Assignment of Contract for Real Estate [template] | Awesome REI

Assignment of Contract for Real Estate [template]

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Wholesalers: Need a simple real estate assignment contract you can really use?

Awesome, got you covered. For zero dollars even.

FYI not just a generic, stock form template. This one’s got street cred—it’s the same one I’ve used (rinse & repeat) for 19+ years in my real estate wholesaling endeavors, and still use today.

Truth be told, this one of the most important, fundamental tools in your arsenal of real estate investing forms. And if you feel in any way shaky about how to use it, don’t worry, got you covered.

Oh, and Btw…

In case you don’t know already, there’s an entire “Swipe & Deploy” goodies category over here—which we’re always adding to, and currently gives you everything from a simple real estate contract to option agreements, a tasty letter of intent templateMLS keywords, a seller phone script & voicemail script— even some marketing goodies like one of our favorite motivated seller letters and seller postcards too.

Seriously, no strings attached. That’s how we do.

And hey, will even do you one better this time…

Step-by-Step Through my Wholesale Assignment of Contract

OK, let’s do this…

Video Transcription:

JP Moses: The real estate assignment contract is kind of an essential tool in any real estate wholesaler’s tool belt. You want mine? It’s the same one I’ve been using for more than 18 years as a wholesaler. Yours free. I’ll do you one better. I’ll even explain it to you line by line. Let’s talk about that.

So look, here’s the deal. Real estate wholesalers, it’s not that complicated and assignment contract is you assigning a contract to somebody else. They step into your shoes, you get paid a little, but it is an important thing for you to understand some of the nuances of. For that reason, I’m not only going to give you the same assignment contract I’ve been using for years and years and years and has made me many, many thousands of dollars, but I’m going to hand you a video I made in 2008 walking through this exact same contract. Having said that, the video you’re about to see was from 2008 so the audio quality was bad. It was a clunky old Windows laptop. I was on the back porch. So I’ll apologize for the poor audio and visual quality, there is no need for me to remake the video, because it’s the same video I would make for you today.

So if you want to download my assignment contract, go to the website you see on the screen here, just follow the link. Or if you’re watching this video on YouTube, you can look in the description at the very top of the video description, you’ll see a link directly to the blog post where you can download this assignment contract for $0.

If you aren’t even sure what an assignment contract really is, you want to understand the best practices for a wholesaler and how to use it in your real estate business… that is the next 6.5 minutes of the video you’re watching right now. If you already understand contract assignments, you don’t really need the assignments 101 conversation, skip ahead about 6.5 minutes, and you can proceed to the walkthrough line by line by line. It’s simple, but it’s important. Thanks guys. Keep it awesome. And now JP from 2008 with a clunky laptop on your back porch, I pass the baton to you…

And why don’t we just start by defining quickly what an assignment agreement is. Wikipedia says it’s the transfer of rights held by one party, the assignor to another party the assignee. Now that’s a pretty simple explanation and it wraps it all up in a nice little nutshell for you. But let me illustrate for you a boiler plate example of how this works in the real day-to-day real estate investing world.

So you’ve got Johnny Q Wholesaler, he finds a great deal. Sally P. Seller just inherited a house from her dear old recently departed grandmother. She’s so darn emotional about the whole thing. She just doesn’t want to deal with it. No how, no way. It’s just a burden to her and her family to even think about it. So she says, “Look Johnny, I know this thing needs a lot of repairs, but I think it’ll eventually be worth around $100,000, but I don’t care about that. If you can take it off my hands pretty quick here, take it as-is and put $40,000 in my pocket, it’s yours.”

So Johnny sizes it up and says, “I see about $20,000 in repairs here. And I got a pretty good idea who I can sell this thing to for a quick profit. So yeah, I can do $40,000 on this.” Sold.

Now you need to understand Johnny Wholesaler is a wholesaler, meaning he does not want to rehab this thing and he does not want to have it as a rental property. Johnny’s in for the quick nickels, not the slow dimes. So he’s going to be quick flipping this puppy probably to another investor, even more specifically, probably to a rehabber or a landlord. So when it comes down to it, Johnny just as soon not take title to this thing, if he doesn’t have to. If possible, Johnny’s gonna find a solid buyer before his closing date. Let’s give him 60 days…

So he’s got 60 days to close with Sally the Seller, and he wants to find a buyer within those 60 days. Someone who can step into his shoes and close in his place. So Johnny hits the streets, he emails his buyers list, puts out a sign or two, makes a call or two… before long, he’s got a couple of interested investors drooling over this thing, and he quickly settles on quick flipping this thing to Rhonda R. Rehabber.

