assignment contracts for wholesaling real estate

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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

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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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2 comments on “Wholesale Real Estate Contract - Free Template Downloads”

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

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• June 18, 2024
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Mastering Assignment Contracts for Wholesaling Real Estate: A Step-by-Step Guide

Identifying the Contract Parties

When it comes to assignment contracts, it’s a trio performance featuring the assignor (you, the wholesaler), the assignee (the end buyer), and the original seller. As the wholesaler, you’re the pivotal figure, holding the rights to purchase which you intend to pass on to the assignee. The end buyer, or assignee, steps into your shoes, adopting all the benefits and responsibilities of the original purchase agreement. And let’s not forget the original seller , who kicked off this chain by agreeing to sell the property.

Describing the Subject Property

A blurry property description can turn a promising deal into a legal quagmire. That’s why the contract must paint a clear picture of the property in question, with no detail left to the imagination. A precise legal description lays the foundation for a binding contract, one that leaves no room for disputes about what’s being bought and sold.

Every detail, from lot measurements to included fixtures, adds to the property’s value and enhances the appeal of the deal. Overlooking the specifics of what stays and what goes can lead to misunderstandings and, worse, devalue the very asset you’re aiming to profit from.

Determining the Financial Terms

Money talks, and in real estate, it speaks volumes. The assignment contract must clearly spell out the financial obligations of the parties involved, starting with the earnest money deposit—a show of good faith from the assignee that guards you against a change of heart. Then there’s the assignment fee, which can fluctuate based on the property’s appeal and the buyer’s willingness, but expect to negotiate around the $5,000 mark as a benchmark.

Legality and Compliance in Assignment Contracts

Diving into the legal depths of assignment contracts, one must navigate the waters of legality and compliance with a keen eye. A contract is only as strong as its adherence to the law and clarity in its terms. The parties involved must be competent, not just in making decisions but also in the eyes of the law—of age and of sound mind. The contract must stand up to legal scrutiny, aligning with local laws and avoiding the murky areas of illegal activities or unconscionable demands.

Securing the services of a real estate attorney as earlier mentioned and in some states a real estate agent with a real estate license is a crucial step. They are the seasoned guides who can steer you through the complexities of real estate contracts and ensure that your agreement meets all necessary legal standards, from the statute of frauds to the finer points of state and local regulations.

Executing a Real Estate Assignment Contract

The execution of an assignment contract signals the culmination of all your groundwork, where the documents are signed, and the promises made on paper transmute into concrete actions. This critical juncture is not just about making it official; it’s also about ensuring that your interests as a wholesaler are buttoned up, protecting you once you’ve handed off the baton to the end buyer.

Preparing for Closing

The closing is the grand finale, and preparing for it means leaving no stone unturned. The closing date should be circled in red, signaling the day when the property changes hands and the profits are realized. However, the buyer’s ability to close the deal is the bedrock upon which your assignment contract rests.

Contingencies are your safety net, allowing you to bow out gracefully should the deal hit a snag before the closing date. And let’s not forget closing costs – knowing who bears the brunt of these fees can influence the deal’s structure and the smoothness of the final act.

Overcoming Obstacles in Assignment Contract Wholesaling

The path to successful wholesaling is often uneven; it’s filled with obstacles that can challenge even the most experienced wholesalers. From restrictive contracts that forbid assignment to financial contingencies that can snarl up transactions, these hurdles require strategic maneuvering and a keen understanding of the wholesaling landscape.

Dealing with Non-Assignable Contracts

Encountering a non-assignable contract requires innovative thinking. Some contracts leave no room for direct assignment, but that doesn’t mean you’re at a dead-end. You can resort to using a Standard Contract Assignment Addendum to circumvent restrictions or, when all else fails, execute a double closing, briefly taking title before passing it along to the end buyer.

Mastering wholesaling through assignment contracts involves:

• Navigating a path that requires minimal initial capital but offers numerous profit opportunities
• Connecting motivated sellers with cash buyers
• Crafting contracts that are as bulletproof as they are profitable
• Overcoming challenges with grit and ingenuity

It’s a journey that can be highly rewarding for those who are willing to put in the effort. Wholesaling real estate is an entry point into the property market, but it’s also a test of one’s ability to understand and adapt to the real estate landscape, where continuous learning is non-negotiable. Check out our Free training on Real Estate Investing to know more.

