Assigning a real estate contract lets you transfer your rights in a property purchase agreement to another buyer for a fee - without needing to own the property. Here's how it works:
- Find a Property: Look for motivated sellers offering discounted deals (e.g., pre-foreclosures, probate properties).
- Secure the Contract: Include an assignment clause and negotiate terms like purchase price and closing date.
- Find a Buyer: Market the contract to investors via networking, online platforms, or real estate events.
- Complete the Assignment: Draft a legal assignment agreement and ensure all parties consent.
- Close the Deal: Finalize paperwork, transfer the contract, and collect your fee.
Quick Overview of Key Points
| Step | Key Actions |
|---|---|
| Find a Property | Analyze market value, property condition, and title. |
| Secure Contract | Add assignment rights and make a refundable deposit. |
| Find a Buyer | Build a buyer list and market the opportunity clearly. |
| Complete Process | Use legal contracts to transfer rights and obligations. |
| Close the Deal | Work with a title company to finalize and get paid. |
Use tools like Stantem for property data, skip tracing, and market analysis to simplify the process. Follow these steps to assign contracts legally and profitably.
How To Do An Assignment Of Contract For Wholesaling Real Estate
Step 1: How to Find the Right Property Deal
Finding properties with motivated sellers is key to successful assignments. A good deal offers solid profit margins and attracts end buyers.
Finding Motivated Sellers
| Seller Situation | Why They're Motivated | Typical Discount Range |
|---|---|---|
| Pre-foreclosures | Need to sell before bank takeover | 20-30% below market |
| Probate Properties | Heirs looking to liquidate quickly | 15-25% below market |
| Inherited Homes | Multiple heirs seeking fast sale | 10-20% below market |
| Extended Market Listings | Properties not selling at list price | 5-15% below market |
Understanding the seller's situation and timeline helps you craft a tailored offer.
Using Tools to Analyze Property Data
Technology makes it easier to pinpoint profitable opportunities. By analyzing data, you can focus on properties with the best potential.
Stantem provides tools like skip tracing, bulk data analysis, and property certification. These features help investors locate property owners, confirm details, and spot trends quickly.
When evaluating potential deals, focus on these key factors:
- Current Market Value: Compare recent sales in the area.
- Property Condition: Estimate repair costs and how they might impact buyer interest.
- Title Status: Ensure there are no liens or other issues that could complicate the deal.
"Research property history, market trends, and condition to identify suitable deals" [1].
For a thorough analysis, use multiple platforms. Zillow gives basic market data, while Stantem offers deeper insights to uncover the most promising properties.
Once you've found a property that checks all the boxes, the next step is securing it under contract.
Step 2: Securing the Property with a Contract
Negotiating the Agreement
When drafting a contract, having a clear assignment clause is crucial to protect your rights. Make sure to include these key elements:
| Contract Element | Required Language | Purpose |
|---|---|---|
| Assignment Rights | "Buyer may assign this Agreement to any third party" | Allows you to transfer the agreement |
| Notice Requirements | "Written notice of assignment to be provided to Seller" | Ensures the seller is informed |
| Assignee Rights | "Assignee agrees to be bound by Agreement terms" | Holds the new buyer accountable to the terms |
When working with motivated sellers, highlight perks like fast closings and no realtor fees. These benefits often make sellers more open to contracts that allow assignments, simplifying the process for you as a wholesaler.
Making a Deposit to Lock the Deal
Earnest money shows your commitment to the deal. Unlike traditional purchases, where deposits are 1-2% of the purchase price, wholesale deals usually require smaller amounts - ranging from $500 to $3,000, depending on the deal's size and timeline.
To reduce risk, use refundable deposits held in escrow. This approach demonstrates your commitment without overextending yourself. Ensure the deposit matches the deal's scale to build trust with the seller while keeping your options open for assignment.
Once the property is secured under contract, the next step is finding a buyer to take over the agreement.
