property owners who may be interested in selling their properties at a discount. Honing your skills in sourcing distressed properties enhances your chances of securing profitable deals and expanding your wholesale real estate business.

Building a Buyers List

Establishing a network of potential investors and buyers is crucial to quickly assigning contracts and closing deals in the world of wholesaling real estate. To build a strong buyers list , you can start by:

• Networking with local real estate agents
• Attending real estate events
• Joining real estate clubs in your area
• Utilizing online platforms like Craigslist and social media groups to connect with potential cash buyers

When adding leads to your buyers list, make sure to collect essential information such as:

• Their names
• Contact details
• Buying criteria
• Funding sources

Cultivating a robust buyers list equips you better to quickly assign contracts, close deals, and generate consistent revenue from your wholesale real estate business.

Marketing and Lead Generation

Attracting motivated sellers and generating a steady flow of leads is essential for success in wholesaling real estate. Implementing marketing strategies like:

• Direct mail
• Social media
• Display ads

can help you reach your target audience and establish your brand in the industry.

In addition to traditional marketing channels, leveraging content marketing can be a highly effective strategy for lead generation. By creating valuable and informative content, you can:

• Attract motivated sellers
• Establish yourself as an expert in the industry
• Increase brand awareness, visibility, and reach
• Ultimately drive more leads and deals for your wholesaling business.

Overcoming Challenges in Wholesale Real Estate

While wholesaling real estate can be a lucrative venture, it’s not without its challenges. Common obstacles include dealing with contract assignment restrictions and managing contingencies. By understanding these potential challenges and implementing the strategies discussed in this guide, you can navigate the complexities of wholesale real estate contracts and set yourself up for success in this thriving niche of the real estate market.

Contract Assignment Restrictions

One common challenge faced by wholesalers is the presence of contract assignment restrictions, which can limit your ability to assign contracts to other buyers. To overcome this obstacle, you can utilize a Standard Contract Assignment Addendum, which modifies the original contract to allow for assignment, or consider alternative strategies such as double closings.

Awareness of potential limitations on contract assignments and exploration of alternative strategies enable navigation through these challenges and assurance of a successful wholesale deal. Additionally, seeking legal advice from a real estate attorney can help you tailor your contract to comply with local laws and regulations, further reducing the risk of disputes or legal issues down the line.

Managing Contingencies

The inclusion of contingency clauses in your wholesale real estate contracts is vital for the protection of all parties involved and the assurance of a successful transaction. Common contingencies include:

• Financing contingencies
• Inspection contingencies
• Sale contingencies
• Title contingencies

These contingencies allow a party to back out of the agreement without negative consequences if certain conditions aren’t met.

Effective management of contingencies requires ensuring that all parties understand the terms of the contingency clause and establishing a realistic timeline to meet the conditions. Additionally, seeking legal advice from an attorney can help you craft contingency clauses that safeguard your interests and reduce the risk of disputes or legal issues down the road.

Final Thoughts

Mastering the art of wholesaling real estate contracts can unlock a world of opportunities for savvy investors. By understanding the fundamentals of wholesale contracts, crafting solid agreements, and implementing effective strategies for sourcing properties, building a buyers list, and generating leads, you’ll be well on your way to success in this thriving niche of the real estate market. With the knowledge and best practices shared in this comprehensive guide, you’re now equipped to overcome challenges, close deals, and reap the rewards of wholesale real estate investing.

Frequently Asked Questions

What type of contract is used for wholesale real estate.

A wholesale real estate contract is an Assignment of Real Estate Purchase and Sale Agreement which facilitates the transfer of rights from the wholesaler to the end buyer.

How do you assign a wholesaling contract to real estate?

To assign a wholesaling contract to real estate, you may need to include an assignment clause in the purchase agreement and draft an assignment of contract agreement. You also need to disclose to the seller that you have the authority to sell or assign the property, as stated by the clause "and/or assigns" next to your name in the contract. Finally, you must find a buyer and assign the contract assignment.

How does a wholesaler get paid?

The wholesaler gets paid when the buyer assumes legal rights of sales contract, or when the closing of the transaction is complete and funds and title of the property change hands.

How can I find distressed properties for my wholesale real estate business?

Do your research, network with industry professionals, attend local real estate events, and leverage online real estate marketplaces to find distressed properties for your wholesale real estate business.

What are some effective marketing strategies for attracting motivated sellers?

Target motivated sellers with direct mail, social media, display ads, and search ads to generate leads and make the most of your marketing efforts.

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How to Write a Wholesale Real Estate Agreement Contract Template

Table of Contents

Wholesaling made simple a comprehensive guide to assigning contracts.

Land Investing , Creative Financing, Making Offers, Mindset Training, Video Tutorials

REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.

For several years, my real estate investing business followed a simple model that worked extremely well about 80% of the time.

I would find boatloads of motivated sellers , make deeply discounted offers to them, and when I found a seller willing to accept, I could buy their property outright and pay cash for it.

Once I owned a property, I could list it for sale (usually within 24 hours) and flip it for a MUCH higher price than I paid.

In a lot of cases,  the process worked perfectly . Going through these motions, I could squeeze a lot of free equity out of each property. In the best-case scenario, I could move through the entire process in just a few weeks.

The Problem With a Cash Business

Even though this business model was pretty effective, I found it had some limitations.

It was surprisingly easy for me to find cheap properties and buy them free and clear with the cash I had, but the real challenge was getting these properties sold quickly .

After my first dozen deals, I learned that some properties were MUCH harder to sell than others,   and I didn't always have the foresight to know which properties would take significantly longer to sell .

This was a big problem for two reasons:

1. I had a limited supply of cash to work with.

Even if I knew how to get every property on earth for 20% of market value, I didn't have enough money to buy them all . At some point, I had to be smart about which properties to pour my limited resources into.

2. It was hard to know when a property would sell.

One of the unpredictable elements of land investing is that some properties will sell quickly, and some will sit on the market for months on end, and the situation usually ISN'T obvious until you list the property for sale and see how the market responds.

Of course, a few indications  can give off some warning signs, and some markets are known for selling faster than others, but when you're working in an unfamiliar territory (like I was most of the time), this can be a tough nut to crack.

RELATED: How to Find the Perfect Market for Flipping Vacant Land

Once I started pushing up against the limitations of my finite supply of cash AND my inability to predict the future, I started thinking to myself,

“There MUST be a better way to monetize these deals without tying up my cash!”

I kept seeing deal after deal hit my desk – and they were great deals – but they just weren't great enough to justify investing my own money .

Buying a property for 60% of market value is great for the average investor, but if I couldn't get a property for a next-to-nothing price tag, it just wasn't “risk-free” enough to tie up my limited funds!

Wholesaling Through Assignments

Around this time, I started exploring how to assign contracts (i.e. – wholesaling, arbitrage, etc.).

Rather than signing a purchase agreement and buying each property outright, I had heard other real estate investors talking about this ingenious way of signing a purchase agreement and selling that contract to another investor so that THEY could close on the deal – with me just acting as a middleman and collecting an assignment fee in the process.

In short, I would effectively be selling a piece of paper because that paper (i.e. – the purchase agreement) represented a TON of valuable real estate equity that would go to whoever closed on the deal and took ownership of the property.

In some ways, assigning a contract wasn't all that different from acting as a real estate agent because I would be wearing many of the same hats and doing some of the same things an agent would do for their client.

The difference was that I had a signed purchase agreement between myself and the seller, giving me an equitable interest in the property. I wasn't selling a property on behalf of someone else, I was selling a contract that entitled me to close on the deal and could be assigned to any other investor who wanted to jump into my shoes.

This contract was like a paper asset I could sell to a third party and get paid an “assignment fee” without owning the property myself.

Legal Disclaimer: In some states, this process of assigning a contract is considered synonymous with working as a real estate agent. Even though it's technically a different type of agreement, some jurisdictions don't distinguish between the two. If you decide to pursue this strategy, check with the laws in your area to make sure you aren't required to have a real estate license to complete this process. If a license is required, you don't want to attempt this without your real estate license.

This presented a few obvious benefits:

• I didn't need to put up any of my own cash.
• I didn't need to shoulder any liability as a property owner.
• I didn't need to stress out if I couldn't find a buyer immediately (because once the purchase agreement expired, I was free to walk away from the deal).

As I became increasingly strapped for cash (all while the opportunities continued to pour in faster than I could handle), this whole “Assignment” business sounded like the PERFECT solution to my problem.

The Mechanics of Assigning a Contract

Now, the idea of assigning contracts (aka – “wholesaling”) always sounds great on paper – but let me tell you, I struggled for YEARS to understand the mechanics of how this process really worked.