Frequently Asked Questions

What exactly is a real estate assignment contract.

A real estate assignment contract is a legal agreement that allows an investor to transfer their rights and obligations under a property purchase agreement to another party, typically for a fee, often used in wholesaling to earn a profit without purchasing the property outright.

How does a wholesaler make money with an assignment contract?

A wholesaler makes money by negotiating a purchase price with a seller and then assigning the contract to an end buyer for a higher price, pocketing the difference as their profit, also known as the assignment fee.

Do I need a real estate license to wholesale properties using assignment contracts?

No, you generally do not need a real estate license to wholesale properties using assignment contracts, but it’s important to understand local regulations and work with a real estate attorney for legal compliance.

Can all real estate contracts be assigned to another party?

No, not all real estate contracts are assignable as it depends on the contract terms, some contracts may have clauses that forbid assignment or require seller’s consent. Make sure to review the terms or use a standard contract assignment addendum if needed.

What are some common obstacles in wholesaling with assignment contracts?

Some common obstacles in wholesaling with assignment contracts are non-assignable contracts, financing contingency hurdles, legal competence of parties, and navigating state and local laws. Solutions may involve double closings, contract addendums, and seeking legal advice.

• Assignment Contract , wholesaling real estate

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How to Write a Wholesale Real Estate Agreement Contract Template

Assignment of Contract – Assignable Contract Basics for Real Estate Investors

What is assignment of contract? Learn about this wholesaling strategy and why assignment agreements are the preferred solution for flipping real estate contracts.

Beginners to investing in real estate and wholesaling must navigate a complex landscape littered with confusing terms and strategies. One of the first concepts to understand before wholesaling is assignment of contract, also known as assignment of agreement or “flipping real estate contracts.”  

An assignment contract is the most popular exit strategy for wholesalers, and it isn’t as complicated as it may seem. What does assignment of contract mean? How can it be used to get into wholesaling? Here’s what you need to know.

What Is Assignment of Contract?

How assignment of contract works in real estate wholesaling, what is an assignment fee in real estate, assignment of agreement pros & cons, assignable contract faqs.

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Assignment of real estate purchase and sale agreement, or simply assignment of agreement or contract, is a real estate wholesale strategy that facilitates a sale between the property owner and the end buyer.

This strategy is also known as flipping real estate contracts because that’s essentially how it works:

• The wholesaler finds a property that’s already discounted or represents a great deal and enters into a contract with the seller,
• The contract contains an assignment clause that allows the wholesaler to assign the contract to someone else (if they choose to!), then
• The wholesaler can assign the contract to another party and receive an assignment fee when the transaction closes.

Assignment of contract in real estate is a popular strategy for beginners in real estate investment because it requires very little or even no capital. As long as you can find an interested buyer, you do not need to come up with a large sum of money to buy and then resell the property – you are only selling your right to buy it .

An assignment contract passes along your purchase rights as well as your contract obligations. After the contract assignment, you are no longer involved in the transaction with no right to make claims or responsibilities to get the transaction to closing.

Until you assign contract to someone else, however, you are completely on the hook for all contract responsibilities and rights.

This means that you are in control of the deal until you decide to assign the contract, but if you aren’t able to get someone to take over the contract, you are legally obligated to follow through with the sale .

Assignment of Contract vs Double Closing

Double closing and assignment of agreement are the two main real estate wholesaling exit strategies. Unlike the double closing strategy, an assignment contract does not require the wholesaler to purchase the property.

Assignment of contract is usually the preferred option because it can be completed in hours and does not require you to fund the purchase . Double closings take twice as much work and require a great deal of coordination. They are also illegal in some states.

Ready to see how an assignment contract actually works? Even though it has a low barrier to entry for beginner investors, the challenges of completing an assignment of contract shouldn’t be underestimated. Here are the general steps involved in wholesaling.

Step #1. Find a seller/property

The process begins by finding a property that you think is a good deal or a good investment and entering into a purchase agreement with the seller. Of course, not just any property is suitable for this strategy. You need to find a motivated seller willing to accept an assignment agreement and a price that works with your strategy. Direct mail marketing, online marketing, and checking the county delinquent tax list are just a few possible lead generation strategies you can employ.