Now Rhonda’s plan is to buy this little junker, rehab the heck out of it, and just turn it into a little gem, sell it to a retail buyer within 6 months or so for $100,000. So she wants to make a decent chunk of change on this thing. And she likes the rehabbing game. So when Johnny Q Wholesaler shows her the $20,000 in work that it needs and says, “Hey, it’s yours for $50,000.” She says, “sold.”

So now Johnny’s on his way to a quick $10,000 wholesale profit. So Johnny says, “Rhonda R. Rehabber, I got it in a contract for $40,000, we’re set to close in another 45 days from now. So let’s assign this contract over to you. You step into my shoes as buyer and as consideration for selling my position in this agreement to you, just pay me an assignment fee of $10,000, which is the difference, obviously.”

So they agree, they sign her up with an assignment contract, like the one I’m about to go through with you, and the deals done. Now before I go on, let me just say, I realize this is a very sanitized, clean version of how a classic wholesale deal works. And any experienced investors out there who are watching this might be inclined to accuse me of painting a really rosy picture of how the whole thing works.

The fact is, I’ve done a lot of deals, very much like that. Every deal has its own personality. It has its own unique challenges. Not every deal fits the boilerplate version of what I just described, but many of them do. And I want to keep things simple and just explain the basic mechanics for those who may not know of how this works.

So what just happened? Well, long story short, Johnny Q Wholesaler just sold his interest in a real estate deal. He never owned the property, but rather his signature was on the purchase agreement. He assigned the purchase agreement to Rhonda R. Rehabber, who stepped into his shoes, so to speak. Rhonda R. Rehabber went to closing with Sally P. Seller and paid an assignment fee to Johnny of $10,000. Johnny took his $10,000 and went happily skipping down the street.

Now as I told this story, there’s 3 questions that come to my mind that I think you may be asking yourself. So let me run through some quick answers for those before we jump into this contract.

#1: First of all, does my real estate contract have to have “and/or assigns” somewhere in it or on it in order for it to be assignable?

Contrary to popular belief, the answer is no. And if you don’t know what the heck I’m talking about there, don’t worry about it, But some people say you have to have the words “and/or assigns” on your original real estate contract in order for it to be assignable. And I said this in another video recently… the fact is, any real estate contract is by its very nature assignable, unless it specifically indicates that it’s not. So myth busted.

#2: Second question, when should I collect my assignment fee?

A lot of people will tell you, a lot of the gurus in fact, will tell you they should collect your assignment fee right when you assign that contract. But I gotta tell you, I don’t like that, and here’s why…

Imagine you’re Johnny Q Wholesaler and you’re explaining to Rhonda R. Rehabber, “You’re going to step into my shoes and close on this deal and you’re going to pay me $10,000 right now, and then you’re going to go to closing.” And then Rhonda says, “Well, what if something happens, and we don’t get to go to closing? What about the $10,000 I just paid you?”

You got one of two answers.

  1. Either you’re going to have to dig in your pockets, pony up and give it back.
  2. You’re going to have to break it to Rhonda that it wasn’t your responsibility to see the deal close. She stepped into your shoes and assumed all the risks associated with that, which is legally true.

But I’ll tell you, I just don’t think that’s good business. My preference as a wholesaler has always been, and still is to say to Rhonda Rehabber, “Look, the fact is, I want you to pay me at closing when you buy, not when you sell this thing, but when you buy, when you pay the seller the $40,000 that’s on this contract that you’re assuming, then you can pay me my $10,000 at the same time.”

What that does is it keeps me interested in making sure that that deal closes (a) because the seller still knows me as a personality… the original person who built rapport and secured this deal with her. I really don’t want to step completely out of the picture.

I just don’t feel like it’s good for the long-term relationship. So I’m going to put off collecting my money until closing, and I actually put that in my assignment agreement.

#3: Question number 3, is this document guaranteed to be the right one for me to use in my area?