I understood the “20,000-foot-high” concept of assignments, but when it came down to figuring out the real, nitty-gritty details (for example)…

• What kind of Purchase Agreement was I supposed to use?
• What kind of Assignment Agreement needed to be signed?
• How was I supposed to get the deal closed?
• Where could I find the right closing agent to work with me?
• When would I get paid in the process?
• What if the buyer went behind my back and talked to the seller?
• What if I couldn't find a buyer before the original contract expired?

…I had heard so many different opinions from so many different people about how the process was supposed to work. All the advice I saw on the various real estate forums and blogs would constantly contradict each other, making  it even harder for me to nail down the “correct” way to move through this process.

Since I struggled with it for a long time, I will save you a ton of hassle and confusion by laying it all out below.

The 4 Stages of Assigning Contracts

Assigning a contract is (in theory) a pretty simple concept.

When an investor (we'll call this the ‘middleman') finds a great real estate deal and signs a Purchase Agreement with the Seller, they have the option ( if their Purchase Agreement contains the right language ) to “assign” (aka – sell) this piece of paper to an outside investor.

When the wholesaler/middleman assigns the Purchase Agreement to the outside investor, they can do it with a simple, 1-page document called an Assignment Agreement . This document legally transfers the original buyer's rights (as written in the original Purchase Agreement) to the new buyer. It also releases the original buyer (i.e. – the “Assignor”) from any liability or obligation and substitutes the new buyer (“Assignee”) in their place.

Essentially, the outside investor is jumping into the shoes of the wholesaler and can purchase the property directly from the Seller, at the same price, at the same terms, with the same deadlines, exactly as the terms were stated in the original Purchase Agreement. The only difference is that it now applies to the new buyer (Assignee) instead of the original buyer (Assignor).

I always find that visual aids are helpful, so here's my best attempt at showing you another representation of how the process works:

Stage 1: Contract Signed between Wholesaler and Seller

Stage 2: Wholesaler Finds an Outside Investor to Buy Under the Terms of the Original Purchase Agreement

Stage 3: Wholesaler Assigns the Contract to the Outside Investor and Gets Paid a Deposit

Stage 4: Seller, Wholesaler, and Outside Investor Close. The Wholesaler is Paid the Balance of the Assignment Fee at Closing.

As you can see, the Wholesaler (Original Buyer or Assignor) is acting as the “middleman” (or middlewoman, in this case), getting paid in the form of an Assignment Fee from the Outside Investor (Assignee).

In the process I follow (which I'm about to explain further), a portion of this payment is made when the Assignment Agreement is signed by both parties (Stage 3 – above), and the remainder is paid when the deal is closed, and the property officially changes hands (Stage 4 – above).

How the Process Works

Over the years, I have heard numerous explanations (all of which were different) about how the wholesaling process is supposed to work.

Most of these explanations only got me  80% there . They never closed the loop on how to get through the closing process, abide by the law, get paid, AND not be a scumbag .

The process outlined below seems to check all of these boxes and get the job done.

Finding the Motivated Seller

I've already thoroughly explained these techniques in several articles throughout this blog. If you aren't sure where to start, you can reference these posts below:

• How I Find Motivated Sellers  –  Step 1 ,  Step 2 ,  Step 3
• How to Create a Buying Website
• Million Dollar Postcard Templates That Work
• How Much Should You Offer For That Property?
• How To Write Offers That Get Accepted (With 3 Simple Pages)
• Everything You Need To Know About Getting Your County's Delinquent Tax List
• The Ultimate Negotiation Technique That Nobody Talks About
• How to Avoid the Guilt Trip When Sending Low Offers
• Understanding the Motivated Seller
• Getting People To Say Yes

Explain Your Intent & Get the Contract Signed (IMPORTANT)

When you start making offers to motivated sellers, your offer must be accompanied by a thorough explanation of what you intend to do .

Assigning a contract is very different than buying a property outright with a traditional closing. The Seller needs to know what you plan to do (because by itself, your Purchase Agreement doesn't imply your intent to assign the contract, it just says that you CAN assign it… and that's not enough guidance for the seller).

If you don't explain your intentions to the Seller, any rational person will get confused (and probably upset) when they see what happens.

It doesn't need to be this way. All it takes is a clear explanation from you so they understand what to expect.

There are a few key points your Seller needs to be aware of:

• You're not planning to buy their property yourself.
• You plan to sell the contract to someone else, and then THEY will buy the property from the Seller.
• You will communicate with the Seller throughout the process (they won't ever be left in the dark), so they know what's happening.
• If you can't find an outside buyer for the property, the contract will expire, and the transaction won't happen .

Given that a wholesale transaction involves a couple of additional steps, it might be tempting to over-complicate this explanation as you're trying to explain things to the Seller. I had this problem when I started wholesaling with assignments.

Avoid Information Overload

It's important to explain all the basics to the seller, but you don't want to bombard them with the information they don't need to know.

Nobody likes to feel confused. Rather than being made to feel stupid, most confused people will just say “No” to save their pride ( even if this arrangement is in their best interests ).

When I explain the process to a potential Seller, it looks something like this:

“Thanks for contacting us! A fter reviewing the details of your property, we would be interested in marketing your property to our nationwide network of real estate investors. For the next 180 days, we would be willing to invest our time and resources to find a cash buyer at no cost to you. If we are able to find a buyer, we will coordinate with you and the buyer to schedule a closing and ensure you are paid the full amount listed in this purchase agreement. You will not incur any costs in this process . We will be compensated by the buyer (which we will find) and when the transaction is closed, you will receive the full sale price stated in the attached purchase agreement. In order to start the process, we will need a signed copy of the attached purchase agreement. In this contract, our company will be listed as the Buyer and our intent will be to assign this contract to another cash buyer in our network.”

To assign your purchase agreement  (as explained above),  you need to ensure your contract contains an “Assignment” clause, allowing you the right to assign the contract to a third party. Without this clause, you will be the only one allowed to close on the purchase, and the rest of this process won't work.

There are many different ways to state this in your contract, but if you need an example, this is what my Assignment clause looks like:

ASSIGNMENT : Buyer has an unqualified right to assign its rights under this contract to a third party. 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 the assignee in its place.

Reminder: Whatever documentation or language you use, you'll want to make sure you run it by an attorney in your area to ensure it's valid and abides by your local, state, and federal laws.

Due Diligence & Property Prospectus Report

Since you're not the actual end-buyer, you don't need to learn every intricate detail about the property you have under contract.

However, you need to know the basic, relevant details about it because you're going to market this thing to the public, to your buyers list (if you have one), and to anyone else who may be a potential cash buyer.

So how much do you need to know?

As a general rule, I try to uncover any potential disasters that would kill a deal if I were buying it outright ( i.e. – what kinds of things would make ME turn and run the other direction? ). I also try to gather enough information to complete a property prospectus report .

What is a property prospectus report? Mine looks something like this…

It's just a single page that lists all of the basic details about the property:

• Listing Price
• Property Address
• Parcel Number
• Legal Description
• Property Size
• Terrain & Surroundings
• Road & Utility Access
• On-Site Photo(s)
• Breakdown of Costs
• Comparable Listings (to give a basis for my asking price)

…and that's pretty much it. Here's a video overview of how I fill it out:

Also see:   One Weird Trick to Find the Size, Shape, Location & Dimensions of Your Property  and  The Fastest Way to Research Any Property in the United States

The goal of this document isn't to inform my cash buyers of every last detail about the property. The point is to give them just enough information to make it obvious that the deal has great potential and huge value (if it's a good deal, this shouldn't be difficult).

That being said, if I do find any big problems in my due diligence process, I'll either walk away from the deal (if I don't think I'll be able to sell it for a profit) or at the very least, I'll be sure to disclose any “Other Issues” that I'm aware of at the bottom of the report.

(Note: If you want a copy of my Prospectus Report template, you can get it at the bottom of this blog post.)

Find the Buyer, Assign the Contract, Collect the Deposit

When you start getting calls and emails from interested buyers, you'll likely find that there are A LOT of tire-kickers out there. People will get your hopes up, only to go AWOL when it's time to sign on the dotted line.

People are extremely flakey , so if someone wants you to take their offer seriously, they'll have to agree to it in writing AND put their money where their mouth is.

When I find an interested buyer, this is how I would communicate the next steps to them:

“ Thanks for your interest in this property! If you'd like to move forward with this purchase, I'll need two things from you: 1. Please sign the attached Assignment Agreement and fax, email, or text it back by 5:00pm today . 2. Please send us a $______ deposit by 5:00pm today  via wire transfer. Note: This property will not be reserved until both items are received. Once both items are received, the property will be reserved in your name and we will contact <<Title Company Name & Location>> to begin the closing process. They will contact you in the next few days and will send you the closing documents and preliminary title report for your review and approval. Our tentative goal is to close this transaction by <<30 days later>>. This means you will need to submit your funds and all the required paperwork to <<Title Company Name>> by (or before) that time. “

When it comes to the earnest deposit , when the total purchase price is $10K – $30K, I'll usually ask for approximately 10% of the total purchase price, and I round it to the nearest $1,000. If the sale price is less than $10K, then $500 is usually sufficient. The idea is just to collect something to show that the buyer is serious and not blowing smoke.

