Rich08

What about receiving the assignment fee outside of closing? For example If they can pay cash for it or as a note on another property. It seems to me that there are no problems because it is receiving payment for selling them the contract. This seems ok to me. I kind of like taking part of the payment as cash and the rest as a note. I did several of these with options and it is cash flow without tenants. I just want to be sure that it is legal to do this outside of closing with the tight scrutiny that everyone is under now.

I used to have no problem assigning a contract to someone else and having them close the deal. Latley I am continuosly running into this problem. In the latest one the lender refused to pay the assignment fee for a purchase and sale agreement that I had assigned to another investor. That was a problem I have run into a lot and work around it with either contract release agreement, cash from buyer, or a note on another property that the buyer owns in exchange for the assignment. However, they then came back and said that they would not even loan to the buyer as long as the psa was assigned. That is a problem I have not had much in the past though several of the lenders say that is their policy now. The seller was way to shaky of a seller to go for a contract release agreement in this case. The only way around it that I could find was to just tell the buyer he can go to the seller and fill out a new psa with the seller directly and go ahead and close. And btw mr. buyer here is an example of a psa that I would use if it were me in case you want to use it for reference. He will be paying me the assignment fee prior to close with a certified check. My take on this is the assignment is still valid since the buyer agreed to basically buy that psa/option to buy the property. If he goes back to the seller and gets a new psa between him and the seller to make the lender happy that has no affect on the obligation to pay the assignment fee and is perfectly legal. The assignment fee would be paid outside of closing here and would not be part of the hud1. My opinion it is not loan fraud since we are not really part of the transaction we simply sold him a piece of paper. Just wanted to get others opinion on this as it is a new problem for me. Thanks

You are only brokering if you put two people together for a fee and are in no way a principle in the transaction. Taking an option on it and releasing it for a fee is certainly one way. Or as MC says, you could consult and get paid for setting up the transaction. Just make sure that you're not filling out paperwork for them. If I sold you a real estate manual and told you how to use it that could be consulting. Same idea. However, if they are willing to pay you $4K, then I would consider getting in the deal. I.e. flipping the property or "assigning" to the buyer. One more note, in most states like MI that have strict laws on brokering without a license, many of those states have loopholes such as number of deals you can do as a principle before needing a license. In MI it's your 5th one, but what if I sell the 5th in a different LLC? Hmm... Also, some states allow you to simply render the services of a broker in the transaction. I have even done that and even consulted for the broker and got paid. Lots of ideas, Adam Thanks Adam. Some real good advice here. I am real careful about not filling out paperwork for others. I will fill out a P & S between me and the seller and assign it, or assign the option and let them see an example of a P&S filled out, but never fill it out for them. Thanks again.

Good for you. This is a very realistic goal. It is ssssoooo easy to pick up one deal a month and make $20K from that deal doing an SLO. You may not realize it all right now, but it's money in the bank waiting for you!That's $240K a year!!! Not bad at all, Adam Would that be $20K when the t/b actually purchases the property? If so aren't the real numbers somewhere around 1 in 10 t/b's actually ends up purchasing the home. So to actually make 20k a month wouldn't you need to do considerably more than 1 deal a month. Perhaps as many as 10. Ofcourse this does not include the cash flow and the option money they put up front. But am I missing something else here. Don't get me wrong, I like lease options. I will not do normal rent with my properties ever again. But with that being said I realize that the t/b will probably not buy the house, and my $20k payday will be postponed. Btw, once again I am not trying to be negative or a smarta$$. Just always looking for another perspective.

Close 1 pure Option per month. Close a minimum of 8 additional deals between wholesaling, cash, short sales and sub2. Net a minimum of 300k. Nothing too lofty yet.

Since this one is closer to brokering then what I am used to, I think I like the option here as well. The paper trail will certainly show me as a principal. Then I have the option of getting an assignment fee upfront or a release fee from the seller.

Yes, they sure are. The Brokering without a license is my biggest concern. That is why I have told them I would need an option in order to do it. How would the consultant thing work? And which one seems like the better choice?

I have a seller I have been talking with for a while now. They have unforyunately decided they want to sell to their daughter for 150k. They want me to take care of the process. I suggested they give me the option to buy at 150k and I will assign to the daughter or go the release agreement route. They are fine with me making 4k to help see this deal through. Is there a better way to do this? And are there any real problems with going the route I suggested? Thanks

The closing (between the seller and new buyer) was pushed back for small title company issues and financing issues. But they have all been worked out now. The signing and the expiration of the option are the same day. But I had the seller sign the Contract Release Agreement form (same one you posted on here a while back) a couple weeks ago.

I am about to have another pure option close. I am using Jonathans contract release agreement for this one. I already had the contract release agreement signed giving me 10k at closing from the seller side. The closing has been postponed a few times and they are scheduled to sign now the day that the option runs out. But it could easily go beyond that by another day or 2. Do I need to extend the option beyond the closing date. I am afraid to bring it up, as some people might would say they won't extend it and try to cut me out of the deal. And from reading the release agreement it does not sound like it matters when it closes.

This is more of what I was looking for too. I just hate spending my time making my own signs. Why the hand-writing font? Do you believe that signs that look home made really bring in more buyers? I have never compared this myself, so I really have no idea. If it does Imaybe I will give it a shot. My signs have pretty much brought in mostly junk. Mostly my signs just help people find the house when I send them over to take a look. This is largely why I hate to waste any time on the signs themselves. I would almost rather waste money instead.

There is no mention of a release fee at all in the original contract. It is just a Pure Option. MC's actually. You can assign that option or you can get a fee in exchange for releasing them from the contract. You put what that fee will be on the contract release agreement.

This is fascinating.. What sort of credit score does one need to have to get a 95% ltv loan? It seems to me that every single T/B that I have run across needs help with financing. Every single T/B that I run across has mediocre credit at best too. Alan He asked about pure a option, so they would not really be t/b's. They would just be buyers. You would be surprised at what credit score some mtg brokers can get someone into a 95% loan. It is good to talk to a lot of them and see what they can do. That way you know which ones to refer people to. You would not find these brokers at places like WAMU, that is for sure.

I'm lazy. Was hoping to just buy them ready to go in the ground. Phone number and all already to go.

Here is an example. Maybe not perfect, but it has been working. FMV- $220,000 Option price - $200,000 Sales price- $215,000 Release or Assignment fee- $15,000 If the buyer needs some help with financing you can carry a 2nd of 5% which would be $10,750 Create a Deed of Trust or mortgage and promissory note between the seller and buyer for the $10,750 2nd. In your contract release agreement you can write into it that you will be paid 15k for releasing the contract. You will be paid $4250 by check and the other $10750 will be accomplished by them assigning the mortgage to you. Now that is passive income. Does that help?