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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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Real Estate Assignment Contract: What Investors Need to Know

In this article

The real estate world is filled with jargon. If you’re new to the field – and especially if you’re interested in wholesaling – here’s a term you need to know: assignment of contract. Short and simple, you:

• Find a property significantly below market value
• Look for another buyer—normally a real estate investor—willing to pay a higher price
• Assign the contract to the new buyer, who then purchases the property.

What’s the point of this practice? During a prime selling season, investors are super busy trying to lock down as many properties as possible. They’re looking to get their hands on almost anything that will generate a profit. Hunting for cheap houses occupies a ton of time – so instead, they turn to wholesalers. These investors focus on finding good deals, and leave the flipping, renting, and other elements to other pros. During a hot market, we recommend riding the storm and assigning as many r

The real estate world is filled with jargon. If you’re new to the field – and especially if you’re interested in wholesaling – here’s a term you need to know: assignment of contract. What exactly is it, how and when do you put it into practice, and what are the benefits? Let’s break down this important real estate term into its constituent parts. 

What Is A Real Estate Assignment Contract?

Short and simple a real estate assignment contract is where you:

• Look for another buyer – normally a real estate investor – willing to pay a higher price

What’s the point of this practice? During a prime selling season, investors are super busy trying to lock down as many properties as possible. They’re looking to get their hands on almost anything that will generate a profit. Hunting for cheap houses occupies a ton of time – so instead, they turn to wholesalers. These investors focus on finding good deals and leave the flipping, renting, and other elements to other pros. During a hot market, we recommend riding the storm and assigning as many real estate deals as possible.

Read more: The Ultimate Beginner’s Guide to Real Estate Wholesaling

Is An Assignment Contract in Real Estate Legal?

Yes – assuming it’s allowed in the terms of your agreement with the seller.

In the past, investors would simply put “John Doe and/or assigns” as the purchaser under the contract. This worked up until 2008 when banks started objecting to this clause in contracts for real estate-owned (REO) properties. Your mileage may vary with individual homeowners. Investors have received quite a bashing, so this clause may make a seller uncomfortable.

One solution: Write up your agreement with a trust or LLC as the purchaser. By using an entity, you can assign it to another investor because the contractual rights are under the entity, not the individual.

When Will Assignment Contracts Not Be Enforced?

There are two main case scenarios when an assignment of contract will not be enforced. The first is when the real estate assignment contract is deemed to break local law. The second is when the phasing of the real estate assignment contract is incorrect, which will make it void. For these reasons, you should always seek legal advice before drawing up an assignment of contract. You’ll need to be familiar with any state and/or local by-laws that may make an assignment of contract unenforceable. You also need to make sure that the correct legal language is used. 

Also, bear in mind that real estate assignment contracts cannot be done on all transactions. HUD homes, REOs, and listed properties have many barriers to this type of transaction. With many REO properties, the lender will ensure there is a seasoning period – normally 90 days – before you can resell the property. 

Some real estate purchase contracts have a clause in them that explicitly does not allow assignment, so watch out for those.

How Does Assignment of Contract Work?

Let’s imagine this situation: you have the time to research and find promising real estate investment properties . You don’t have any intention (or desire) to buy these properties as long-term investments. You can still make money, however, by purchasing the contracts to buy these promising properties and then selling them to buyers who will pay the price stated in the contract (or higher). 

That’s it: you’ve become an assignor. This is a common practice in real estate wholesaling, which is different from your typical long-term real estate investing. You won’t be dealing with the properties yourself: you actually won’t even be buying them at any point. You’ll just be buying the right to buy them and then collecting an assignment fee for finding the buyers to fulfill those contracts. 

What Is An Assignment Fee In Real Estate?

The assignment fee is the fee an assignor gets for finding a buyer for a property. An assignment fee is also known as a wholesale fee.

Assignment Contract Vs Double Close

In an assignment of contract, the assignor never actually buys the property but merely sells the contract, or the right to buy the property to the end buyer. In a double-close scenario, the assignor buys the property and then immediately sells it to the end buyer. 

Flipping Real Estate Contracts

Flipping real estate contracts is just another term for contract assignment. Yes, they are the same. If you are interested in wholesaling, then it’s useful to know that these two terms are used interchangeably.   