If you're closing with a title company or attorney, this money should be sent to your closing agent, who will disperse it appropriately when the deal closes (or if it falls apart). Your end buyer can either send the funds directly to your closing agent, or they can send the funds to you, and YOU can give it to your closing agent.

Unfortunately, all kinds of obstacles can get in the way of closing ( clouds on title , funding issues, inspection issues, you name it), so you don't want to get too excited about this money until the deal is closed.

Note Regarding the Assignment Agreement

You might find that some people (buyers, sellers, closing agents, etc.) tend to overthink this document simply because they don't have experience with assignments and aren't familiar with how they work.

As I explained above, this is a relatively simple document that takes your rights as the original “Buyer” of the property and transfers them to a third-party (i.e., the new person or entity that has the cash and desire to jump into your shoes and become the actual end buyer of the property).

This video offers a straightforward explanation if you ever encounter an individual who just doesn't get it.

Deliver Documentation to Title Company, Close, Get Paid

Once you have both the Assignment Agreement and the funds required for your deposit, you'll need to deliver the following documentation to your Closing Agent (i.e., Title Company or Closing Attorney):

• A copy of the fully executed Purchase Agreement.
• A copy of the fully executed Assignment Agreement.
• The funds from the end buyer's earnest deposit.

This should be everything they need to prepare the necessary paperwork for all parties to sign and move forward with closing the transaction.

Given that this is a cash deal (with no mortgages or outside financing involved), this shouldn't be a complicated transaction for your closing agent to pull off. That said, I should warn you that not all closing agents are created equal .

When I started trying to assign contracts, I found that some title companies had no idea what they were doing. They acted like I was asking them to move heaven and earth or do something illegal. I found that MANY title companies were particularly incompetent with assigning contracts, which threw a huge wrench in my progress for a long time.

If you run into this dilemma, keep calling around to various title companies or closing attorneys in your area until you find someone who understands what you're talking about. Don't let their ignorance act as an obstacle to your business.

Advantages to Assigning Contracts

When I look back on all the properties I've listed and sold on my behalf, most sold in 6 months or less (assuming they were desirable, usable , priced right , and I was marketing them consistently ).

Whenever a property took longer than six months to sell, it was usually because of one or two issues:

• My assumption about the property's market value was WAY off (and I didn't have the profit margin I thought I would).
• Something was fundamentally wrong with the property (e.g., it didn't perc , it wasn't buildable, the location was terrible, etc.).

As you can imagine – neither of these issues is fun to realize, but whatever the case may have been, I found that when a property sat on the market for more than six months and the sale still hadn't occurred , something big needed to change .

This is one of the huge benefits of assigning a contract. By the time I realized I had made a pricing or due diligence mistake with one of my properties, it was clear that if I could do it all over again, I wouldn't have bought this property at the price I paid for it .

It would have been far better for me to get it under contract and then assign the purchase agreement (if I even could) rather than buy it outright.

As you can imagine, if there's ever something wrong with a property, this problem should stay in the seller's lap instead of mine.

Here are some issues that make me consider wholesaling through an assignment rather than buying a property outright:

• When I'm not very confident about the property's true market value.
• When there are potential problems with the property that I can't get resolved.
• If I don't have the money to invest and buy the property outright.
• The seller isn't willing to lower their asking price to my liking (but it's still a good deal, with enough profit margin to be a good deal for someone else).
• The property isn't local, and I don't want to take on the liability of ownership.

It's important to remember that even when you have money to buy a property, it doesn't necessarily mean you should.

All kinds of menacing issues can come up with any property – and in some cases, these issues can become MAJOR obstacles to selling it.

For many investors, this uncertainty is more than enough reason to stick to wholesaling them with an assignment exclusively.

Drawbacks to Assigning Contracts

While there are a lot of benefits that can come with assigning contracts, there are a few drawbacks you should be aware of as well.

When you intend to assign a contract, you'll have to deal with a few limitations (which may or may not be a problem – depending on what you're trying to do). For example:

• You won't be able to improve the property (because you don't own it, and it's not yours to improve).
• You won't be able to offer seller financing (because you're not the owner, and it's not yours to finance).
• You'll have a shorter window of time to finish the deal (because your contract won't last forever).
• The closing process will require more attention to detail than the simplicity of a cash closing.
• Your buyer MUST be able to pay all cash (because most mortgage lenders aren't willing to deal with the complexities of an assigned contract).

It's also worth noting that some states (like Ohio , for instance) have laws and statutes that essentially   make it illegal to market a property you don't own in your name. It's considered the “brokering of real estate,” if you don't have a real estate license in that state, you could get fined and/or charged with a misdemeanor for working outside of this box.

Even in states where the legality of assigning contracts isn't an issue, it's still a good practice to make it abundantly clear in your listing that you are selling a CONTRACT to purchase the property, not the property itself .

For example, you could include a short paragraph in your listing that reads something like this…

“ This property is available via our Assignment Program. We have entered into a purchase contract with the current owner to buy the property for $________ (this price includes payment to the owner and all associated fees and estimated closing costs) and for an assignment fee of $_______, we will sell our rights in this contract to a third party. A reputable title company and/or attorney will be enlisted to handle the closing and transfer of title.”

With this kind of statement included in your listing, it should be clear to interested parties that  you are not the current owner . You are simply selling a piece of paper that gives you (and, ultimately, your end buyer) the right to purchase the property for a certain price.

When you decide to buy a property outright and flip it (i.e., the old-fashioned way), there are a lot of freedoms you'll have that simply aren't available when you choose to assign the contract.

So, before you swear off buying properties outright, remember that every deal has different considerations you need to think about. Depending on your end goals, these issues may or may not make the property an ideal fit for wholesaling with an assignment.

It's An Ongoing Education

I'll be completely honest; I still don't consider myself an “expert” in wholesaling via assigning contracts  because it isn't been my primary strategy.

On the same coin, I can say that I've been through enough wholesale assignment transactions to know that this process works .

Wholesaling is a great way to make money in real estate, but assigning contracts isn't my primary technique for handling most deals.

That being said, wholesaling is an extremely helpful sidearm at my disposal when I come across deals that don't fit perfectly inside the “cookie-cutter mold” that I like to see (and as you can probably imagine, this happens pretty frequently).

I think it's great for any real estate investor to be familiar and comfortable with this strategy because there are PLENTY of scenarios where assigning the contract is a much better fit than buying a property outright.

Want Access to My Wholesaling Toolbox?

As I mentioned earlier, I spent YEARS of my life trying to nail down the right process and documentation for wholesaling real estate. The ability to pull some huge profits out of properties I didn't even own was a major revelation, and it could be a big deal for you too.

If you want to try your hand at assigning contracts… I've got something I think will help:

• A copy of my Assignment Agreement template
• A copy of my Purchase Agreement (which is fully assignable)
• A copy of my Property Prospectus Report template
• A copy of my Wholesaling Checklist (to walk you through each step of the process)
• Detailed Video Tutorials explaining how to use each document

Again, there's no “magic” to the documents I use. You can easily call up your local attorney, and I'm sure they'd be happy to charge you $600/hour to give you a similar set of documents and instructions.

Go ahead and call them… I'll wait.

It took me a long time and a lot of tedious conversations with various legal pros to fine-tune this product. These docs were designed to be both simple and user-friendly, all while including all of the pertinent details I needed to see in my wholesale deals.

My goal was to AVOID confusing Buyers, Sellers, and Closing Agents about how this process works and to give myself the freedom I needed to feel comfortable doing these types of transactions. Over time, I've found that these attributes went a long way in getting these deals done. If you’re serious about adding wholesaling to your growing repertoire of real estate investing strategies – the opportunity is sitting right in front of you.

When you consider how many more deals you'll be able to do, the risk you'll be able to avoid, and the amount of money you'll be able to make here (all while investing none of your cash), this information is easily worth 50x than the price tag I'm putting on it – I'm not exaggerating .

Note: When you sign up as an REtipster Email Subscriber , I’ll send you an instant $20 off “Discount Code” for this item, and if you enroll in the Land Investing Masterclass , you'll get access to this item for FREE. There's no pressure – I just want to make sure you're aware.

About the author

Seth Williams

Seth Williams is the Founder of REtipster.com - an online community that offers real-world guidance for real estate investors.

Related articles

015: maggie found early success with house wholesaling – how did she do it, 098: how luis mastered assignments and double closings on land deals, 085: how the modern rules of house wholesaling have changed, 054: karl made six figures last year as a land investor assigning contracts. here’s how he did it…, discover the retipster club.