Step #2: Enter into an assignable contract

The contract with the seller will be almost the same as a standard purchase agreement except it will contain an assignment clause.

An important element in an assignable purchase contract is “ and/or assigns ” next to your name as the buyer . The term “assigns” is used here as a noun to refer to a potential assignee. This is a basic assignment clause authorizing you to transfer your position and rights in the contract to an assignee if you choose.

The contract must also follow local laws regulating contract language. In some jurisdictions, assignment of contract is not allowed. It’s becoming increasingly common for wholesalers to assign agreements to an LLC instead of an individual. In this case, the LLC would be under contract with the seller. This can potentially bypass lender objections and even anti-assignment clauses for distressed properties. Rather than assigning the contract to someone else, the investor can reassign their interest in the LLC through an “assignment of membership interest.”

Note: even the presence of an assignment clause can make some sellers nervous or unwilling to make a deal . The seller may be picky about whom they want to buy the property, or they may be suspicious or concerned about the concept of assigning a contract to an unknown third party who may or may not be able to complete the sale.

The assignment clause should always be disclosed and explained to the seller. If they are nervous, they can be assured that they will still get the agreed-upon amount.

Step #3. Submit the assignment contract for a title search

Once you are under contract, you must typically submit the contract to a title company to perform the title search. This ensures there are no liens attached to the property.

Step #4. Find an end buyer to assign the contract

Next is the most challenging step: finding a buyer who can fulfill the contract’s original terms including the closing date and purchase price.

Successful wholesalers build buyers lists and employ marketing campaigns, social media, and networking to find a good match for an assignable contract.

Once you locate an end buyer, your contract should include earnest money the buyer must pay upfront. This gives you some protection if the buyer breaches the contract and, potentially, causes you to breach your contract with the seller. With a non-refundable deposit, you can be sure your earnest money to the seller will be covered in a worst-case scenario.

You can see an assignment of contract example here between an assignor and assignee.

Step #5. Receive your assignment fee

The final step is receiving your assignment fee. This fee is your profit from the transaction, and it’s usually paid when the transaction closes.

The assignment fee is how the wholesaler makes money through an assignment contract. This fee is paid by the end buyer when they purchase the right to buy the property as compensation for being connected to the original seller. Assignment contracts should clearly spell out the assignment fee and how it will be paid.

An assignment fee in real estate replaces the broker or Realtor fee in a typical transaction as the assignor or investor is bringing together the seller and end buyer.

The standard real estate assignment fee is $5,000 . However, it varies by transaction and calculating the assignment fee may be higher or lower depending on whether the buyer is buying and holding the property or rehabbing and flipping.

The assignment fee is not always a flat amount. The difference between the agreed-upon price with the seller and the end buyer is the profit you stand to earn as the assignor. If you agreed to purchase the property for $150,000 from the seller and assign the contract to a buyer for $200,000, your assignment fee or profit would be $50,000.

In most cases, an investor receives a deposit when the Assignment of Purchase and Sale Agreement is signed with the rest paid at closing.

Be aware that assignment agreements can have a bad reputation . This is usually the case when the end buyer and seller are unsatisfied, realizing they could have sold higher or bought lower and essentially paid thousands to an investor who never even wanted to buy the property.

Opting for the standard, flat assignment fee is much more readily accepted by sellers and buyers as it’s comparable to a real estate agent’s commission or even much lower and the parties can avoid working with an agent.

Real estate investors enjoy many benefits of an assignment of contract:

• This strategy requires little or no capital which makes it a popular entry to wholesaling as investors learn the ropes.
• Investors are not added to the title chain and never own the property which reduces costs and the amount of time the deal takes.
• An assignment of agreement is easier and faster than double closing which requires two separate closings and two sets of fees and disclosures.
• Wholesaling can be a great tool to expand an investor’s network for future opportunities.

As with most things, there are important drawbacks to consider. Before jumping into wholesaling and flipping real estate contracts, consider the downsides .