No, it’s not guaranteed. As I said, my disclaimer, you need to check with your local area. You need to ask another local investor, maybe take a look at their agreement or have them look at this or just run it by your local real estate attorney friend for an opinion, to be as sure as you can be about this. You’re welcome to use my assignment contract but use it at your own risk.

Now with all that out of the way, let’s run through the actual agreement. I’ve given you free of charge today…

Here we are with my assignment of real estate purchase and sale agreement. As you can see, this is a pretty simple 1-page form. I’m going to bust through it pretty quick. You can download it from the webpage I gave you earlier, so let me just run through this. (Oh, and I should say I’m recording this on the back porch. This is part 2. And between part 1 and part 2, my daughter came home from school, so to a avoid any background noise from her, I came outside. But you might hear a dog barking in the background or something along those lines. Hopefully you won’t mind.)

So this assignment is made and as you can see, I’ve kind of got this filled out on the 27th day of August 2008, random date. Mr. Johnny Q Wholesaler, you’ll remember him from the story I just told and Miss Rhonda R. Rehabber. Whereas… now this is a little bit more legal ease, a little bit more formal sounding than some of the agreements have used before. But I think it’ll still be pretty easy to understand and I don’t know why the heck they use “whereas” all the time in these contracts, but they just do.

Whereas assignor has entered into a certain real estate purchase and sale agreement with Sally Seller—this was the original seller of the property, the person who I, as the wholesaler, had my original contract with—Sally Seller was the seller and assignor, which is me, the wholesaler as buyer, which agreement was dated on—and this is, of course, the date of that contract, not today’s date, but the date of that contract—by assignor and said seller for the purchase and sale of certain real property lying in—put your county name here and your state right here. And more particularly described in said agreement, copy of set agreement being attached hereto as Exhibit A.

So basically, your real estate contract becomes an attachment to this assignment. Exhibit A whereas assignor, that’s me the wholesaler, desires to assign, transfer and sell and convey to assignee all of my rights, title and interest in to and under said real estate purchase and sale agreement. And whereas the assignee, the investor I’m flipping this thing to, desires to receive all of my rights, title and interest in and under the real estate contract.

Now therefore for in consideration of the sum—this is going to be your consideration as the wholesaler that you’re going to receive. Basically this is your assignment fee. So in this pretend transaction, I’m receiving $10,000.

If you remember from my story, I had a contract on it for $40,000, and Rhonda Rehabber agreed to buy it for $50,000 the difference is $10k, so that’s my assignment fee here.

And other good and valuable considerations—it’s just legal contract mumbo jumbo—the sufficiency of which is hereby acknowledged. The assignor has assigned, transferred and sold and conveyed, and by these presence does here bias sign, transfer, sell and convey good grief onto assigning all of assignor’s rights, title, and interest in, to and under the real estate purchase and sale agreement.

So this is basically saying, I’m giving them all that I had as a person on this contract, any rights I had, any ups, downs, positives and negatives that I was entitled to as a signer on this contract. I am turning over to Rhonda Rehabber. I also agreed to receive and Rhonda Rehabber agrees to pay in full the assignment consideration, that we mentioned up here, on or before the closing date of the real estate purchase and sale agreement attached.

Now you remember, I said I actually added this in myself because I don’t think it’s really fair for everyone for me to try and get paid right away, when we might be two weeks away from closing and I just kind of say bye to Rhonda Rehabber and Sally Seller. So, I take my assignment fee when Rhonda Rehabber closes on her purchase, her acquisition of this property.

This assignment shall be binding upon assignor and shall enter to the benefit of assignee and his successors, heirs and assigns. Assignee hereby assumes all of the signers duties and obligations required by a assignor under the set agreement and agrees to defend, indemnify and hold a signer harmless from any liability or obligation under the agreement.

So basically this is saying that when the assignee takes my place in this contract, he or she, in this case, she, Rhonda Rehabber is agreeing to hold me harmless from any liability or obligation under this contract. I was told at one point that without a clause like this in my assignment agreement, then technically, the person I’m assigning this contract to could come back to me and have some grounds for holding me accountable, if something goes awry in the contract between the original seller and the new buyer. Of course, I don’t want that to be the case as far as I’m concerned, I’m gonna stay there and help nurse things along, but I don’t want to have any legal liability remaining over my head in this process.

So that’s an important clause to understand why it’s there and to leave it in there.