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Contract Assignment Agreement

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This Contract Assignment Agreement document is used to transfer rights and responsibilities under an original contract from one Party, known as the Assignor, to another, known as the Assignee. The Assignor who was a Party to the original contract can use this document to assign their rights under the original contract to the Assignee, as well as delegating their duties under the original contract to that Assignee. For example, a nanny who as contracted with a family to watch their children but is no longer able to due to a move could assign their rights and responsibilities under the original service contract to a new childcare provider.

How to use this document

Prior to using this document, the original contract is consulted to be sure that an assignment is not prohibited and that any necessary permissions from the other Party to the original contract, known as the Obligor, have been obtained. Once this has been done, the document can be used. The Agreement contains important information such as the identities of all parties to the Agreement, the expiration date (if any) of the original contract, whether the original contract requires the Obligor's consent before assigning rights and, if so, the form of consent that the Assignor obtained and when, and which state's laws will govern the interpretation of the Agreement.

If the Agreement involves the transfer of land from one Party to another , the document will include information about where the property is located, as well as space for the document to be recorded in the county's official records, and a notary page customized for the land's location so that the document can be notarized.

Once the document has been completed, it is signed, dated, and copies are given to all concerned parties , including the Assignor, the Assignee, and the Obligor. If the Agreement concerns the transfer of land, the Agreement is then notarized and taken to be recorded so that there is an official record that the property was transferred.

Applicable law

The assignment of contracts that involve the provision of services is governed by common law in the " Second Restatement of Contracts " (the "Restatement"). The Restatement is a non-binding authority in all of U.S common law in the area of contracts and commercial transactions. Though the Restatement is non-binding, it is frequently cited by courts in explaining their reasoning in interpreting contractual disputes.

The assignment of contracts for sale of goods is governed by the Uniform Commercial Code (the "UCC") in § 2-209 Modification, Rescission and Waiver .

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.

Other names for the document:

Assignment Agreement, Assignment of Contract Agreement, Contract Assignment, Assignment of Contract Contract, Contract Transfer Agreement

Country: United States

General Business Documents - Other downloadable templates of legal documents

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• Mutual Rescission and Release Agreement
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• Other downloadable templates of legal documents

• Wholesale contract

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How to create a wholesale real estate contract.

Learn what a wholesaler’s role is in real estate transactions and how to create a wholesale contract.

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How and why to use real estate wholesaling

What does the wholesaler invest in

Who is involved in a wholesale deal

What to include in a wholesale real estate contract

Create, sign, and manage wholesale contracts with Adobe

Frequently asked questions about wholesale real estate contracts

What is a wholesale contract?

A real estate wholesaler acts as the intermediary between the buyer and seller in a real estate transaction. Unlike a traditional real estate agent, in a wholesale deal, the wholesaler seeks out a potential buyer and connects them with a seller. Once the new buyer is ready to go through with the purchase, the wholesaler assigns a purchase contract (or wholesale contract) to the end buyer and collects an assignment fee for their services.

This purchase agreement does not represent the sale of the property. It simply gives the buyer the exclusive right to purchase the property by assigning the contract to the buyer. This is why wholesaling contracts are also called “real estate purchase and sale agreements” or “real estate assignment contracts” — the wholesaler’s work is connecting their buyers list to their sellers to set up both parties for a smooth and easy transaction. Once this is done, the wholesaler’s role in the transaction is finished.

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How and why to use real estate wholesaling.

Wholesaling real estate is a form of short-term real estate investing. Anyone can start wholesaling — you don’t need a real estate license to take part in this investment strategy, although it is advisable to form an LLC under which you can conduct your business. With due diligence and a little real estate know-how, wholesale purchases are a great way to get familiar with the real estate world and make money in a relatively short time frame.

Wholesalers usually seek out properties priced below market value in order to turn the most profit — for example, foreclosures, properties with liens, distressed property, those that need serious repairs, or those that are owned by highly motivated sellers. Once a wholesaler strikes an agreement with the seller, the wholesaler may then work with a title company, contractor, and appraiser to properly vet the property and prepare it for any renovations they — or the seller — want to make.

When the property is ready to be sold, the wholesaler lists it at a higher price — at or above market value. The difference between this purchase price and the wholesale price accounts for the wholesaler’s cut, or the assignment fee, as well as the added value from any repairs or renovations. This can look similar to flipping a house, but wholesaling is generally a shorter, more hands-off process than a complete renovation. Additionally, the buyer is less likely to be a future homeowner and more likely to be a real estate investor.

Wholesale real estate requires unique knowledge to be successful and avoid loss. Familiarity with the real estate industry and legal documentation is helpful. Spotting the opportunities in market properties, however, is key. Success in wholesale real estate means being able to forecast factors like eventual sale price, potential rental property, and real estate market comps.

What does the wholesaler invest in?

Wholesaling is considered a relatively fast and easy investment with quick profits, because in most deals, the wholesaler never owns the property but simply matches a buyer with the seller. In some cases, however, the wholesaler will purchase the wholesale property and resell it. This is known as double closing.

Who is involved in a wholesale deal?

The seller, the wholesaler, and the buyer (also called the end buyer of the real estate deal) to whom the wholesaler hands over the assignment agreement are the three parties involved in a wholesale contract . The assignee (buyer) could be anyone from a real estate agent or real estate investor to a first-time homeowner.

What to include in a wholesale real estate contract.

Make sure you consult with a real estate attorney to confirm that the terms of the agreement are legally sound for all parties. Here are some common parts of a wholesale contract:

• Name and contact information of the buyer and current property owner (seller)
• Legal description of the property
• Condition of premises
• Purchase price and financing
• Closing costs, who pays them, and when
• Assignment clause to transfer property rights
• Buyer and seller default clauses
• Signature by both parties

Create, sign, and manage wholesale contracts with Adobe.

Fortune favors the fast when it comes to wholesaling — make sure you don’t lose out due to time-consuming paperwork or negotiations.

With e-docs you can collaborate, edit, and comment on PDFs with all parties involved so that you can keep sellers and investors in the loop. Quickly send out contracts for digital signatures and receive notifications when the other party signs. Get started with your own wholesale contract template with Acrobat Pro.

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Frequently asked questions about wholesale real estate contracts.

Do you need a real estate license to wholesale.

No. You don’t need a real estate license to take part in this investment strategy, but wholesale real estate requires unique knowledge to be successful and avoid loss. Familiarity with the real estate industry and legal documentation is helpful, as is knowledge of the real estate market in your area. Real estate investment clubs can often provide information about getting started in wholesale real estate investing.

Is a wholesale assignment contract the same as a wholesale real estate contract?

No. A wholesale real estate contract gives an investor the right to buy a property from a seller. A wholesale assignment contract transfers the right to purchase a property from the wholesaler to a buyer. Using these two contracts, a wholesaler can act as an intermediary between interested sellers and buyers.

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• Sample Contracts

FREE 10+ Wholesale Assignment Contract Samples in PDF

If you want to jump into property investment but you’re short on cash, being a wholesaler could be a lucrative alternative for you. In fact, with a little luck and a little know-how, you can make quick money without spending any money. However, before you get too excited, you need learn how a wholesale real estate transaction works, as well as the risks involved. Today’s most successful wholesalers already know it, and it’s about time you did, too: a wholesale deal can be profitable in one of two ways. Selling the contract, also known as the assignment of contract procedure, and a double closing are the two most typical ways to finish a wholesale agreement.

Wholesale Assignment Contract

Free 11+ assignment of insurance policy samples, free 11+ notice of assignment samples, free 9+ dealership contract samples, 10+ wholesale assignment contract samples.

A wholesale contract, like any other legally enforceable agreement, is a document used by investors to secure the right to purchase a subject property. To be clear, real estate wholesaling contracts do not constitute a home sale; instead, they grant investors the right to purchase the property in issue. It’s vital to note that investors interested in wholesaling houses aren’t usually interested in purchasing subject properties. Rather, they want to obtain the right to purchase a certain home and then sell it to someone else. After that, the wholesaler will sell their rights to a new buyer. The wholesaler isn’t selling a home; rather, they’re selling their rights to buy one.

1. Wholesale Assignment Agreement Contract

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2. Wholesale Property Assignment Contract

Size: 49 KB

3. Company Wholesale Assignment Contract

Size: 145 KB

4. Wholesale Assignment Services Contract

Size: 829 KB

5. Firm Wholesale Assignment Contract

6. Wholesale Assignment Purchase Contract

Size: 192 KB

7. Wholesale Business Assignment Contract

Size: 228 KB

8. Sample Wholesale Assignment Contract

Size: 189 KB

9. Standard Wholesale Assignment Contract

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10. Basic Wholesale Assignment Contract

11. Wholesale Assignment Development Contract

Size: 574 KB

Property Wholesale

A wholesale real estate contract is a relatively brief investment technique where the wholesaler intends to make their money in 30 days. Though wholesale real estate laws vary from state to state, the wholesaler always acts as a middleman in between home’s seller and an end buyer.