Why Is An Assignment Contract in Real Estate Important?

Assigning contracts can be a great strategy for investors who want to save time – and, potentially, make good profits faster than by using other investing methods. Unlike a house flipper, a contract flipper doesn’t take years to renovate and resell properties. You are trading in buying rights not properties. Contract assignment can be an important way into real estate investing for those who lack the time and capital to devote themselves to traditional real estate investing.  

The Advantages of Assignment Contracts in Real Estate

The relatively low-stakes nature of contract assignment makes it particularly attractive to beginner investors. If you get good at finding buyers, you can turn a good profit, too, with $5,000 per assignment contract considered standard.  

Wholesaling can also benefit both real estate buyers and sellers as it tends to reduce the time to closing and closing costs. Some buyers may prefer an assignment of contract to going down the traditional real estate agent route as they’ll pay less in assignment fees than in agent fees.

The Disadvantages of Assignment Contracts in Real Estate?

The biggest disadvantage a contract flipper will face is overcoming people’s lack of knowledge about the contract assignment process. Some sellers tend to reject assignment contracts outright, and many buyers can have doubts, too. It is up to you, the assignor, to convince both parties that this process is beneficial to all parties. 

• Also, as an assignor, you will always face the risk of a buyer pulling out last minute, whether because they decide they don’t like the idea of paying the assignment fee or they don’t have the funds. Coupled with the fact that assignment contracts have limited time frames, you may find yourself in a situation where the deal falls through. You will need to get good at vetting potential buyers.   

How To Make an Assignment Contract in a Real Estate Transaction

1. find the right property – and a motivated seller.

First, let’s understand what a motivated seller is. This is an individual who needs to sell a property quickly. There is usually some sort of distress going on in their lives, like a job transfer, or perhaps they’re burdened with inherited property. Keep in mind that a huge gap exists between wanting to sell and needing to sell. Knowing which category your seller falls into – helps you know how to handle the situation.

• Need to sell: “I have to sell this house now because I’m moving to Maryland to take care of my ailing mother, and I have no other family members in the area.”
• Want to sell: “I’m curious to see what my house is worth because I may be selling next year.”

There is a definitive reason behind the need-to-sell scenario. In the second one, there is mere curiosity.

There are numerous ways to find motivated sellers – and by extension, the right properties to assign –  such as driving for dollars, newspaper ads, internet marketing, and direct mail marketing. If you begin to research real estate marketing, you will find many options – but make sure you use a combination of these strategies.

2. Acquire A Real Estate Contract Template 

There are many assignment contract templates on the internet; however – at the very least – make sure an attorney has read and approved the document. There are two reasons this is so critical.

• Comfort knowing your contract is legally sound
• The ability to use that attorney as counsel in the event you find yourself in litigation.

There is critical verbiage that needs to be added to your assignment contract: “and/or assigns.” These three words authorize you to reassign the property to another interested buyer who is interested in the property. (Be sure to read your purchase agreement with the seller extremely carefully.) When you receive the signed contract, you now have an equitable interest in the property and have some legal standing in what happens.

If reassigning is indeed allowed, include a provision in your contract that clearly explains that you, as the buyer, are a real estate investor and that you intend to assign the contract to a new buyer. Have the seller initial the provision. This reduces the likelihood of a seller objecting to the new purchaser and attempting to back out of the agreement. Assure them that they will still receive the agreed-upon purchase amount.

Related: Virtual Wholesaling: How to Wholesale Properties in Any Market From Afar

3. Submit the contract to title

This process may differ in each state, but there is normally either a title company or a closing attorney that will conduct a title search. The title search will check the historical records of the property to make sure there are no liens on the property . It is important not to sell a property with a defective title. The title company or the closing attorney is an independent third party hired to make sure the deal is fair as agreed upon in the contract.

4. Assign the contract to the buyer

Yep: more marketing. Working to find your end-buyer, or assignee, can be daunting, but once you have a solid buyer, you can begin the process of closing the transaction.

When you find your buyer, ask for a nonrefundable earnest money deposit. Make sure your agreement contains language that specifically deals with earnest money – e.g., “The assignee will reimburse the assignor for the money paid upfront.” You do not want the assignee to breach the agreement, which would result in you losing your earnest money.