Assignee, that’s Rhonda, further agrees to hold assignor, me, harmless from any deficiency or defect and the legality or enforceability of the terms of the agreement. Same thing there. So this is saying: look, you’re stepping into my shoes, not just for the profit and not just for the property, but also for the liability.

Assignee agrees and understands that I am not acting as a real estate broker or an agent in this transaction, and I’m not representing either party, but rather acting as a principle in selling my interest in the above referenced agreement to you, Rhonda. And of course, I’m paraphrasing a little there, but I’m trying to make it crystal clear now.

I added this in once I became licensed as a real estate agent here in Tennessee in 2004, because I wanted it to be crystal clear that I am not representing anyone here as an agent. That this is not them thinking that the money I’m receiving, the $10k up there is a real estate commission.

Time is of the essence in this agreement. This is a good thing to have in your contracts, in general. It helps make any timeframe that’s mentioned enforceable, and assignee is in position of the original agreement. This is basically saying, Rhonda, I’m giving you the original contract. Now, I will keep a copy in my file so I have a record of it, but I’m going to go ahead and give her the original blue ink signature version.

And then of course, you’ve got signatures and dates from both parties. And that’s it. A simple 1-page agreement. Again, I know it’s a little more legalese than some of the other agreements I’ve gone through before, but it’s still pretty darn easy to understand. I’ve used it for many years.

Feel free to use it in your own business, use it at your own risk, but use it to your heart’s content. Feel free to tweak it. I do suggest you get it run by a local professional and see if there’s any tweaking that needs to happen on your end.

Wholesale Real Estate Assignment Contract: Get Mine Now 🙂

Ready to just grab mine yours and start making money with it?

Awesome, just remember: You might want to have your local attorney and/or real estate pro—someone who knows the specific legal stuff for your state—review it before you go start making it rain dollar bills.

Make it rain!

Here’s how…

Step 1 »

“Like” our Facebook page please?

Step 2 »

Just leave a comment below sharing your honest feedback on the simple real estate purchase contract template I’m freely sharing with you. Whatever you think after hearing my thoughts behind it in the video above. Good, bad, and anywhere in between. Seriously.

Alternately, I’m also interested in hearing anything else (another resource or tool) that you’d like us to share in a future “Swipe & Deploy” like this. Do tell.

Step 3 »

Then Chuck Norris will hand you over my script.

Totally serious. Just try it. 😀

New to Real Estate Contract Assignments?

For anyone who’s pretty green to wholesaling real estate via contract assignments—and also not much of a “video person”—here’s a few things all written out that you should understand.

It’s basically the legal document that records and legitimizes (grants enforceability to) the transfer of all of your rights and interest in the deal over to your end-buyer—and stipulates how, when and how much you get paid.

It’s a simple, easy-to-fill-out agreement between you and your end-buyer… it simply assigns your purchase contract over to your new buyer—and you collect a fee in return for your interest in the deal.  The new buyer steps into your shoes and closes instead of you, in exchange for an “assignment fee” you get for letting them enjoy your sweet deal instead of you.

Wait, what?!

Assignment of Contract 101

This document, also called an Assignment of Real Estate Purchase and Sale Agreement, is for anyone who wholesales real estate for fast cash.

Essential ingredients are:

  1. A motivated seller with a workable deal.
  2. A hungry buyer with cash burning a hole in his pocket.
  3. AND: The right paperwork to pull it off! An Assignment Contract.

I remember all too well how intimidating it can feel to piece-meal your REI forms and contracts together—from (sometimes questionable) places all over the interwebs. So, I’m happy to provide you with a solid, proven assignment agreement here that you know real investors are actually using (like the guy writing this), and not just a stock template from someone’s hard drive.

Are There Times You Can’t Assign a Purchase Contract?

Yep! You can’t typically do contract assignments with:

  • Short sales or REOs—verbiage in those agreements makes them expressly non-assignable.
  • Any other purchase contract that specifies the agreement is not assignable.

NO from captain obvious 193kb

For those types of deals, you’ll have to wholesale with a simultaneous or double closing.

The ideal use for assignment of contracts is when you’re working directly with mom and pop sellers. I’ve wholesaled many hundreds of these types of deals, and nearly all of them were done via contract assignment.

“And/or Assigns…” Needed?

Nope, not even.