The wholesaler establishes a contract with the seller for exclusive right to purchase the property for a specified fee. Then they try to resell the contract to a different bidder for a higher price. The distinction between the 2 prices is the wholesaler’s profit.

The wholesaler and the seller agree to the reasonable conversion doctrine at the time of the contract. The wholesaler thereby becomes the owner of the property with the ability to transfer the contract, while the seller retains title to the residence. The ultimate buyer fulfills the real estate deal directly with the seller after the wholesaler reassigns the contract.

To be a successful wholesaler, a real estate investor must accomplish two things at once: create a wholesale buyer list and find properties to contract. The wholesaler’s buyers list is a list of possible end buyers, mainly other real estate investors such as flippers or renters.

To get repeat sales, the wholesaler should develop good relationships with these investors. The wholesaler’s job of promptly reassigning contracts will be much more difficult without regular buyers. Investors in wholesale real estate must always be on the lookout for good wholesale residences.

Wholesalers typically choose distressed properties, also known as fixer-uppers, when it comes to choosing a property. The wholesaler can obtain the home under contract below market value and benefit handsomely from the contract reassignment because the sellers are frequently very motivated.

What is a real estate wholesale contract?

A real estate wholesale contract is a legal agreement between a wholesaler and a seller that gives the investors the right to purchase the property. You’re simply putting up the game for others to engage as a wholesaler. As a middleman, your role is to find a good bargain, get the rights, and then delegate the contract to a real estate investor. “A wholesale real estate contract is a legal instrument between a real estate wholesaler and a seller, which grants the investor the right to buy the property. Assignment contract is the transferring of rights from the wholesaler to the buyer. A wholesale agreement is comparable to a purchase agreement in concept, but the operations are very different.

What is an assignment of contract in real estate?

An assignment of contract in real estate is launched when the legal owner chose to sell their home to an investor and forms a wholesale contract pledging themselves to the upcoming agreement. As a result, the investor holds the right to acquire the property, which they could then sell to another buyer. It’s vital to note that they’re not selling the house; they’re selling the right to buy the house. You see, when you sell a contract, you’re not actually selling the property; you’re selling the deal you have with the homeowner to sell the house to another buyer. As a result, an investor’s first choice should usually be the assignment of contract strategy.

If you want to see more samples and formats, check out some wholesale assignment contract samples and templates provided in the article for your reference.

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Wholesale Contract Agreement: Key Components in an Assignment

The wholesale contract agreement in real estate is an essential instrument that dictates the terms of a transaction between buyers and sellers. This document is the foundation of any wholesale deal as it guarantees accountability for the parties involved.

To help you understand wholesale contracts better, this article delves into its key components. From the basics of what an assignment of real estate purchase and sale entails, its different types, right through to its pros and cons and contents.

We aim to provide you with a firm grip on real estate wholesaling contracts so you can start finding deals and start your journey to be financially free.

An Overview of Real Estate Wholesaling

Real estate wholesaling involves the purchasing of property rights by a real estate investor, commonly known as the wholesaler, who then sells these rights to an end buyer. 

This business model allows wholesalers to profit from the difference in price between the amount for which they obtain the property rights and the price at which these rights are sold to the end buyer.

In contrast to traditional real estate transactions where buyers purchase properties outright, wholesaling focuses more on contractual rights. 

The initial contract is between the original property owner (the seller) and the wholesaler. The wholesaler, rather than purchasing the property outright, negotiates a purchase agreement with the seller under specific terms and conditions.

Once this contract is agreed upon, the wholesaler can then assign this contract to an end buyer through an assignment clause. The end buyer, in most cases another investor, purchases the property directly from the seller but at a price determined in the contract with the wholesaler. 

This allows for real estate transactions without the wholesaler ever needing to purchase, manage, or maintain properties themselves.

Real estate wholesaling can seem daunting, especially when legal terminologies come into play. However, a solid understanding of all of these, especially the assignment in a wholesale contract agreement, is essential for anyone who wants to enter this industry.

What is a Wholesale Real Estate Contract?

Essentially, a wholesale real estate contract works as an instrument that allows wholesalers to do their job without having to buy, manage, or maintain properties themselves.  

In simple terms, it's an agreement between a property owner and a wholesaler. The terms detail that the wholesaler has the right to purchase the property. But unlike traditional property purchases, in wholesaling, the aim is not for the wholesaler to buy the property themselves.

In the wholesale real estate contract, the wholesaler and the seller agree on a specific price for the property. The wholesaler doesn't plan to buy the property at this price, though. Instead, they secure the right to buy it under these agreed conditions within a set timeframe. 

Once the contract is signed, the wholesaler can then look for a buyer who's willing to buy the property at a higher price than the one agreed upon in the contract. 

The wholesaler’s intention is to assign this contract to the buyer, who then steps into the wholesaler's position and purchases the property directly from the seller. The profit for the wholesaler comes from the difference between the price they agreed with the seller and the price the buyer pays for the property.

Who Is Needed To Complete A Wholesale Real Estate Contract?

Completing a wholesale real estate contract involves a number of key players, each with their own role to play. Understanding these roles is the key to learn how to get started.

The seller is the party who owns the property and intends to sell it. They enter into an assignment agreement with the wholesaler to sell the property at a specified price within a certain timeframe. 

The seller's main interest lies in finding a buyer for their property who can sign on the purchase and sale agreement, ideally at a competitive price and in a timely manner.

The wholesaler serves as the intermediary between the seller and the end buyer. They negotiate the contract with the seller and then look for a buyer who's willing to purchase the property at a higher price. In other words, they are somehow in to buy and sell.

Once they find a buyer, the wholesaler assigns the original contract to them, allowing the buyer to purchase the property directly from the seller. The wholesaler's profit comes from the difference in price between what they agreed with the seller and what the buyer is willing to pay.

The buyer, often another investor, is the party interested in purchasing the property. Once the wholesaler has found a buyer, they assign the original contract to them. The buyer then steps into the wholesaler's shoes, purchasing the property directly from the seller at the price agreed upon in the contract. 

The buyer's goal is usually to purchase a property that offers good value, with the intent to either resell or rent it for profit. They pay the wholesale fee directly to the wholesaler.

Title Company

In a wholesale deal, the title company will help facilitate the transfer of the contract from the wholesaler to the buyer and ensure that all legal requirements are met for the transaction to take place.  

Types of Real Estate Wholesale Contracts

Real estate wholesaling can take a variety of forms, each represented by different types of contracts. The best one for a given situation will depend on the specific circumstances of the buyer, the seller, and the wholesaler.

Here are some of the most common types of real estate wholesale contracts and how they work:

Wholesale Real Estate Assignment Contract

This is the most common type of contract used in real estate wholesaling. In this scenario, the wholesaler signs a contract with a property seller that allows them to 'assign' their purchase rights to a third-party buyer. 

The original contract includes an assignment clause, which mentions that the wholesaler has the right to transfer their role to the buyer. The wholesaler's profit comes from the difference between the original purchase price agreed with the seller and the price the end buyer pays to take on the contract. 

It's crucial to note that the wholesaler never actually purchases the property – they simply assign their rights in the contract to the new buyer.

Wholesale Real Estate Purchase Agreement

While similar to the assignment contract, a wholesale real estate purchase agreement differs in one key way for people who invest in real estate – the wholesaler does plan to purchase the property, but only for a brief period. 

In this 'double closing' or 'simultaneous closing' scenario, the wholesaler signs a purchase agreement with the seller, then finds a buyer and signs a separate agreement with them. The wholesaler uses the funds from the end buyer to complete the purchase from the original seller. 

The transactions usually happen almost simultaneously. The wholesaler's profit is the difference between the price they paid the seller and the price they sold the property to the buyer. 

Lease Option Agreement

This is a less common but still valid form of real estate wholesaling . In this scenario, the wholesaler secures an agreement to lease the property from the seller with an option to buy at a later date. 

The wholesaler then finds an end buyer who wants to take on the lease and the option to purchase. The wholesaler transfers their rights to the lease and purchase option to the end buyer, usually for an assignment fee. 

This type of contract can be beneficial when dealing with sellers who might be hesitant to sell immediately or buyers who need time to secure financing.

Who Buys Wholesale Real Estate Contracts?

Wholesale real estate contracts can be attractive to a variety of buyers, each with their unique motivations and business models. Let's look at some of the most common types of buyers:

• Investors: These buyers may be interested in adding properties to their portfolio for rental income or for a longer-term appreciation in value. They are typically looking for properties that are priced below real estate market value in order to flip, making wholesale real estate purchase and sale agreement contracts an excellent opportunity.
• Property Developers: Developers often seek out properties in desirable locations where they can build or enhance real estate projects. They might buy a wholesale contract for a property that's ideally situated for their project or one that they can demolish and rebuild according to their plans. They often seek the help or a real estate agent. But they also approach wholesalers who can assign the contract to them especially for commercial real estate.
• Flippers: These buyers, often known as house flippers, purchase properties with the intention of selling them for a profit after they flip them or after making necessary or aesthetic improvements. Wholesale real estate contracts offer flippers the opportunity to purchase properties at a lower cost, increasing their potential profit when they sell the improved property.