• It can be difficult to work with sellers and buyers who are not familiar with wholesaling or assignment agreements.
• Some sellers avoid or decline assignment of contract offers because they are suspicious of the arrangement, think it is too risky, or want to know who they are selling to.
• There is a limited time to find an end buyer. Without a reliable buyer’s list, it can be very challenging to find a viable end buyer before the closing date.
• The end buyer may back out at the last minute. This may happen if they do not have owner’s rights until the contract is assigned or they do not want to pay an assignment fee.
• Not all properties are eligible for wholesaling like HUD and REO properties. There may be anti-assignment clauses or other hurdles. It is possible to get around this by purchasing the property with an LLC which can then be sold, but this is a level of complication that many wholesalers want to avoid.
• Assignors do not have owner’s rights. When the property is under contract, investors cannot make repairs or improvements. This makes it harder to assign a contract for a distressed property in poor condition.
• It can be hard to confirm an end buyer is qualified. The end buyer is responsible for paying the agreed upon price set by the seller and assignor. Many lenders do not handle assignment agreements which usually means turning to all-cash end buyers. Depending on the market, they can be hard to find.

In the worst-case scenario, if a wholesaling deal falls through because the end buyer backs out, the investor or assignor is still responsible for buying the property and must follow through with the purchase agreement. If you do not, you are in breach of contract and lose the earnest money you put down.

To avoid this worst-case scenario, be prepared with a good buyer’s list. You should only put properties under contract that you consider a good deal and you can market to other investors or homeowners. You may be able to get more time by asking for an extension to the assignment of contract while you find another buyer or even turn to other wholesalers to see if they have someone who would be a good fit.

What is the difference between assignor vs assignee?

In an assignment clause, the assignor is the buyer who then assigns the contract to an assignee. The assignee is the end buyer or final buyer who becomes the owner when the transaction closes. After the assignment, contract rights and obligations are transferred from the assignor to the assignee.

What Is an assignable contract?

An assignable contract in real estate is a purchase agreement that allows the buyer to assign their rights and obligations to another party before the contract expires. The assignee then becomes obligated to meet the terms of the contract and, at closing, get title to the property.

Is Assignment of Agreement Legal?

Assignment of contract is legal as long as state regulations are followed and it’s an assignable contract. The terms of your agreement with the seller must allow for the contract to be assumed. To be legal and enforceable, the following general requirements must be met.

• The assignment does not violate state law or public policy. In some states and jurisdictions, contract assignments are prohibited.
• There is no assignment clause prohibiting assignment.
• There is written consent between all parties.
• The property does not have restrictions prohibiting assignment. Some properties have deed restrictions or anti-assignment clauses prohibiting assignment of contract within a specific period of time. This includes HUD properties, short sales, and REO properties which usually prohibit a property from being resold for 90 days. There is potentially a way around these non-assignable contracts using an LLC.

Can a non-assignable contract still be assigned?

Even an non-assignable contract can become an assignable contract in some cases. A common approach is creating an agreement with an LLC or trust as the purchaser. The investor can then assign the entity to someone else because the contractual rights and obligations are the entity’s.

Assignment agreements are not as complicated as they may sound, and they offer an excellent entry into real estate investing without significant capital. A transaction coordinator at Transactly can be an invaluable solution, no matter your volume, to keep your wholesaling business on track and facilitate every step of the transaction to closing – and your assignment fee!

Adam Valley

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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. [ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]

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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Wholesaling Real Estate Contracts

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.

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.

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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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Guide to real estate wholesaling contracts [exact templates]

Justin dossey.

• October 21, 2022

Maybe you’re just getting started in real estate, or you want to collect an assignment fee , or you’re asking, “what is real estate wholesaling” … We want this to be your guide on everything you need to know about contracts in off market real estate investing.

______________________________________________________________________

If you just want to grab the contracts we use, you can subscribe below and we’ll send you some contracts:

Keep reading below to get a complete guide on wholesaling contracts…

What is wholesaling real estate contracts?

Every contract can be “assigned” to someone else unless the contract otherwise states it. And “wholesaling” a real estate contract means that you have a contractual agreement with a property owner to buy their property, and then you sell (or assign — also called “wholesale”), that contract to another person during the closing period.

Typically, this is a profession or a business, where someone or an entity, prospects for motivated sellers to agree on buying their property for cash, then the “contracted buyer” sells the contract to one of their cash buyers.