Basic contract law: Any contract is, by default, assignable unless it explicitly states that it can’t be assigned.

So, all that “and/or assigns” stuff? Not needed. Myth busted.

confused Ryan from office

When & How do I Get Paid?

There’s really no “right” answer in an absolute sense—you just need to make sure right from the start of any deal that it’s 100% clear when you do expect to get paid.

You’ve basically got 3 options:

  • Get your assignment fee upfront (when the contract is first assigned)
  • Get paid entirely at closing (which seems reasonable to me)
  • Get it paid into escrow in advance pending closing (I’ve never done that)

Historically, I’ve always just had it paid to me from funds dispersed at the final closing. But if I’m dealing with a new investor-buyer, I’ll have them put some earnest money down in the amount of my assignment fee… and I have that EMD held in escrow by the closing attorney until the deal actually closes.

Of course, as the middleman, it would be great to get paid right away, step out and move on to the next deal.

cash money!

But… think about it from your investor-buyer’s perspective: How big of a risk is it for them to take? What if you walk away with their money, and then the deal falls apart for some reason?

If I were in their shoes, I’d probably not do the deal unless the assignment fee were paid at closing, along with the purchase. Since if I was them, that’s the way I do it. It just seems reasonable to me. But, ultimately, it’s a call you can make for yourself, even on a deal-by-deal basis if you want.

When/How Should the Seller Know I’m Assigning?

Again, there’s not a “right” answer here…

Some wholesalers let sellers know from the beginning that they’ll be assigning the deal to someone else at some point—then they’ll let them know when they have a buyer lined up and that it’s being assigned.

Other investors (myself included) are concerned that this could confuse or needlessly alarm an unknowledgeable seller who’s not already familiar with the world of real estate investing. So, I typically tell my sellers that I have “funding partners” who will be looking at the deal to size it up… then whenever I’ve got a buyer locked in, I’ll let the seller know that:

  1. One of my funding partners has agreed to proceed

—and—

  1. He’s asked that I assign my contract over to him and close in his name, for simplicity’s sake.

For me, this is just much easier to explain and for the seller to understand, than to try and give them a crash course on the fundamentals of wholesaling houses for quick cash.

Main point—don’t surprise your seller with an assignment—let them know about it one way or another. Most people hate surprises, and it’ll likely kill deals for you if they only find out in the 11th hour.

Surprise gasp!

Few Other Things…

Communicate what’s going on very clearly with your title company. Make sure they understand that either (a) you’ve already been paid your fee (if you have) or (b) you are getting paid an assignment fee from the closing proceeds.

In other words, make sure they understand if they’re supposed to be cutting you a check at closing, rather than the seller paying you. I once had a title company make the mistake of thinking the seller would be paying my fee instead of them at closing. Guess who never got paid on that deal? (Don’t be that guy.)

Don’t call your assignment fee a “finder’s fee.” If you’re finding properties for new buyers and collecting finder’s fees, then you’re acting as a real estate agent and you need a license.

Call it an “assignment fee” any/everywhere applicable. That’s the legal and proper way to name it—and it could keep you out of hot water should an agent decide you’re infringing on their turf.

Swipe & Deploy…

Step 1 »

“Like” our Facebook page please?

Step 2 »

Just leave a comment below sharing your honest feedback on the simple real estate purchase contract template I’m freely sharing with you. Whatever you think after hearing my thoughts behind it in the video above. Good, bad, and anywhere in between. Seriously.

Alternately, I’m also interested in hearing anything else (another resource or tool) that you’d like us to share in a future “Swipe & Deploy” like this. Do tell.

Step 3 »

Then Chuck Norris will hand you over my script.

Totally serious. Just try it. 😀

Click Here to Leave a Comment Below

9 comments
K. Sims

Thank you so much for all of this wonderful information.

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Ralph L Brenden II

Great presentation and thorough contract. Thank you.

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James Allen

Great videos and even greater content, very worthwhile

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Addison Warner

Thank you very much for walking through the contract line by line and explaining why certain phrases, words, and sections are in the contract. This has allowed me to understand more perspectives on approaching FSBO and others in wholesaling!

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Ray Alba

Your info on the subject of wholesaling particularly assignment of contract is spot on!
I’d like to see other tools like ARV from you I’m interested in details as how you go about it.
Thanks a bunch!

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