Contents of a Wholesale Contract

A real estate wholesale contract is indeed a complex document. While the exact content may vary from contract template to contract template, here are some of the key components that are typically included in this pdf:

• Parties Involved: Contracts contain the legal names of the real estate wholesaler and a seller, ensuring that the agreement for the wholesaling business is legally binding.
• Property Description: This outlines the specifics of the property in question, such as the physical address, and often includes legal descriptions of the property boundaries.
• Deed Type: This specifies the type of ownership transfer document to be used at closing, such as a warranty deed or quitclaim deed.
• Deposits: This section outlines the details of the earnest money deposit, if any, that the wholesaler needs to provide to secure the contract.
• Purchase Price: This is the agreed-upon price that the successful real estate wholesaler will have the right to buy the property as well as how much percentage of the purchase price would be the profit from the contract.
• Financing: This section outlines the terms of how the purchase of the contract assignment will be financed, such as a cash deal or through a mortgage.
• Closing Costs: This section details who will be responsible for various closing costs in the purchase contracts, which can include things like title insurance, recording fees, and loan origination fees.
• Property Condition Report: This section often includes information about the current condition of the property and any known defects. This is crucial especially for those who are looking to flip properties.
• Inspections: This outlines the rights of the wholesaler to have the property inspected before the deal closes and how any necessary repairs or issues identified in the inspection will be handled.
• Radon Gas & Lead-Based Paint: For older properties, there may be provisions related to radon gas and lead-based paint disclosures, which are federally mandated for homes built before 1978.
• Occupancy, Possession, and Closing date: Sale contracts as well as assignment contracts also include when the buyer is entitled to take possession of the property and the date when the agreement is signed and the transaction will be completed.
• Contingencies: These are conditions that must be met for the assignment of contract to proceed whether you plan to wholesale commercial real estate or a residential property. For example, a financing contingency would stipulate that the contract is only valid if the wholesaler can secure financing. Otherwise, you can back out of the contract.

Pros and Cons of Wholesale Real Estate Contracts

Real estate wholesaling, while offering significant potential benefits, also comes with its unique challenges. Understanding these can help potential wholesalers (especially those in need of lesson about real estate for beginners) decide if this is the right approach for their circumstances and financial goals.

• Low Financial Risk: The wholesaling strategy involves lower financial risk compared to traditional real estate investing. Wholesalers typically don't need to secure large loans or invest significant amounts of money since they're not actually purchasing the property themselves.
• Quick Profits: Since wholesaling typically involves fast turnaround times (often just a few weeks or within 30 days), it can lead to quicker profits compared to other real estate investment strategies that require a longer-term commitment.
• No Credit Requirements: Since wholesalers don't actually purchase the property but instead adding the contract to another buyer, there's no need for a credit check. This makes wholesaling an accessible option for those with less-than-stellar credit histories.
• Excellent Entry Point for Beginners: Wholesaling or flipping real estate contracts can be a great way to learn about the real estate industry without the need for substantial upfront investment. It provides a hands-on experience with contract negotiation, property valuation, and network building.
• Helps Build Your Network: Through wholesaling, you'll meet and work with various players in the real estate industry, from investors and flippers to agents and property managers. These contacts can be invaluable for future real estate ventures.
• Requires a Solid Wholesale Buyers List: To be successful in wholesaling, you need a list of reliable, interested buyers who are familiar with wholesaling and are open to assignment contracts. Building and maintaining this list requires time and effort.
• You Will Do a Lot of Legwork: Wholesaling is far from passive income. It requires considerable effort to find properties, create a wholesale real estate contract template or wholesale real estate contract pdf, negotiate and transfer the contract, find buyers, and facilitate the sale.
• Inconsistent Income: The income from wholesaling can be inconsistent, as it depends on finding good deals and interested buyers. There may be periods with little to no income if deals fall through or are hard to find.
• Finding Distressed Properties Can Be Challenging: Wholesaling often involves finding and negotiating deals for distressed properties (properties in need of repair or with motivated sellers). These can be difficult to locate and require skills to assess and negotiate effectively.

Frequently Asked Questions

Is a wholesale contract legal.

Yes, a wholesale real estate contract is a legal document. It's a standard practice in the real estate industry. However, legality of a wholesale contract template can also depend on local laws. Some states have regulations around real estate wholesaling, and in some cases, you may need to be a licensed real estate agent to do. 

It's always a good idea to consult with a local real estate attorney to ensure that your wholesaling practices comply with all relevant real estate laws and regulations and that the wholesaler is not required a real estate license like a real estate agent would.

Can You Get Out Of A Wholesale Real Estate Contract?

Getting out of a wholesale real estate contract can be challenging once it's signed, as it's legally binding. However, many contracts include contingency clauses that provide ways to legally exit the agreement under specific circumstances. 

For instance, a wholesaler might include a contingency stating that the contract is void if they cannot find a buyer within a certain timeframe.

What To Do If You Can’t Assign the Property To the Wholesale Contract?

If you can't assign the property to the wholesale contract, there are a few options. You might choose to purchase the property yourself, particularly if you have the means and the deal is advantageous. 

Alternatively, you can partner with a buyer and close on the property together, or you could renegotiate with the seller. However, the best course of action often depends on the specific circumstances.

Can You Wholesale Without a Contract?

No, you can't wholesale without a contract. The contract is a crucial component of wholesaling properties as it legally binds the seller to sell and the real estate wholesaler to buy the property at the agreed-upon price. 

Without a contract, there's no legal agreement to assign to another buyer where the ins and outs of the sale are labeled. Trying to wholesale without a contract can lead to legal issues and disputes. Also, a copy of the purchase contract should be attached to every transaction.

Final Thoughts: Wholesale Contract Agreement

Wholesale contracts offer an excellent entry point into real estate investment with relatively low financial risk and no credit requirements. They provide a unique opportunity to turn quick profits and build a network in the real estate industry. 

However, remember that success in this field requires an understanding of real estate wholesaling contracts. Always seek legal advice to ensure the legality of your contracts and their alignment with your goals. 

Ready to start wholesaling? Check out Property Leads ! We provide highly motivated seller leads from different states, so you’re sure to claim your target areas. All our leads are generated from SEO, so you are guaranteed their quality.

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Legal Templates

Home Business Assignment Agreement

Assignment Agreement Template

Use our assignment agreement to transfer contractual obligations.

Updated February 1, 2024 Reviewed by Brooke Davis

An assignment agreement is a legal document that transfers rights, responsibilities, and benefits from one party (the “assignor”) to another (the “assignee”). You can use it to reassign debt, real estate, intellectual property, leases, insurance policies, and government contracts.

What Is an Assignment Agreement?

What to include in an assignment agreement, how to assign a contract, how to write an assignment agreement, assignment agreement sample.

Partnership Interest

An assignment agreement effectively transfers the rights and obligations of a person or entity under an initial contract to another. The original party is the assignor, and the assignee takes on the contract’s duties and benefits.

It’s often a requirement to let the other party in the original deal know the contract is being transferred. It’s essential to create this form thoughtfully, as a poorly written assignment agreement may leave the assignor obligated to certain aspects of the deal.

The most common use of an assignment agreement occurs when the assignor no longer can or wants to continue with a contract. Instead of leaving the initial party or breaking the agreement, the assignor can transfer the contract to another individual or entity.

For example, imagine a small residential trash collection service plans to close its operations. Before it closes, the business brokers a deal to send its accounts to a curbside pickup company providing similar services. After notifying account holders, the latter company continues the service while receiving payment.

Create a thorough assignment agreement by including the following information:

• Effective Date:  The document must indicate when the transfer of rights and obligations occurs.
• Parties:  Include the full name and address of the assignor, assignee, and obligor (if required).
• Assignment:  Provide details that identify the original contract being assigned.
• Third-Party Approval: If the initial contract requires the approval of the obligor, note the date the approval was received.
• Signatures:  Both parties must sign and date the printed assignment contract template once completed. If a notary is required, wait until you are in the presence of the official and present identification before signing. Failure to do so may result in having to redo the assignment contract.

Review the Contract Terms

Carefully review the terms of the existing contract. Some contracts may have specific provisions regarding assignment. Check for any restrictions or requirements related to assigning the contract.

Check for Anti-Assignment Clauses

Some contracts include anti-assignment clauses that prohibit or restrict the ability to assign the contract without the consent of the other party. If there’s such a clause, you may need the consent of the original parties to proceed.

