Question on Assigning Deals

[jrmeyer]

Hi,

I'm a new property locator in Raleigh, NC so forgive me if I say something stupid in the next couple of months  

If you are talking to a seller and it is a FSBO, do you tell them that you will be assigning the contract before they sign with you or is this something to not mention unless it comes up?  I ask because I'm concerned that some sellers might back out if you are not the one ultimately purchasing the property.

Thanks,
Jean

[reiauctions]

It depends how motivated the seller is.  Some FSBO's may not be that motivated and will have a problem with you selling the contract.  Not to mention, many people don't even know that so you would confuse them by bringing it up.

My feeling is to tell what you need to but never lie.  I can't imagine a seller will even care if you assign their contract as long as the closing happens on the date for the price they agreed to.

[real deal]

 I would'nt say anything unless they ask.You're contract should have it in there or you should include it after you sign.If they ask then don't lie to them and just tell them,but i'd keep it hush until they bring it up.

[syracusePRO]

Disclose.   It's a lot easier if everyone involved in a transaction knows the numbers before they, or their lawyer,  see a copy of the contract and addendum.  State the fact that you may be assigning the contract to a prequalified buyer (it should be a contingency in the contract if this is your intention), and state your fee.  Much easier all around.

[real deal]

Disclose.   It's a lot easier if everyone involved in a transaction knows the numbers before they, or their lawyer,  see a copy of the contract and addendum.  State the fact that you may be assigning the contract to a prequalified buyer (it should be a contingency in the contract if this is your intention), and state your fee.  Much easier all around.

Personally i would keep your mouth shut unless asked! Your contract should say it.If you tell a homeowner that your just tieng a contract up so that you can find someone to assign it to,then personally I would'nt want you wasting my time ( and keeping other buyers from buying it)

[REI Hustler [Bob]]

Your option agreement should say somewhere near the signings box, X JOHN DOE for my assigns, assignees, associates, heirs, successors in title. etc.

It should say On this date this agreement was finalised and concluded, and nothing NOT mentioned in this agreement shall be binding on the parties.

If you assign it, the assignee needs to inform the vendor/property owner its been assigned to him, 0r it becomes void. You cannot exercise it without notice of assignment. An attorney lost me a lot of money by not giving notice of assignment.

And don't tell them, if they raise the subject say sometines you need to assign it to a finance house to raise funds, or to your parent company, don't forget a viewing at at any time clause as well [viewing by the assignees, agents, and valuers]

[jrmeyer]

Thank you for all the responses.  I did not know that if the party you assign the contract to does not inform the property owner that they now have the contract, the deal can be nullified.

Good info - thanks again!

- Jean

[REI Hustler [Bob]]

Jean, about 25 years ago I worked with someone who had and used this expression, he said> In property dealings you have Mr Greed, Mr Mrs Greed and all the little Greedys to deal with. He was so right. And with Options you can have the disgruntled party to deal with scenario.

So read what you can about Options, read about contract law, and always get them to sign. Then get them to sign later that this copy [you have given them] is accurate, read and understood. Have it prepared for signature. I took a guy to Court who said he had not read the agreement, how could I prove he had read it three times, and spent an hour thinking it over. My good sense was to have him sign 7 days later that this was his 2nd copy, he had read it, he understood it, and he was happy with the terms. He had forgotten all about this 2nd signature note and receipt. So we won / he lost. Months later we got a story he could have sold it for more money- and that was the real beef. For what its worth if you sign something without reading it, you are bound by its terms. Some people do not know this and think its a good excuse to get  out of a deal.

[LonestarState]

O.K. first of all... I'm not sure if you are using YOUR STATES LEGAL REAL ESTATE CONTRACT or not, I sure hope so.(doesn't sound like it) You can find them on your states website, they are free and you should use those only.

The contracts spell out everything for you, with the third party financing to the inspection, survey, and apprasial periods. These are ALL you outs if need be. Please read your states contracts!