What a real estate wholesaling contract should include

Although, you SHOULD get advice from a licensed real estate attorney on contract law — and we are NOT licensed attorneys — however, for your entertainment purposes, here are our own company’s internal rules for a contract:

• Must be simple (1-2 pages) — we don’t want to scare sellers away with long legal jargon. We want to make it easy for a seller to say yes.
• Must have an exit clause — In our own off-market operations, we have inspections done professionally as to not be surprised. And sellers are ok with this. If neither of us knew that there were some serious termite issues that affects the structure then I have to have the ability to walk away or re-negotiate.
• Details of the transaction and parties involved — everything from price, terms, address, and parties’ contact info must be “spelled out” in detail.
• Must have an assignment clause — a stipulation/clause that allows to assign the contract to another party.

That’s really it for a simple real estate wholesaling contract.

If you’d like to learn more about what it takes to wholesaling real estate… read on 🙂

How to get paid – Assignment fee

The typical business model of “wholesaling”, gets paid on the assignment fee OR the double close. Here’s an example of how it works:

A.) You and a homeowner go into an agreement:

B.) You agree to buy their house for cash at a price of $100,000 (for example)

C.) You enter into escrow with this agreement

D.) You find a cash buyer to purchase the interest of that contract for $105,000.

E.) While in escrow you, transfer (or assign), that interest/contract, to him for that price.

F.) Escrow closes: The seller gets $100,000, and you get $5,000. The end cash buyer gets a house for $105,000.

How to wholesale real estate contracts

Although there’s a lot of controversy behind wholesaling real estate contracts, technically, assigning contracts is NOT illegal. There are two reasons why wholesaling has been “under the microscope”:

• People are running around “advertising”  they don’t own … (In the typical definition of “real estate wholesaling”, you’re never “selling a property”, you’re selling your interest in a real estate contract. There’s a big difference. You should never say in your advertising that you have a property you’re selling — it should always be: “Assignment of contract”, or “I’m selling my interest in a real estate contract”.
• Wholesalers are giving themselves a bad rep … (If you’re telling a distressed homeowner that you WILL purchase their property for cash — and with complete confidence — that homeowner is relying on you to close. But if you fail because you can’t find a cash buyer or can’t secure private money or hard money lending, it spreads a very bad light on you and others who say “We’ll buy your house cash”. Because of recent “wholesalers” walking away from sellers, some States have been paying close attention to this, and making efforts to try and make the traditional business model of “wholesaling” illegal without a license.

Stay out of legal microscopes in wholesaling real estate contracts

Let me get this out of the way first: Each state is different, so we advise to always meet with a licensed real estate attorney of the state you plan on wholesaling in. We are not attorneys and only write for entertainment purposes…

Ok… so we got that legal jargon out of the way (but seriously don’t listen to us for legal advise, meet with an attorney). However here’s our opinion: No matter what state you’re in, it’s not illegal to “sell equitable interest” in a contract.

So two things to keep yourself out of legal waters:

• Don’t advertise that you’re selling a property
• Don’t walk away from sellers.

The last one is a big one. If you break your word and break the contract with a seller, they may pursue legal recourse. And if you’re in a state that doesn’t like wholesalers, they make take some serious action against you.

So how do you keep yourself safe from “walking away”?

Here are our suggestions:

How to wholesale real estate contracts and always CLOSE the deal

Reverse wholesaling 

This is a strategy in real estate where you find a buyer FIRST before finding a deal.

Here are two videos from two wholesaling masters, that explain it:

If you build a solid relationship with a real cash buyer who’s been in the business long enough, he can actually TELL you what to put the house under contract for and what he’ll buy the contract for — all BEFORE you negotiate with the homeowner. This puts you in a great position of confidence, to know that the price you’re offering to the homeowner, will be bought

And here’s how another investor got started in REI by starting with “reverse wholesaling”:

Estimating costs and prices accurately

The biggest reason a wholesaler walks away from a deal is that they can’t find a cash buyer that will purchase their contract. And THE reason they won’t purchase that deal is that it’s not a good deal, and the price is too high.

If you’re not accurately estimating rehab costs and comping houses correctly, there’s a good chance you’ll be putting houses under contract for too high of a price; a price no one wants.

If this happens, you have two choices:

• Re-negotiate with the seller — Looks bad, but not as bad as the next one.
• Walk away — this happens all too often in real estate and gives wholesalers a bad name.