When the buyer deposits the earnest money, you then know they have a genuine interest in the property and are willing to move forward. This fee is normally held by the title company or the closing attorney.

5. Get the fee

You get paid when the end buyer wires the funds for the deal. This money will cover what you stated you were willing to buy the property for from the seller, as well as your fee for facilitating the transaction. 

As an example, if you told the seller you would buy the house for $45,000 and you then sold your interest in the property to the buyer for $50,000, then your assignment fee is $5,000.

Note: Never refer to the assignment fee as a finder’s fee. These are two very different things. 

Related: The Ultimate Guide to Using Direct Mail Marketing to Grow Your Real Estate Business

How Do Real Estate Wholesalers Get Paid? 

Real estate wholesalers, or assignors, get paid after the successful closure of an assignment contract. That is, you as a wholesaler get paid when the buyer closes on the deal and buys the property you assigned to them. 

It is standard practice that assignments are done only for profits of $5,000 or less. But if you are comfortable with the seller and the buyer, it’s possible to assign a contract for a much higher fee. Be careful here: whatever assignment fee you and the buyer agree to needs to be clearly stated in the contract. Otherwise, you are not guaranteed to get paid. 

Often, wholesalers can get paid a deposit ahead of the contract closing. This is good practice not only because you’ll get some of the money sooner but also because it helps weed out buyers who may choose to pull out later.

In the event you are not comfortable with all parties in the transaction, a double (or simultaneous) close keeps both legs of the transaction anonymous. Be aware: Not all title companies will agree to conduct a double close, so this needs to be discussed in advance.

But as you can see, there are some clear benefits to contract assignment for big paydays.

Investors: Have you ever assigned a contract? Any questions about this process?

Let me know your thoughts with a comment!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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Assignment (Real Estate) Definition

Investing Strategy , Jargon, Legal, Terminology, Title

Table of Contents

• What Is an Assignment?
• What is an Assignment in Real Estate?
• What Does it Mean to Assign a Contract in Real Estate?
• How Does a Contract Assignment Work?
• Pros and Cons of Assigning Contracts

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.

In real estate terms, an assignment of contract is a way to profit from a real estate transaction without ever becoming the owner of the property.

The assignment method is a standard tool in a real estate wholesaler’s kit and lowers the barrier to entry for a real estate investor because it does not require the wholesaler to use much (or any) of their own money to profit from a deal.

Contract assignment is a common wholesaling strategy where the seller and the wholesaler (i.e. – middleman) sign an agreement giving the wholesaler the sole right to buy a property at a specified price, within a certain period of time.

The wholesaler then finds another buyer and assigns the contract to him or her. The wholesaler isn’t selling the property to the end buyer because the wholesaler never takes title to the property during the process. The wholesaler is simply selling the contract , which gives the end buyer the right to buy the property in accordance with the original purchase agreement.

In doing this, the wholesaler can earn an assignment fee for putting the deal together.

Some states require a real estate wholesaler to be a licensed real estate agent, and the assignment strategy can’t be used for HUD homes and REOs.

The process for assigning a contract follows some common steps.

Find the Right Property

This is where the heavy lifting happens—investors use many different marketing tactics to find leads and identify properties that work with their investing strategy. Typically, for wholesaling to work, a wholesaler needs a motivated seller who wants to unload the property as soon as possible. That sense of urgency works to the wholesaler’s advantage in negotiating a price that will be attractive to buyers and cover their assignment fee.

RELATED: What is “Driving for Dollars” and How Does It Work?

Get a Purchase Agreement Signed

Once a motivated seller has agreed to sell their property at a discounted price, they will sign a purchase agreement with the wholesaler. The purchase agreement needs to contain language that clearly allows the buyer to assign their rights in the agreement to a third party . Most standard purchase agreements do not include this language by default, so if the buyer plans to sell/assign the contract, they need to make sure this language is included (note: talk with an attorney to make sure the language included and explained correctly).