On the very top of the contract it has the place for you to write in the parties to the transaction where it has Seller/Buyer names ...put your "company name &/or Assigns".... That tells the seller "I may Assign this contract"
make sense?..hope so.

Just my two cents...

[REI Hustler [Bob]]

Do you mean the Sales Contract, these are quite common and listed everywhere, but few sites have an Option to Buy Contract. I've never found any on State sites.

[LonestarState]

No I mean STATE. Your state has a website that has the forms you need. Your SALES contract is your option. You are putting the property under contract to buy...if any of the ..a. finanicing..b. inspection period..c. survey...d. appraisial... does not TURN out RIGHT (you find your end buyer) then, that is your OPTION to either buy or walk.

Make sense?

[REI Hustler [Bob]]

My understanding is that a sales contract is not binding, it appears on the face of it to be binding- but the buyer or seller can always find some reason not to go ahead and either can pull out of it. It contains to many subject to/s, whys and wherefores'.  Whilst an Option Agreement is binding on the vendor, he cannot opt out of it, say no, or find excuses not to proceed. The Option buyer as the choice to buy  or not to buy the land or property. An Option is binding and easily enforceable / a sales contract is not.

[LonestarState]

A sales contract is binding..it is a legal document. However, I am glad that there are several ways to get out of it, you should be too.  For example: You are the buyer and I'm the seller...

You are wanting to purchase my property.. like it says in the contract you are having your inspection, apprasial, and survey done...

O.k... You have also put up lets say 5K earnest money with the title company...

Now your inspection comes in and says that all the electrical wiring is old and not up to code. It is a binding, legal contract, remember, but now you don't want the house cause its gonna cost you 20K to get it rewired and up to snuff.

However, it also states that if the inspection, survey, &/or apprasial are not fitting to the lender, it is a null contract.

I would release your earnest money from the title company, you get it back and carry on... Arent you glad those are in there? I am..

Just my 2 cents...

[REI Hustler [Bob]]

LonestarState:

Any contract that contains loopholes and get out clauses is not binding. Thats why Option Agreements are so popular, theres no way of getting out of it for the vendor/seller.  Having said that an [sneaky] Attorney might argue that its void for unertainty, vodi for incapacity, for feebleness of mind and give you  the legal -paper work runaround. But with a good agreeemt your covered. I have had 3 contested, all lost in Court.

[randyfarber]

A contract usually does two things:

1)   Obligates the buyer, and seller, UNLESS certain 'out' clauses are activated.

2)   Usually requires a substantial deposit.

I have seen many cases go to court where the potential buyer wanted out, because he 'felt' the out clauses were valid in his favor, but the judge ruled that there wasn't enough to cause the seller to lose out on the escrow deposit.  The judge most likely didn't force the buyer to buy, but allows the seller to retain the deposit, or a good portion of it, to offset losses caused by the home being off the market. (those losses pile up quick)

An option doesn't obligate the Buyer to anything, it just states that he has the right to purchase at the previously agreed to terms.  For the option to be enforcable, though, there must be compensation for the Seller, for his involvement in the option.  An implied, or intended, benefit for the seller won't suffice.  Plain old UCCC definition of a valid contract.

Disclose up front to Seller, that you WILL be assigning the option.  Explain that this is what you do and that you have worked for a long time to gather your contacts, make arrangements, dealt with attorneys on contracts, placed advertisements, and spent countless hours working with buyers and sellers alike to earn your profits.  Besides, tell him/her it shouldn't matter if you make money, as long as he/she gets what they want, which is getting their house sold.  Also explain that a realtor would be getting thousands of dollars to list their home, and would probably not work as hard to sell it, they just put them on the MLS and hope that another realtor brings a buyer.

Failure to disclose is actionable in all jurisdictions.  You will be seen as trying to take advantage of the Seller.  Not good for business relations, and the time/money of defending in court, when not needed, are a bullshit waste of time and money.  And that's if you win!