As someone looking to get into selling assignments of contracts in real estate, you need to know whether or not you can use one form that qualifies in every state in the US. To put it simply, before we provide even deeper information about assignments of contracts in real estate, it’s important to know that each state usually has its own legal requirements so you should check with them before creating an assignment of contract just to find out the specifics that need to go on the document.
For the most part, the rules aren’t going to be all that different from one state to another. But they may have specific things that need to go in the assignment of contract in Florida as opposed to North Carolina as an example. But really, you should contact the legal department in each state or call a contract lawyer just to make sure you have all of your ducks in a row when filling out an assignment of contract document. It’s always better to be safe than sorry, right?
What Is an Assignment of Contract in Real Estate?
For the most part, a real estate assignment contract is a strategy that real estate investors use to facilitate a property’s sale between a buyer and a seller. As you can imagine, this assignment is basically consisting of a witness that sees an owner sign a contract that provides a specific investor the right to buy their property.
The interesting thing about this type of contract is that it only gives the investor the ability to buy the home. No one is saying they have to actually buy it after they sign this contract. It just grants them the sole right to buy it and whether or not they choose to do so is up to them. More than likely, the potential real estate buyer will have to do his or her due diligence to determine if the property is a good purchase or not.
There really is only one specific type of assignment of contract in real estate, so it makes sense that using one form should be acceptable in just about every state. Again, you should contact the state’s government or their legal department to determine if this is the correct path or not. The great thing about this type of assignment of contract is that the investor is the one and only person to retain the rights to buy the home. It’s their sole option to decide if it’s the investment property that they want or not.
However, these assignments of contract are only as valid as the actual agreement itself. If the language is used incorrectly within the contract, it could potentially create problems for the investor or the seller.
Certain caveats to keep in mind for these assignments of contracts include:
- Prohibitions specific to certain properties – certain properties like REOs, HUD properties, or foreclosed REOs are not available for assignment contracts. As an example, an REO property cannot be resold for 90 days after the purchase preventing the assignment option.
- Prohibitions in the contract – each contract must not have prohibitions for future assignments with the property seller. Down the road, this can create major issues. So if you are using a contract, make sure it’s drafted by a lawyer specializing in this type of contract law in the real estate niche.
How Much Money Can a Wholesaler Expect to Get for Their Assignment of Contract Fee?
Wholesalers aren’t doing this out of the kindness of their heart. They are in this business to get paid by connecting a buyer with a seller. So it makes sense that they would want to know how much they’ll actually make ahead of time before getting into this business.
For the most part, the standard fee for an assignment of contract is $5000. But this does not necessarily mean you’re going to earn $5000 for connecting a buyer to a seller. Remember, every deal is different and occasionally sellers are going to attempt to renegotiate your price so that you get paid less. Ultimately, it’s up to you to determine your price and either stick to it or renegotiate if that’s something you’re interested in.
It would be very convenient to use the same assignment of contract in every state. There is no denying this fact. But this contract is a big deal so you have to make sure you get it 100% correct no matter what state you happen to be doing business in.
Instead of hoping or wishing that the contract is right, you should contact a lawyer in the state and either ask them to draft the contract or ask them questions to determine if your contract is good enough. This is the only way to ensure you have the right contract every time you sell a contract assignment no matter what state it happens to be in.