RELATED: Wholesaling Made Simple! A Comprehensive Guide to Assigning Contracts

Communicate, Communicate, Communicate

From the very beginning, it’s important for a wholesaler to communicate with their seller about their intent to assign the contract. Many sellers are not familiar with the assignment process, so if the role of the buyer is going to change along the way, the seller needs to be aware of this at or before the time they sign the original purchase agreement .

Find an End Buyer

This is the other half of a wholesaler’s job – marketing to find buyers. Once a buyer has been found, the wholesaler can assign the contract to the new party and work with both the original seller and the end buyer to schedule a closing date.

The assignment is done through a simple “Assignment Agreement” and it allows the new buyer to step into the wholesaler’s shoes as the buyer in the original contract.

While this document technically replaces the wholesaler with the new end buyer, the wholesaler doesn’t get paid until the deal is closed.

Most assignment contracts include language for a nonrefundable deposit from the end buyer, which protects the wholesaler in case the buyer backs out. Although it’s possible to download assignment contract templates online, this is one situation where most experts recommend having your contracts reviewed by an attorney. The assignment wording has to be precise and in accordance with your state laws; having an attorney review your contract protects you against any issues down the road.

Close the Transaction, Assign the Contract & Collect the Assignment Fee

Wholesalers get paid once the end buyer closes the deal. The assignment fee can be a flat amount, a percentage of the purchase price or the difference between the original purchase price and the end buyer’s purchase price.

With an assignment transaction, the end buyer will see precisely how much the wholesaler is getting paid because the end buyer has to sign the closing statement (which states the purchase price from the seller) and the Assignment Agreement (which clearly states the assignment fee being paid to the wholesaler).

If the assignment fee is a reasonable amount relative to the purchase price, most serious investors won’t have any qualms about paying this. If, however, the assignment fee is very large relative to the original purchase price (e.g. – if the original seller agreed to sell their property for $10,000, the wholesaler is collecting an assignment fee of $20,000, and the property is worth $50,000), some end buyers may take issue with this.

In cases where the wholesaler has a substantially higher profit margin, a double closing or a traditional closing is a safer way to close a wholesale transaction. When there are two separate closings taking place, the seller and buyer are not able to see the numbers and overall profit margin being made by the wholesaler between the two transactions.

According to UpCounsel, most contract assignments are done for about $5,000, although depending on the property and the market, it could be higher or lower.

Assigning contracts is a way to lower the barrier to entry for many new real estate investors; because they don’t need to put up their own money to buy a property or assume any risk in financing a deal.

The wholesaler isn’t part of the title chain, which streamlines the process and avoids the hassle of closing two times. Compared to the double-close strategy, assignment contracts require less paperwork and are usually less costly (because there is only one closing occurring, rather than two separate transactions).

On the downside, the wholesaler has to sell the property as-is, because they don’t own it at any point and they cannot make repairs or renovations to make the property look more attractive to a potential buyer. Financing may be much more difficult for the end buyer because many mortgage lenders won’t work with assigned contracts. Purchase Agreements also have expiration dates, which means the wholesaler has a limited window of time to find an end buyer and get the deal done.

Being successful with assignment contracts usually comes down to excellent marketing, networking, and communication between all parties involved. It’s all about developing strategies to find the right properties and having a solid network of investors you can assign them to quickly.

It’s also critical to be aware of any applicable laws in the jurisdiction where the wholesaler is working and holding any licenses required for these kinds of real estate transactions.

Related terms

Double closing, wholesaling (real estate wholesaling), transactional funding.

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• Purchase Agreements »

Real Estate Assignment Contract

A real estate assignment contract  allows a real estate buyer to transfer their purchasing rights and responsibilities to someone else before the closing date. Typically, the new buyer pays a fee to the original buyer for the assignment. The form specifies the amount and due date of the assignment fee (if applicable), as well as all other details of the transaction, including the new buyer’s  liabilities , payment requirements , and rights under the purchase agreement . 

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REAL ESTATE ASSIGNMENT CONTRACT

1. THE PARTIES . This Real Estate Assignment Contract (“Assignment”) is entered into on [MM/DD/YYYY] (“Effective Date”), by and between:

Assignor : [ASSIGNOR’S NAME] (“Assignor”) with a mailing address of [ADDRESS] , and

Assignee : [ASSIGNEE’S NAME] (“Assignee”) with a mailing address of [ADDRESS] .