NOTE: if you’re re-negotiating because later, you find that the seller didn’t reveal that there are hidden roof damages that will cost you $20k… that’s different. It’s fair, legal, and ethical to ask to re-negotiate because you weren’t aware or told of certain damages/repairs/issues. However, some investors take this to the extreme and make up some excuse every time; when it would be far better for them to just learn how to comp and analyze deals better.

Here’s a video that shows you how to estimate repairs one of the biggest downfalls for new investors:

Here’s another video on comping houses so you get your ARV right:

After you’ve nailed the analysis part, presented your offer to your sellers, and asked for the close… the next part of “selling” your contract to collect an assignment fee

Building a buyers list.

Part of the “job” of a wholesaler is to grow and nurture their own list of cash buyers. That way, when they have a deal, they can blast an email (or call them directly if it’s a small list), and pitch the deal. Let’s talk about finding cash buyers for your wholesale deals…

There are a number of ways to grow a list:

• ) Go to REIA meetings
• ) Craigslist ads about your deals
• See this video on that:

• ) Go to Bigger Pockets

Marketing for wholesalers

I may have jumped the gun with all those contract jargon, and not first talk about one of the most important roles of a wholesaler:

Without good marketing strategies, you can’t ever find motivated sellers to get your contract in front. So let’s finish off this article with some proven real estate marketing tactics :

• Real estate direct mail (High front-end cost. Very targeted. Very scalable— the bread and butter of many investors and our speciality at Ballpoint Marketing. It has a high front end cost, but as far as “cost per acquisition” it’s cheaper than cold calling, TV, and radio (at least our mail is cheaper 😉
• Pulling good data — Regardless if you’re cold calling, door knocking, or mailing, it pays to have good data. It can mean a skunked mailing or a great success. It’s best to learn about great mailing lists for real estate investors that are being used today. For example: Niche lists (senior w/ equity, bankruptcy, Expired MLS, etc), “stacked lists”, and absentee lists are always used because they work well.
• Cold calling (high effort, “free” if DIY, high front end cost if you scale, targeted — lots of wholesalers start off “smiling and dialing”. Cold calling is not fun for most. But if you do it yourself, it’s essentially free — but takes hours of your day if you want to do it right.
• Social media marketing tactics (“free”, not as effective, not targeted — Not many investors use social media, however, if you have a knack for it, it can be a good way to get (slow) steady flow of organic traffic once you get traction
• Door knocking (VERY targeted, very effective, not scalable — This is the best marketing tactic to get face-to-face with sellers. However, it takes lots of time. If you have no money but lots of time, door knock on potential sellers for hours a day (yes hours).

With the right contract and stipulation, the right ethics in wholesaling, and the right pricing strategy you can wholesale effectively while avoiding legal issues (just make sure you double-check with your attorney).

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• Real Estate Wholesaling and Assignment Contracts

Real Estate Wholesaling and Assignment Contracts: Unpacking the Legal Dimensions

Author: Real Estate Holding Company

Wholesaling and assignment contracts have grown increasingly popular as real estate investing strategies. While they offer intriguing profit margins and comparatively lower risks, their legal complexities can be daunting. In this context, the layperson investor often walks a fine line between a profitable deal and a binding contractual mess.

Wholesaling as a Versatile Investment Strategy

Wholesaling has earned its reputation as a versatile real estate investment strategy for several reasons. It allows you to operate with a lower upfront capital requirement than many other forms of real estate investment. Since the wholesaler typically never takes possession of the property, holding costs like taxes, utilities, and maintenance are generally not a concern.

It's also a quicker way to turn a profit. Traditional real estate investments can take months or even years to yield a return. In wholesaling, however, the timeline from acquisition to sale is generally much shorter. But it's precisely this expedited timeline that makes understanding assignment contracts so crucial. A poorly structured assignment contract could not only jeopardize a deal but also potentially subject you to legal repercussions.

The Indispensable Role of Assignment Contracts

Assignment contracts are the linchpin that holds the wholesaling strategy together. These are the legal documents that allow the wholesaler to transfer their purchase rights to a third-party buyer. In effect, they serve as a roadmap that details how the transaction will proceed and under what conditions. Here, every clause matters—from the descriptions of the property to the allocation of costs and the stipulations that would permit either party to back out of the deal.

