How Do I Assign My Purchase

Assignment is the other method of flipping, often preferred by professionals. Here you make an offer to purchase, usually for cash. However, when you make your offer, you state that the buyer is your name "or assigns" or whatever language is appropriate in you state. What this means is that either you can buy the property, or anyone else you assign the contract to can buy the property.

Note that in an option, you the buyer are not committed to purchase. It's at your discretion. The seller, however, is committed to sell. He or she must go through with the transaction, IF you execute your option.

Unlike the option, the assignment only runs for as long as a normal closing, typically 30 to 45 days. That means that you've got to find a buyer and conclude your other end of the deal very quickly.

Hopefully you have done your homework and have a rebuyer waiting in the wings. You now sign a separate agreement for the property with the rebuyer, but of course your sale is for a higher price. When the deal is ready to close, the rebuyer's name goes on the deed.

Again, you never actually make the purchase. The transaction is basically handled in escrow. At the end of the deal, you get your money out, typically in cash

The biggest problem with using an assignment is often getting a seller to accept. Savvy sellers won't always agree. The reason is that they don't know who will eventually purchase the property. They are afraid that you might not be able to get a needed mortgage and want aback door out, or that you're planning to sell your contract to someone else (which is, in fact, the case!) and that person may not qualify for a needed mortgage. In order to calm the seller's fears, you may need to put up a bigger deposit, or avoid putting many escape clauses (contingencies) into the contract, which can increase your risks.

Pros and Cons of the Assignment

■ You only have to put up the original deposit when you buy the property from the seller, and you get this back from your rebuyer.

■ No mortgage, property taxes, or insurance to worry about.

■ But you actually do commit to purchasing the property. To protect yourself from having to complete the purchase in case you can't find a buyer (or your rebuyer falls through), you'll want lots of escape clauses (contingencies—see Chapter 10). But escape clauses weaken your offer and lessen your chances of getting it accepted. So to make the deal, you may have to take a big risk.

■ If not handled properly, you can make the seller seriously mad at you and you can land yourself in a lawsuit.

■ The seller may not be able to complete the sale for any number of reasons, so you'll again need lots of escape clauses to protect yourself from the rebuyer. Again, such clauses weaken your resale agreement.

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