The Assignor and Assignee are each referred to herein as a “Party” and, collectively, as the “Parties.”

2. ORIGINAL AGREEMENT . The Assignor is the purchasing party to that certain purchase and sale agreement, dated [MM/DD/YYYY] , for the real property located at [PROPERTY ADDRESS] , and as more particularly described therein (“Original Agreement”).

3. ASSIGNMENT . The Assignor hereby transfers, assigns, and sets over to the Assignee all contractual rights, title, interests, and obligations in and to the Original Agreement on the Effective Date, pursuant to the terms of the Original Agreement

4. CONSIDERATION . For the sum of any dollar amount stipulated herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree to the following: [DESCRIBE PAYMENT OR OTHER CONSIDERATION] .

5. ASSUMPTION . By executing this Assignment, the Assignee accepts and assumes the transfer and ownership of all liabilities, obligations, and claims that currently exist or may in the future regarding the Assignment. As of the Effective Date, the Assignee agrees to comply with and assume all terms, payments, conditions, covenants, and any other duties and obligations as part of this Assignment and those set forth in the Original Agreement.

6. REPRESENTATIONS . The Parties acknowledge that they have a full understanding of the terms of this Assignment. The Assignor further warrants and represents that they own the rights transferred in this Assignment and has prior consent to execute this Assignment under the terms of the Original Agreement or otherwise through the written consent of the selling party under the Original Agreement; in the latter case, the written and signed consent of said party shall be attached to this Assignment. The Parties agree to provide and complete any obligations under this Assignment and the Original Agreement.

Assignor Signature : ___________________ Date:  [MM/DD/YYYY] Print Name: [ASSIGNOR’S NAME]

Assignee Signature : ___________________ Date:  [MM/DD/YYYY] Print Name:  [ASSIGNEE’S NAME]

Frequently Asked Questions

Is it legal to assign a purchase agreement, is there a time limit for assignment.

Whether or not a buyer can assign their purchasing rights depends on the terms and conditions of the original purchase agreement. If the agreement allows assignment , the buyer may need to notify the seller and get their written permission before drafting the assignment contract.

• Note : Some real estate contracts, such as those involving foreclosed property and homes owned by the Department of Housing and Urban Development (HUD), contain anti-assignment clauses.

Unless the parties agree to a different arrangement, the original buyer can assign their rights and obligations to someone else at any point before the closing date.

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Real Estate Assignment Templates, Designs & Documents

Efficiently Manage the Transfer of Houses, Contracts, and Agreements with Template.net’s Library of Real Estate Assignment Templates. Every Ready-Made Sample Comes with Editable Design Elements and Content Suitable for the Assignee and Assignor. Create Hassle-Free Processes and Systems for Purchases, Investing, and Property Management. Download a Template Today for Free!

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Real Estate Assignment Contract Template

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Having a real estate assignment contract or agreement will be your defense from conflict with the other party. It also helps both of you focus on your duties and obligations without going less or more. So, if you want to save time, instead of starting from scratch, download one of our ready-made Real Estate Assignment Templates! These templates are professionally written and have high-quality content that is useful to you. They also make your work quicker. These are also printable in A4 & US sizes. So, what are you waiting for? Download a template now!

What Is a Real Estate Assignment Document?

A real estate assignment document can be a real estate purchase agreement, contract, sublease, sale agreement, or a mortgage document.  This assignment document gives the buyer's responsibilities to the assignee, which he or she should undertake. This ends when the original homeowner or will take over the property.

How to Make a Real Estate Assignment Document

Statista's report about real estate reveals that last 2019, the estimation of the real estate industry's revenue was US$493.3 billion. This industry provides opportunities for people to sell and buy properties that can lead to more future revenues. On the same note, if you're into real estate wholesaling, it's essential to establish legal terms with the other investor or the assignee, or vice versa. So, to assist you in creating a real estate assignment document , you may follow the tips below.

1. Present Recitals

Begin your wholesale document with recitals. This section is the part where you provide a summary of what the real estate contract is about. The content of the recitals should include the names of the assignor and the assignee. 

