I’ve been in the Real Estate Investing business for quite a while now, and without a doubt, the two methods I use most often to close wholesale deals are the "Assignment" and the "Double Close" methods.
Both of these approaches can help you close a transaction and get paid, and both have advantages and disadvantages.
Look, as a newbie real estate investor or someone who is new to the wholesaling game, there are two proven methods that work for closing wholesale deals and you need to know how to use them.
Let’s jump in and learn about the different closing methods used for wholesale deals!
Wholesale Deals Closing Methods
The Assignment Method
What It Is: In this method, you’ll simply “assign” your role in the distressed seller’s contract over to your cash buyer. Here’s the trick: because you’re a principal in the transaction, you do not need a Realtor’s license to wholesale properties this way, so you are allowed to charge an “assignment fee” (which is similar to the commission that a real estate agent would earn). And boom! Money in your pocket; deal is done.
- This method is as easy as 1, 2, 3!
- Find a cash buyer.
- Fill-out a one-page assignment form that “assigns” your rights in the original contract over to your cash buyer.
- Collect your “assignment fee” when the deal closes.
- This method is cheap, requiring only one set of closing costs (paid by your cash buyer).
- Privacy goes out the window. Due to the requirement of the assignment contract, all players involved will see how much money you’re making on the deal. It can get a little dicey if you’re profiting a large amount. Why? Well, because you’re basically making bank for doing nothing and not taking any risk. I’d suggest you do what I do regarding this method… only use the Assignment method if you’re making $10,000 or less in profit.
The Double Close Method
What It Is: It’s really two transactions, commonly referred to as the “A-B & B-C” strategy. A is the distressed seller, B is you, and C is your cash buyer. In the A-B transaction, you buy the property from the distressed seller. In the secondary B-C transaction, you sell the property to your cash buyer. And now you know your ABCs!
- Privacy remains intact. No one but you sees how much profit you’re bringing in from the deal. Again, I’d suggest you do what I do… always use this method when making more than $10,000 – or if the other parties involved seem to be super uncomfortable about it.
- Since there are technically two transactions, you’ll have to work with two different sets of closing costs. Annoying, but this shouldn’t be a reason not to use this method.
What Do You Need For An Assignment Contract?
You simply need “and/or assignee” terminology in your contract. Generally, there are five terms that should be agreed to in the assignment contract:
- Close of Escrow Date
- Earnest Deposit
- Inspection/Escape Clause
- Closing Agent Named
I can’t stress enough how important it is to establish a solid working relationship with an investor-friendly title company that understands both the Assignment and Double Close methods.
|As a veteran of the armed forces (NAVY), Cody learned that ethics, honor, and commitment can tell a lot about a person. After being released with an honorary discharge, he attended ASU, receiving a degree in Finance (Magna Cum Laude). Cody then received his real estate license 3 years after he first began investing in real estate because he was tired of working with horrible Realtors that were just trying to make a quick commission.|
Cody began focusing on different strategies to help clients Avoid Foreclosure. Cody worked with underwater owners arranging short sales. This led to the development of his Reverse Short Sale Secret. Cody continues to buy and sell millions of dollars worth of real estate every year. In addition he has created a series of free real estate investor training tools for new investors.
Cody trains and mentors a handful of dedicated investors. When it comes to succeeding in real estate investing, Cody grows daily and helps others to do the same. Cody breaks the silence on methodologies that have launched successful real estate investing careers. He explains the top four ways to amass real wealth using real estate whether you are a new or a seasoned investor. His approach is sound and his presentation is clear and concise.
Cody Sperber is recognized as one of the young guns of real estate investing. He thrives on encouraging and educating fellow investors. Cody Sperber's philosophy is to give you all you need to be successful before he ever requires anything on your part more than the commitment to learn.
|Copyright 2002-2017 All Rights Reserved. Published with Permission of Author. No part of this publication may be copied or reprinted|
without the express written permission of the Author and/or REIClub.com.