Given their importance, it's advisable not to use a one-size-fits-all template for assignment contracts. Tailor them to fit the unique circumstances and stipulations of each deal. Consulting with a real estate attorney to draft or at least review your assignment contract could save you from headaches down the line. It's better to invest in a well-drafted contract now than to pay for legal disputes later.

Clauses that Matter: Price, Timeline, and Contingencies

Key clauses in an assignment contract often include the assignment fee, the timeline for the completion of the deal, and any contingencies that must be met for the contract to be fulfilled. The assignment fee is what the third-party buyer pays the wholesaler for the right to purchase the property. This fee is where the wholesaler makes their profit and is usually a topic of keen negotiation.

The timeline is also critical. Given that the wholesaler is not planning to purchase the property, time is of the essence. If the third-party buyer doesn’t complete the purchase within the stipulated time, the wholesaler could risk losing their earnest money deposit or even facing legal claims from the original seller.

Contingencies are another essential feature of assignment contracts. These could range from standard inspection contingencies to more specific conditions like the availability of financing for the third-party buyer. These need to be clearly defined and mutually agreed upon.

The Core Elements of Wholesaling in Real Estate

At its simplest, wholesaling in real estate involves purchasing properties below market value and reselling them at a profit. However, the legal process is more involved. Typically, an investor (the "wholesaler") signs a purchase agreement with the property owner, giving them the right but not the obligation to buy the property. Then, the wholesaler sells or "assigns" this purchase right to a third party.

The assignment of a contract, which transfers the original agreement's responsibilities and benefits to another party, is where things start to get complex. Although a seemingly straightforward process, the practice is governed by a set of detailed laws that can differ from state to state.

Legislation that Sets the Ground Rules

The Uniform Commercial Code (UCC), particularly Article 2, is a principal set of laws that generally govern these transactions in the United States. Yet, real estate contracts often also fall under state-specific legislation that may augment or contradict the UCC. For instance, some states require a wholesaler to be a licensed real estate agent if they sell real property interests. Failure to comply with such rules could lead to severe penalties.

Disclosure Obligations in Assignment Contracts

A key consideration in real estate assignment contracts is the requirement for clear and comprehensive disclosure. Without sufficient disclosure to all involved parties—the initial property seller and the third-party buyer—legal disputes can arise. These might stem from accusations of misrepresentation or even fraud. Therefore, it's advisable to consult an attorney specializing in real estate law to craft a foolproof contract.

When Due Diligence Pays Off

Before diving into a wholesaling deal, engaging in rigorous due diligence may be beneficial. This usually entails an analysis of the property in question, its market conditions, and reviewing all associated legal documentation. A detailed inspection report, comparable market analysis, and a legal review serve as powerful tools to gauge the viability of a deal.

Moreover, as part of due diligence, make sure to check the title for any liens or other encumbrances that may affect the property's value or marketability. This may require professional title services and should not be overlooked.

Financing and Capital: Setting Up for Success

While wholesaling generally requires less capital than other forms of real estate investing, it's not devoid of financial considerations. Even though a wholesaler typically doesn't purchase the property outright, earnest money deposits are common. These deposits are often non-refundable and serve as a gesture of good faith. How much you'll need to put down as earnest money is generally up for negotiation but failing to follow through with the contract could mean losing that money.

Leveraging Wholesaling as a Real Estate Investment Strategy

For those who are considering wholesaling as a primary or secondary strategy in their real estate investing portfolio, caution and educated action are your allies. Although assignment contracts offer a framework for successfully completing a wholesale deal, they are not a shield against legal obligations and compliance with local, state, and federal laws. Ignorance of the law is rarely if ever, considered an acceptable defense. Keep an eye on local and state legislation that may affect your transactions, and stay abreast of federal guidelines. Connect with professionals who can offer valuable insights—be it tax advisors, real estate attorneys, or seasoned investors.

In this business, the margin between success and failure often comes down to understanding the legal aspects. Wholesaling and assignment contracts may appear to be simple routes to profit, yet they are wrapped in layers of legalities that warrant close scrutiny. Proceed with caution, yet proceed—you might find that the investment yields more than monetary rewards.

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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.

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