2. Carefully Layout the Terms 

It's crucial to avoid any clash between you and the other party. To keep at bay from this mishap, you need to write the terms and agreements carefully. Provide specific terms and never go beyond your scope. Don't include vague terms that have different interpretations for this can lead to misunderstanding.

3. Use Formal Language

In writing your real estate agreement or contract, ensure that you use the formal language and tone. Every legal document should sound professional—shun informal and casual language.

4. Ask Your Attorney

If you want to keep every content right and make sure that it meets legal expectations, you can call your attorney. You can ask him or her to read your simple agreement and ask if you still need to improve it. 

5. Sign the Document

Last but not least, you and your assignee should sign the real estate business contract . Your signatures will represent that both of you have agreed to every term in the assignment document. 

Frequently Asked Question

How does assignment work in real estate.

Assignment in real estate provides the investor or assignee the right to buy the property without consent from the assignor. But this should happen when both the assignor and assignee signed the contract to make it legal. 

What does it mean to assign a real estate contract?

It means that the wholesaler can procure or receive money through selling and buying properties. The wholesaler will sell the property at a higher price.

Is double closing illegal?

No, it's not illegal at all.

What is an assignment fee?

This is the amount the wholesaler will receive after selling the property to an end buyer. This is the money that the buyer will give to the wholesaler after the wholesaler sold the rights or authority to the buyer to own the property.

Is real estate wholesaling worth it?

Yes, it's worth it. All you need is to look for a property that has a low market value that the owner wants or needs to sell. Meanwhile, you can find buyers who are willing to buy it for its higher amount which is a good deal for you.

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China Evergrande crashes 87% to become a penny stock as the former $50 billion real estate giant reveals more steep losses

• Shares of China Evergrande crashed 87% as trading resumed after a 17-month halt.
• The once-$50 billion property developer faces a massive debt load and a troubled balance sheet.
• On Monday it became a penny stock after reporting a loss of 33 billion yuan in the six months ending June 30.

Shares of China Evergrande Group tumbled as much as 87%, diving into penny stock territory after trading in the shares resumed on Monday for the first time in 17 months. 

By midday in Hong Kong the stock hovered around 0.35 Hong Kong dollars, with the real estate developer's market value falling to about $586 million. Per Bloomberg , Evergrande was worth more than $50 billion in 2017.

The stock was last available for trading on March 18, 2022, and since its peak, it has lost 99% of its market cap. Trading resumed after the company said internal control systems met the Hong Kong exchange's listing rules. 

The sell-off followed a company filing on Sunday that showed a loss of 33 billion yuan for the six months up to June 30, according to the report, piling on to the 582 billion yuan losses from the last two years. 

In total, Evergrande's net losses for the first half of 2023 hit 39.3 billion yuan.

China's economic troubles continue to mount , and much of the concern stems from the property sector, where developers like Evergrande, Country Garden, and others face risks of mounting debt and bankruptcy.

Some commentators have cautioned that a cascading "Lehman moment" looms , though economists told Insider the situation in China isn't entirely comparable to that of the US in 2008, given the way the political economy is set up. 

Still, that doesn't mean there aren't risks of catastrophe. 

"If we think about the 2008 collapse in the US property market, driven by excessive wealth plowed into real estate, versus what's happening in China with much higher amounts of wealth in that sector, the scale and severity of the crisis is potentially much much worse than what happened 15 years ago in the US," William Hurst, deputy director for the Centre for Geopolitics at the University of Cambridge, told Insider in a recent interview.

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Former Thai leader Thaksin goes to jail as political party linked to him wins vote to take power

Ex-Prime Minister Thaksin Shinawatra has landed in Bangkok after years of self-imposed exile. (Aug 22)

Divisive ex-Prime Minister Thaksin Shinawatra has returned to Thailand after years of self-imposed exile to face criminal charges on the same day that a party affiliated with him plans to start forming a new government. (Aug. 22)

Thailand’s former Prime Minister Thaksin Shinawatra, second right, is greeted by supporters on his arrival at Don Muang airport in Bangkok, Thailand, Tuesday, Aug. 22, 2023. (AP Photo/Wason Wanichakorn)

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Pheu Thai’s prime ministerial candidate Srettha Thavisin who is the sole candidate nominated for a parliamentary vote, speaks to media at the party headquarters in Bangkok, Thailand Tuesday, Aug. 22, 2023. (AP Photo/Wason Wanichakorn)