Determine Assignability

Ensure that the contract is assignable. Some contracts, especially those involving personal services or unique skills, may not be assignable without the other party’s agreement.

Get Consent from the Other Party (if Required)

If the contract includes an anti-assignment clause or requires consent for assignment, seek written consent from the other party. This can often be done through a formal amendment to the contract.

Prepare an Assignment Agreement

Draft an assignment agreement that clearly outlines the transfer of rights and obligations from the assignor (the party assigning the contract) to the assignee (the party receiving the assignment). Include details such as the names of the parties, the effective date of the assignment, and the specific rights and obligations being transferred.

Include Original Contract Information

Attach a copy of the original contract or reference its key terms in the assignment agreement. This helps in clearly identifying the contract being assigned.

Execution of the Assignment Agreement

Both the assignor and assignee should sign the assignment agreement. Signatures should be notarized if required by the contract or local laws.

Notice to the Other Party

Provide notice of the assignment to the non-assigning party. This can be done formally through a letter or as specified in the contract.

File the Assignment

File the assignment agreement with the appropriate parties or entities as required. This may include filing with the original contracting party or relevant government authorities.

Communicate with Third Parties

Inform any relevant third parties, such as suppliers, customers, or service providers, about the assignment to ensure a smooth transition.

Keep Copies for Records

Keep copies of the assignment agreement, original contract, and any related communications for your records.

Here’s a list of steps on how to write an assignment agreement:

Step 1 – List the Assignor’s and Assignee’s Details

List all of the pertinent information regarding the parties involved in the transfer. This information includes their full names, addresses, phone numbers, and other relevant contact information.

This step clarifies who’s transferring the initial contract and who will take on its responsibilities.

Step 2 – Provide Original Contract Information

Describing and identifying the contract that is effectively being reassigned is essential. This step avoids any confusion after the transfer has been completed.

Step 3 – State the Consideration

Provide accurate information regarding the amount the assignee pays to assume the contract. This figure should include taxes and any relevant peripheral expenses. If the assignee will pay the consideration over a period, indicate the method and installments.

Step 4 – Provide Any Terms and Conditions

The terms and conditions of any agreement are crucial to a smooth transaction. You must cover issues such as dispute resolution, governing law, obligor approval, and any relevant clauses.

Step 5 – Obtain Signatures

Both parties must sign the agreement to ensure it is legally binding and that they have read and understood the contract. If a notary is required, wait to sign off in their presence.

Related Documents

• Purchase Agreement : Outlines the terms and conditions of an item sale.
• Business Contract : An agreement in which each party agrees to an exchange, typically involving money, goods, or services.
• Lease/Rental Agreement : A lease agreement is a written document that officially recognizes a legally binding relationship between two parties -- a landlord and a tenant.
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How Wholesalers Use Assignment of Contract

Lex levinrad.

Assigning a contract is a very useful tool for wholesalers that would like to assign their rights to a property for a small profit. An assignment of contract form is used to transfer beneficial interest in the property to the new buyers (assignee) from the existing buyer (assignor).

How Does The Assignment Of Contract Work?

Assume your name is Jack Smith and you have signed a contract to purchase a property located at 123 Main St in Fort Lauderdale Florida. Your purchase price on your contract is $40,000 but you would like to make a quick $5,000 profit and sell this contract (or assign it) to another buyer. Let's say that you are successful in locating a buyer for this property that is willing to purchase the property for $45,000 which is $5,000 more than what your purchase contract states.

You tell this buyer that you have a contract to purchase this property for $40,000 and you will assign all rights to purchase this property for a fee of $5,000 to him/her. This fee is called an assignment fee.

The buyer agrees to the assignment fee and you have a one page form called an assignment of beneficial interest form or assignment of contract form (use an attorney to draw up this form) , which states that you are giving up all rights to purchase this property and assigning it to the new buyer in exchange for an assignment fee of $5,000.

What Are The Benefits Of Doing This?

Well, firstly you are essentially flipping a property without ever closing on it or really owning it which means that you do not have to come up with any cash or pay any closing costs or incur any liability or expense. You are not really flipping the property you are actually flipping the contract that gives you the right to purchase the property. This is what wholesalers do and it can be extremely lucrative.

The only money that you will actually need to put down will be the deposit that you give to the seller or put on the contract as a deposit held in escrow (escrow is preferred). A true wholesaler would never put more than $10 or $100 down in order to reduce their risk.

What Is The Risk To The Wholesaler?

If the Wholesaler cannot find a buyer to purchase the house at a higher price, they will need to cancel the contract. When they do cancel the contract their deposit can be forfeited. Purchase contracts have an inspection period which is the time period that the buyer is allowed to inspect the property. Regular buyers use this inspection period to bring in their general contractor or inspector to complete an inspection of the property. However, wholesalers use this inspection period to try and market the property and find a buyer.

If the wholesaler cannot find a buyer for this property then they can simply cancel the contract within the inspection period and get their deposit back. If there is a problem or delay in getting the deposit returned (like the seller won't give it back), or if the buyer has cancelled after the expiration of the inspection period then the deposit will not be returned and will be forfeited. It is for this reason that you should use the least amount possible when placing a deposit on a property that you plan on assigning. A deposit of $10 or $100 is the most you should use for deposit on an assignable contract.

There is one key point for you to keep in mind if you are going to be assigning a contract. You must use the words “and or assigns” after your name. This means that on the purchase contract the buyers name should be Jack Smith and or assigns not just Jack Smith. If you don't use those words “and or assigns” then your contract will not be assignable. You should also check off the clause that says that the contract is assignable, which is a separate item that is further down in the purchase contract.

Another important point is that you will not be able to use the assignment method with bank owned properties and short sales. Banks do not want assignable contracts because they don't want wholesalers tying up their bank owned properties and trying to flip them. If you are making an offer on an REO or short sale or any property where the bank is the seller then you will have to use the double closing method for these properties.

A disadvantage to the assignment of contract method is that your buyer will see how much profit you make so, if your profit is really huge it could potentially create a problem with your buyer trying to reduce the purchase price. For example, if you purchased the property for $15,000 and tried to sell it for $45,000 with a $30,000 assignment fee then you might encounter a lot of resistance from the buyer who thinks you are marking up the property excessively. This could be avoided by using the double closing method where the buyer does not see how much you paid until after the transaction has closed (public records).

I find that it is often preferable to double close on all transactions regardless of who the seller is and I use as low a deposit as possible depending on whether the seller is a private party or a bank (banks require at least $1,000 deposit). This way you will have many more options available to you when you are flipping the property.

If the property is owned by an individual (not a bank), then an assignment of contract can be a really low cost entry into wholesaling for beginners. All you need to get started is a purchase contract, $10 and a distressed seller.

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How To Navigate The Real Estate Assignment Contract

What is assignment of contract?

Assignment of contract vs double close

How to assign a contract

Assignment of contract pros and cons

Even the most left-brained, technical real estate practitioners may find themselves overwhelmed by the legal forms that have become synonymous with the investing industry. The assignment of contract strategy, in particular, has developed a confusing reputation for those unfamiliar with the concept of wholesaling. At the very least, there’s a good chance the “assignment of contract real estate” exit strategy sounds more like a foreign language to new investors than a viable means to an end.

A real estate assignment contract isn’t as complicated as many make it out to be, nor is it something to shy away from because of a lack of understanding. Instead, new investors need to learn how to assign a real estate contract as this particular exit strategy represents one of the best ways to break into the industry.

In this article, we will break down the elements of a real estate assignment contract, or a real estate wholesale contract, and provide strategies for how it can help investors further their careers. [ It's time to escape the rat race. Register to attend a free one-day investing event , where you'll learn how one secret strategy can help you create cash flow from the stock market. ]

What Is A Real Estate Assignment Contract?

A real estate assignment contract is a wholesale strategy used by real estate investors to facilitate the sale of a property between an owner and an end buyer. As its name suggests, contract assignment strategies will witness a subject property owner sign a contract with an investor that gives them the rights to buy the home. That’s an important distinction to make, as the contract only gives the investor the right to buy the home; they don’t actually follow through on a purchase. Once under contract, however, the investor retains the sole right to buy the home. That means they may then sell their rights to buy the house to another buyer. Therefore, when a wholesaler executes a contact assignment, they aren’t selling a house but rather their rights to buy a house. The end buyer will pay the wholesale a small assignment fee and buy the house from the original buyer.

The real estate assignment contract strategy is only as strong as the contracts used in the agreement. The language used in the respective contract is of the utmost importance and should clearly define what the investors and sellers expect out of the deal.

There are a couple of caveats to keep in mind when considering using sales contracts for real estate:

Contract prohibitions: Make sure the contract you have with the property seller does not have prohibitions for future assignments. This can create serious issues down the road. Make sure the contract is drafted by a lawyer that specializes in real estate assignment contract law.