Step 3: Finding a Buyer for the Contract
Marketing the Property Contract
To successfully market your real estate contract, you'll need to use multiple channels to connect with potential buyers. Start by creating detailed property listings that highlight the key aspects of the deal. Here's what to include:
| Marketing Element | Key Details | Why It Matters |
|---|---|---|
| Property Information | Include size, location, condition, and quality photos | Gives buyers a clear understanding of the property |
| Financial Analysis | Share purchase price, estimated repairs, and potential ARV | Helps investors gauge the deal's profitability |
| Clear Next Steps | Provide contact info and deadlines for responses | Encourages immediate action from buyers |
Be upfront about everything. Clearly explain the assignment fee and any contingencies to avoid misunderstandings. Tools like Stantem can help you validate market data and provide accurate comparables for your listings, boosting trust and confidence among buyers.
Building a Buyer List Through Networking
Marketing is important, but having a strong network of buyers is equally critical. A solid buyer list ensures you're not scrambling to find investors, helping you close deals faster and avoid holding contracts for too long.
| Networking Channel | Tips for Success | Benefits |
|---|---|---|
| Real Estate Events | Attend local REI meetings and property auctions | Meet active, motivated buyers directly |
| Online Platforms | Engage regularly on investor forums | Expand your reach to national investors |
| Social Media | Post property listings and market insights | Boost visibility and generate leads |
When promoting contracts, always disclose your role as a contract assignor to stay compliant. Track how well your methods are working by monitoring inquiries and conversions, and adjust your strategy as needed.
Once you've found an interested buyer, the next step is to formalize the assignment agreement and smoothly transfer the contract.
Step 4: Completing the Assignment Process
Drafting the Assignment Contract
To create a valid assignment contract, include these key elements to ensure a proper transfer of rights and obligations:
| Contract Component | Required Details | Purpose |
|---|---|---|
| Original Agreement | Copy of the purchase contract | Serves as the basis for the assignment |
| Party Information | Legal names and contact info | Identifies all parties involved |
| Property Details | Address, parcel number, type | Clearly specifies the property being assigned |
| Financial Terms | Purchase price, assignment fee | Lays out monetary responsibilities |
| Timeline | Closing date, key deadlines | Establishes deadlines and expectations |
Make sure to clearly outline the assignment fee in the contract - this represents your profit.
Ensuring Legal Compliance
Adhering to legal requirements is essential when assigning real estate contracts. Confirm that the original contract permits assignment by including language like "and/or assigns" if needed, and secure written consent from all involved parties.
Contract Checklist
- Confirm the contract allows assignment.
- Obtain written consent from all necessary parties.
- Verify local laws support this type of transaction.
Using tools like Stantem's certified property data services can help verify ownership details and ensure accurate documentation, minimizing risks during the process.
Common Legal Pitfalls to Avoid
- Failing to get written consent.
- Attempting to assign a non-assignable contract.
- Leaving out crucial details, such as property specifics or the assignment fee.
"The assignment contract must transfer all obligations from the wholesaler to the buyer, using the same terms outlined in the original purchase deal except for the price." [1]
To avoid costly errors, have a legal expert review your contract. Once the contract is finalized and compliant, the next step is completing the deal and collecting your assignment fee.
Step 5: Closing the Deal and Getting Paid
With the assignment contract in place, the final step is to execute the agreement and ensure everything wraps up smoothly.
Finalizing the Assignment Agreement
The closing process typically involves three main steps:
- Obtain signatures on the Assignment of Real Estate Purchase and Sale Agreement.
- Submit all documents to the title company.
- Schedule and complete the closing.
Here’s a quick look at the key documents you’ll need:
| Document | Purpose | Key Details |
|---|---|---|
| Assignment Agreement | Transfers contract rights | Includes purchase price, fee, and terms |
| Closing Statement | Records the transaction details | Lists payment amounts and instructions |
| Written Consent Forms | Confirms agreement by all parties | Requires all necessary signatures |
Using tools like Stantem can help ensure everything is documented correctly. Closing agents will handle the final steps, but it’s important to keep copies of all documents and confirm the end buyer is ready to meet their commitments.