Leader of Pheu Thai party Chonlanan Srikaew, left, and his party lawmakers make victory signs at Parliament in Bangkok, Thailand, Tuesday, Aug. 22, 2023, after securing enough votes in parliament for their nominee Srettha Thavisin to become Thailand’s 30th prime minister. (AP Photo/Sakchai Lalit)

Pheu Thai supporters react during a parliamentary vote on Srettha Thavisin’s prime ministerial candidacy, at the party headquarters in Bangkok, Thailand, Tuesday, Aug. 22, 2023. (AP Photo/Wason Wanichakorn)

Pheu Thai supporters react, after Thailand’s parliament voted in favour of Pheu Thai candidate Srettha Thavisin’s prime ministerial candidacy, in Bangkok, Thailand, Tuesday, Aug. 22, 2023. Thavisin from the populist Pheu Thai party secured enough votes in parliament to become the country’s 30th prime minister Tuesday, hours after former Prime Minister Thaksin Shinawatra returned from years of self-imposed exile and began an eight-year prison sentence. (AP Photo/Wason Wanichakorn)

Thailand’s former Prime Minister Thaksin Shinawatra, left, with his daughter Paetongtarn Shinawatra arrives at Don Muang airport in Bangkok, Thailand, Tuesday, Aug. 22, 2023. (AP Photo/Sakchai Lalit)

Thailand’s former Prime Minister Thaksin Shinawatra greets supporters on his arrival at Don Muang airport in Bangkok, Thailand, Tuesday, Aug. 22, 2023. (AP Photo/Wason Wanichakorn)

Thailand’s former Prime Minister Thaksin Shinawatra prays in front of a portrait of King Maha Vajiralongkorn as he arrives at Don Muang airport in Bangkok, Thailand, Tuesday, Aug. 22, 2023. (AP Photo/Wason Wanichakorn)

Thailand’s former Prime Minister Thaksin Shinawatra, foreground, with, from left, his son Phantongtae, his daughters Pinthongta and Paetongtarn, arrives at Don Muang airport in Bangkok, Thailand, Tuesday, Aug. 22, 2023. (AP Photo/Sakchai Lalit)

Thailand’s former Prime Minister Thaksin Shinawatra arrives at Don Muang airport in Bangkok, Thailand, Tuesday, Aug. 22, 2023. (AP Photo/Sakchai Lalit)

Thailand’s former Prime Minister Thaksin Shinawatra, second left, prays in front of a portrait of King Maha Vajiralongkorn as he arrives at Don Muang airport in Bangkok, Thailand, Tuesday, Aug. 22, 2023. (AP Photo/Sakchai Lalit)

Pheu Thai political party’s Srettha Thavisin reacts as he attends a press conference after Thailand’s parliament voted in favor of his prime ministerial candidacy, at the party headquarters in Bangkok, Thailand, Tuesday, August 22, 2023. (AP Photo/Wason Wanichakorn)

BANGKOK (AP) — A divisive former prime minister of Thailand made a dramatic return home Tuesday to face an eight-year prison term, just as a party linked to him won a vote in Parliament to lead the government — the latest turn in the country’s tumultuous politics.

The move by Thaksin Shinawatra indicates he is hoping that a friendly government will be able to cut short his sentence, although he has said his decision to come back had nothing to do with the Pheu Thai party’s bid for power.

Thaksin’s return after 15 years in self-imposed exile was an emotional moment for supporters of the 74-year-old billionaire, who won the loyalty of millions with populist policies that directed attention and funding to the country’s largely rural, impoverished north before being removed in a coup. His reemergence recalls the years of pitched battles — both figurative and sometimes literal — between his “red shirt” supporters and “yellow shirt” opponents who champion conservative, royalist values.

Hundreds of people gathered outside of the airport early in the morning, donning red clothes and holding signs with welcoming messages. They sang and chanted in anticipation, then raised a raucous cheer when Thaksin appeared at the terminal’s door.