Property-specific prohibitions: HUD homes (property obtained by the Department of Housing and Urban Development), real estate owned or REOs (foreclosed-upon property), and listed properties are not open to assignment contracts. REO properties, for example, have a 90-day period before being allowed to be resold.

What Is An Assignment Fee In Real Estate?

An assignment fee in real estate is the money a wholesaler can expect to receive from an end buyer when they sell them their rights to buy the subject property. In other words, the assignment fee serves as the monetary compensation awarded to the wholesaler for connecting the original seller with the end buyer.

Again, any contract used to disclose a wholesale deal should be completely transparent, and including the assignment fee is no exception. The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself.

The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers). As with any negotiations , proper information is vital. Take the time to find out how much the property would realistically cost before and after repairs. Then, add your preferred assignment fee on top of it.

Traditionally, investors will receive a deposit when they sign the Assignment of Real Estate Purchase and Sale Agreement . The rest of the assignment fee will be paid out upon the deal closing.

Assignment Contract Vs Double Close

The real estate assignment contract strategy is just one of the two methods investors may use to wholesale a deal. In addition to assigning contracts, investors may also choose to double close. While both strategies are essentially variations of a wholesale deal, several differences must be noted.

A double closing, otherwise known as a back-to-back closing, will have investors actually purchase the home. However, instead of holding onto it, they will immediately sell the asset without rehabbing it. Double closings aren’t as traditional as fast as contract assignment, but they can be in the right situation. Double closings can also take as long as a few weeks. In the end, double closings aren’t all that different from a traditional buy and sell; they transpire over a meeter of weeks instead of months.

Assignment real estate strategies are usually the first option investors will want to consider, as they are slightly easier and less involved. That said, real estate assignment contract methods aren’t necessarily better; they are just different. The wholesale strategy an investor chooses is entirely dependent on their situation. For example, if a buyer cannot line up funding fast enough, they may need to initiate a double closing because they don’t have the capital to pay the acquisition costs and assignment fee. Meanwhile, select institutional lenders incorporate language against lending money in an assignment of contract scenario. Therefore, any subsequent wholesale will need to be an assignment of contract.

Double closings and contract assignments are simply two means of obtaining the same end. Neither is better than the other; they are meant to be used in different scenarios.

Flipping Real Estate Contracts

Those unfamiliar with the real estate contract assignment concept may know it as something else: flipping real estate contracts; if for nothing else, the two are one-in-the-same. Flipping real estate contracts is simply another way to refer to assigning a contract.

Is An Assignment Of Contract Legal?

Yes, an assignment of contract is legal when executed correctly. Wholesalers must follow local laws regulating the language of contracts, as some jurisdictions have more regulations than others. It is also becoming increasingly common to assign contracts to a legal entity or LLC rather than an individual, to prevent objections from the bank. Note that you will need written consent from all parties listed on the contract, and there cannot be any clauses present that violate the law. If you have any questions about the specific language to include in a contract, it’s always a good idea to consult a qualified real estate attorney.

When Will Assignments Not Be Enforced?

In certain cases, an assignment of contract will not be enforced. Most notably, if the contract violates the law or any local regulations it cannot be enforced. This is why it is always encouraged to understand real estate laws and policy as soon as you enter the industry. Further, working with a qualified attorney when crafting contracts can be beneficial.

It may seem obvious, but assignment contracts will not be enforced if the language is used incorrectly. If the language in a contract contradicts itself, or if the contract is not legally binding it cannot be enforced. Essentially if there is any anti-assignment language, this can void the contract. Finally, if the assignment violates what is included under the contract, for example by devaluing the item, the contract will likely not be enforced.

How To Assign A Real Estate Contract

A wholesaling investment strategy that utilizes assignment contracts has many advantages, one of them being a low barrier-to-entry for investors. However, despite its inherent profitability, there are a lot of investors that underestimate the process. While probably the easiest exit strategy in all of real estate investing, there are a number of steps that must be taken to ensure a timely and profitable contract assignment, not the least of which include:

Find the right property

Acquire a real estate contract template

Submit the contract

Assign the contract

Collect the fee

1. Find The Right Property

You need to prune your leads, whether from newspaper ads, online marketing, or direct mail marketing. Remember, you aren’t just looking for any seller: you need a motivated seller who will sell their property at a price that works with your investing strategy.

The difference between a regular seller and a motivated seller is the latter’s sense of urgency. A motivated seller wants their property sold now. Pick a seller who wants to be rid of their property in the quickest time possible. It could be because they’re moving out of state, or they want to buy another house in a different area ASAP. Or, they don’t want to live in that house anymore for personal reasons. The key is to know their motivation for selling and determine if that intent is enough to sell immediately.

With a better idea of who to buy from, wholesalers will have an easier time exercising one of several marketing strategies:

Direct Mail

Real Estate Meetings

Local Marketing

2. Acquire A Real Estate Contract Template

Real estate assignment contract templates are readily available online. Although it’s tempting to go the DIY route, it’s generally advisable to let a lawyer see it first. This way, you will have the comfort of knowing you are doing it right, and that you have counsel in case of any legal problems along the way.

One of the things proper wholesale real estate contracts add is the phrase “and/or assigns” next to your name. This clause will give you the authority to sell the property or assign the property to another buyer.

You do need to disclose this to the seller and explain the clause if needed. Assure them that they will still get the amount you both agreed upon, but it gives you deal flexibility down the road.

3. Submit The Contract

Depending on your state’s laws, you need to submit your real estate assignment contract to a title company, or a closing attorney, for a title search. These are independent parties that look into the history of a property, seeing that there are no liens attached to the title. They then sign off on the validity of the contract.

4. Assign The Contract

Finding your buyer, similar to finding a seller, requires proper segmentation. When searching for buyers, investors should exercise several avenues, including online marketing, listing websites, or networking groups. In the real estate industry, this process is called building a buyer’s list, and it is a crucial step to finding success in assigning contracts.

Once you have found a buyer (hopefully from your ever-growing buyer’s list), ensure your contract includes language that covers earnest money to be paid upfront. This grants you protection against a possible breach of contract. This also assures you that you will profit, whether the transaction closes or not, as earnest money is non-refundable. How much it is depends on you, as long as it is properly justified.

5. Collect The Fee

Your profit from a deal of this kind comes from both your assignment fee, as well as the difference between the agreed-upon value and how much you sell it to the buyer. If you and the seller decide you will buy the property for $75,000 and sell it for $80,000 to the buyer, you profit $5,000. The deal is closed once the buyer pays the full $80,000.

Assignment of Contract Pros

For many investors, the most attractive benefit of an assignment of contract is the ability to profit without ever purchasing a property. This is often what attracts people to start wholesaling, as it allows many to learn the ropes of real estate with relatively low stakes. An assignment fee can either be determined as a percentage of the purchase price or as a set amount determined by the wholesaler. A standard fee is around $5,000 per contract.

The profit potential is not the only positive associated with an assignment of contract. Investors also benefit from not being added to the title chain, which can greatly reduce the costs and timeline associated with a deal. This benefit can even transfer to the seller and end buyer, as they get to avoid paying a real estate agent fee by opting for an assignment of contract. Compared to a double close (another popular wholesaling strategy), investors can avoid two sets of closing costs. All of these pros can positively impact an investor’s bottom line, making this a highly desirable exit strategy.

Assignment of Contract Cons

Although there are numerous perks to an assignment of contract, there are a few downsides to be aware of before searching for your first wholesale deal. Namely, working with buyers and sellers who may not be familiar with wholesaling can be challenging. Investors need to be prepared to familiarize newcomers with the process and be ready to answer any questions. Occasionally, sellers will purposely not accept an assignment of contract situation. Investors should occasionally expect this, as to not get discouraged.

Another obstacle wholesalers may face when working with an assignment of contract is in cases where the end buyer wants to back out. This can happen if the buyer is not comfortable paying the assignment fee, or if they don’t have owner’s rights until the contract is fully assigned. The best way to protect yourself from situations like this is to form a reliable buyer’s list and be upfront with all of the information. It is always recommended to develop a solid contract as well.

Know that not all properties can be wholesaled, for example HUD houses. In these cases, there are often anti-assigned clauses preventing wholesalers from getting involved. Make sure you know how to identify these properties so you don’t waste your time. Keep in mind that while there are cons to this real estate exit strategy, the right preparation can help investors avoid any big challenges.

Assignment of Contract Template

If you decide to pursue a career wholesaling real estate, then you’ll want the tools that will make your life as easy as possible. The good news is that there are plenty of real estate tools and templates at your disposal so that you don’t have to reinvent the wheel! For instance, here is an assignment of contract template that you can use when you strike your first deal.

As with any part of the real estate investing trade, no single aspect will lead to success. However, understanding how a real estate assignment of contract works is vital for this business. When you comprehend the many layers of how contracts are assigned—and how wholesaling works from beginning to end—you’ll be a more informed, educated, and successful investor.

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