How Assignment Fees Work
Your profit as a wholesaler comes from the assignment fee, which is calculated in one of two ways:
| Fee Structure | Explanation |
|---|---|
| Markup Method | The difference between the original and final price |
| Flat Fee | A set amount, regardless of property price |
Important Fee Guidelines:
- Clearly outline the fee structure in the assignment agreement.
- Include the fee details in the closing statement.
- Follow the title company’s procedures for processing the fee.
- Keep full records of the transaction.
The title company or closing agent will handle the payment of your fee during the final transaction. Be prepared to explain your role and the fee in simple terms, as these details will be visible to everyone involved in the deal.
Resources to Help with Real Estate Assignments
Success in real estate contract assignments often comes down to using the right tools. Below is a closer look at platforms that can make the process smoother and more efficient.
How Stantem Supports Property Data Needs
Stantem simplifies the contract assignment process by offering certified property data and owner details. It's especially useful during Steps 1 and 3 of the assignment process:
| Feature | How It Helps in Assignments |
|---|---|
| Skip Tracing | Quickly locate and contact motivated sellers |
| Property Data Access | Verify ownership and assess market values |
| Bulk Data Analysis | Create targeted lists of buyers and sellers |
| Data Certification | Minimize legal risks with verified information |
Stantem also provides flexible plans, making it easier to scale your business while accessing reliable property data.
Additional Tools for Real Estate Assignments
Pairing Stantem with other specialized tools can enhance your workflow and boost efficiency:
| Tool Category | Solution | How It Fits the Process |
|---|---|---|
| Legal Documentation | Rocket Lawyer | Create customizable contracts for Step 4 |
| Contract Management | Nolo | Access templates and checklists |
| Market Analysis | PropStream | Generate leads and analyze deals (Steps 1-3) |
To get the most out of these tools, consider how they integrate with your current processes. For instance, you can use Stantem's bulk data features to identify properties and then rely on PropStream for marketing to qualified buyers.
To streamline your real estate assignments:
- Combine property data platforms with marketing tools for lead generation.
- Use legal services to ensure contracts meet compliance standards.
- Incorporate market analysis tools to confirm the potential of a deal.
Conclusion: Steps to Successfully Assign Real Estate Contracts
Finding good deals and securing them with well-structured contracts are essential for successful assignments. Knowing your role in the process is equally important to meet legal obligations.
"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." [2]
Each step, from spotting opportunities to completing assignments, contributes to a smooth and profitable process. Assignment fees, often around $5,000, should always be clearly stated in contracts and closing documents for full transparency [2]. Staying compliant with legal requirements is critical - ensure contracts permit assignment, get written consent, and document all terms clearly.
Modern tools make a big difference. Platforms like Stantem help reduce risks and simplify deal analysis by verifying property ownership and streamlining research. These tools are valuable at every stage, from initial property checks to final verification.
The key to success in real estate assignments lies in clear communication between all parties and a systematic approach. By sticking to these steps and using the right technology, you can create a scalable and profitable business rooted in solid research, compliance, and efficient execution.
FAQs
How do you assign a real estate contract?
Assigning a real estate contract means transferring your rights in a purchase agreement to another party, usually in exchange for a fee. Here's an overview of how it works:
- Secure the Property: Find motivated sellers and secure the property under a contract that includes assignment rights (e.g., "and/or assigns").
- Check Assignability: Make sure the contract allows for assignment and complies with legal requirements.
- Market the Deal: Share the contract details with potential buyers through listings, networking, or buyer platforms.
- Create an Assignment Agreement: Outline the original terms, the fee you'll charge, and the responsibilities for everyone involved.
- Close the Deal: Complete the transaction with proper documentation and collect your fee.
Here's a breakdown of key elements to keep in mind:
| Component | Details |
|---|---|
| Contract Language | Must clearly allow assignment |
| Legal Compliance | Requires written consent from all parties |
| Documentation | Includes original purchase terms and fees |
| Closing Process | Coordinated with a title company |
Tools like Stantem can help streamline steps like finding properties and marketing contracts by providing verified property data, ownership details, and market insights, which can make the process smoother and reduce risks.