Hours later, Srettha Thavisin of the Pheu Thai party secured enough votes to become prime minister, ending months of suspense , legal wrangling and horse trading that followed May’s elections. The progressive Move Forward Party won the most votes in those elections but was blocked from taking power by conservative senators.

The Pheu Thai party has since entered a coalition with military parties linked to the coup that removed it from power in 2014, and some accuse the party of turning its back on the election results and the democracy movement that began after the military removed Thaksin from power in an earlier coup, in 2006. Thaksin is widely seen as the party’s de facto leader.

“From the past, the party was seen by the people as the most diligent in standing up for democracy,” said Thanet Aphornsuvan, a retired professor of history. “Now, that sentiment is going to disappear.”

Thaksin and parties he backed have tussled with the military — and the conservative elite it represents — for years. His second term as prime minister was cut short by the 2006 coup, sparking years of deep political divisions.

He was hit with corruption charges, which he dismissed as politically motivated, and was tried and convicted in absentia after he fled into exile.

A Pheu Thai government led by Thaksin’s sister, Yingluck Shinawatra, eventually came to power but was ousted in 2014 by then-army chief Prayuth Chan-ocha, who is now the outgoing prime minister.

At the airport, Thaksin prostrated himself before a portrait of Thailand’s king and queen and left a flower wreath — an important gesture of deference for a man who often had been accused of not sufficiently respecting the monarchy, which is widely revered in Thailand. He spent a moment greeting supporters and the media waiting in front of the terminal, but did not speak.

“I feel fulfilled that I traveled here today to welcome him. If possible I want to hug him. Everyone has tears, tears coming out of their eyes,” said Makawan Payakkae, a 43-year-old from Maha Sarakham province in Thailand’s northeast.

Pheu Thai will begin forming Thailand’s next government and Srettha will lead a coalition of 11 parties that includes two pro-military parties affiliated with Prayuth.

Pheu Thai said the coalition agreed to back the party’s platform of boosting the economy, increasing the minimum wage and ending mandatory conscription. They will also support keeping medical marijuana legal and work to amend the constitution to help the country “become more democratic.”

“I will try my best to perform my duty without being worn down, in order to lift up the quality of life of all Thai people,” Srettha said.

Move Forward was excluded from the coalition. Pheu Thai leaders said Move Forward’s vow to reform a law that forbids insulting the royal family had made it impossible to rally enough support from other parties and the unelected Senate, which was installed by the previous military government. Both houses of Parliament vote together for the prime minister under the military-implemented constitution.

Critics say the law, which carries a penalty of up to 15 years in prison, has been widely abused as a political weapon. The Pheu Thai-led coalition pledged not to touch the law.

Thanet, the retired professor, said the wide range of interests in the coalition would make the government an “unhappy” one, forced to accommodate allies from all ends of the political spectrum and a backlash from Pheu Thai’s own supporters.

But Thitinan Pongsudhirak, a professor of political science at Bangkok’s Chulalongkorn University, held out some hope that the government could work effectively, with Move Forward able to push some reform from its position in the opposition.

Before the parliamentary vote began, Thaksin’s convoy went from the airport to the Supreme Court, where a special body that handles criminal cases against former officeholders confirmed his eight-year sentence. He then went directly to Bangkok’s main prison.

Many observers say that Thaksin is betting he won’t stay in prison long. Less than a week before the May elections, Thaksin announced plans to return before his birthday in July, but they were repeatedly delayed after his party failed to win and faced uncertain prospects of entering a new government.

“This implies a strong connection between the election, formation of coalitions, and selection of the prime minister on one hand, and Thaksin’s personal agenda on the other,” said Napon Jatusripitak, a political science researcher and visiting fellow at Singapore’s ISEAS-Yusof Ishak Institute.

Napon said Thaksin’s decision to return suggests that “he has received assurances that he will not have to serve a prison sentence in full.”

Deputy Prime Minister Wissanu Krea-ngam of the outgoing military-linked government has said that Thaksin can request a royal pardon like any other inmate.

Correctional officers at Bangkok Remand Prison said in a news conference that following a medical check that Thaksin had been categorized as “vulnerable” due to his age and chronic conditions, including high blood pressure, and he will be held in isolation and monitored.

Find more of AP’s Asia-Pacific coverage at https://apnews.com/hub/asia-pacific