Doing an assignment and IEE on both ends...

Yes you can, you will have to disclose all this to the seller that what you're doing as investor otherwise they may become suspicious as to your intentions.

This is what I love to read about the most ..... I want to read everything available about executing assignments and equity exchanges.

I , too will be interested if both assignments and IEEs can be done together.

Just be upfront from the start of your intentions to all parties that are involved.

The fee is justified to you for your action and participation in the transaction. The property was able to be sold through you and your actions .
You have relieved the buyer of their obligations. Most would be thrilled that you resolved their dilemma.

Keep active !!
Good luck to everyone !!

I disagree, you cannot really do both. IEE is for a buyer which requires financing. Assignments are for cash buyers, or buyers whom already have their own financing.

In your example you said that the 20k assignment fee is included in the 170k purchase price. That would simply enable you to lock up the property at 170k. You then would make the 30k for assigning at 200k.

Your best bet would be to lock it up at 150k then do one OR the other.

Ex: You now have property locked up at 150k, so market the property at 200k. If the properties FMV is 300k, then you have alot of options. There is plenty of equity there, so you could easily do an assignment to another investor for 200k. You still make the 50k you desire.

On the other hand, you can work w/ a buyer who needs financing. Get them set up w/ your mortgage broker (which you should have on your team, without a doubt), get them qualified for purchase, and market to them at a price you see fit. As they are not another investor, equity will not be as much of a necessity.

Personally, if I had a property locked up at 150k, w/ a FMV of 300k, I would market for about 250k, to an IEE buyer. 100k for you. Why market to a home owner at the same price as an investor? 250k will still leave 50k instant equity there, that should be more then enough to be a key selling point. You do not need to offer that much equity unless it is another investor (In which case they will have a minimum % of equity they desire in a property).

This is an EXTREMELY ideal situation, if you come across a deal like this then you are very, very fortunate!! This is simply an example.

I hope this of some clarification and I didn't confuse you further. If you have any questions, please, don't hesitate to ask!

Good luck!
-Mike

It is actually contractually impossible to do both an IEE and Assignment, now that I am thinking about it.

W/ an IEE you have an initial purchase agreement between yourself and seller, you then market to end-buyer. You will get another purchase agreement signed between seller and end-buyer at closing. You then sign a Discharge of Agreement to Purchase, which releases you from the initial purchase agreement signed by yourself and seller. Purchase agreement between yourself and seller is then ripped up and you take discharge of agreement to purchase to title company to get payed at close of escrow.

W/ an assignment you write "and/or assignee" after your name on the initial purchase agreement. You then will assign that same contract to the end-buyer for an assignment fee. No need to write up any other contracts.

They are not as similar as they might seem. I hope this makes sense..

Good luck!
-Mike

I think you misunderstood in my example. The price you agree upon with the seller is 150k. The purchase agreement is then written for 170k with an agreement that at closing you get the remaining 20k difference which in essence comes out of the sellers take. Its marketing it as an "assignment fee" rather than just saying Im selling your property for 170k and charging you 20k. The 150 was already agreed upon so they don't see themselves losing anything. So the seller gets their 150k that you agreed upon. This is what I understand to be an IEE. That 20k is the instant equity just created and the contract is between you and the seller, not having anything to do with the buyer. Whether or not the buyer has financing or cash has nothing to do with it. The assignment happens when you decide to then assign the contract to a buyer for 200k, therefore making another 30k. The buyer will get the original purchase agreement for 170k, you get a discharge agreement to be payed the remaining 30k. Even though all the money is actually coming from the buyer I understood that an IEE was a way to get around a "finders fee" which seems to be illegal in a lot of places. So instead of ripping up the contract between you and the seller, you just assign that to the end buyer. I thought about this only because somewhere the buyer or the seller is going to see how much money you are making from the deal. I can't imagine a seller knowing his property is worth 300k letting you make 100k off of it for putting a deal together no matter how much you explain to them that you are saving them, helping them, saving their credit etc. So my thinking was to take a little from both ends. No can do??

Is this property a short sale by any chance? Or a seller just wanting to get rid of their property?

Ahh now I understand. That is a very interesting idea indeed. Sounds like it should work great. Be sure to let us know if you successfully do so.

Good luck!
-Mike

This is only an example, its not a real deal, it was just a thought that I had to bump up profits without anyone feeling you are taking advantage. I think the key to doing assignments is to have both parties, but more importantly the seller, trust you. You can't get to greedy. I also had another idea of a way to set the "assignment fee". Lets say a property has an FMV of 300k. The seller is in pre-forclosure and about to lose everything, you find out that they owe 150k. You can tell them that not only are you going to get them out of debt but you are also going to put some money in their pocket as well. You tell them that you are going write up a purchase agreement between you and them for 30% less than the FMV and you are going to assign the deal to an investor. The assignment fee will then be a 70/30 split of the difference between the selling price and what they owe. You get 70% for your services and they get 30%. So in this case the FMV is 300k, less 30% (90k) would make the selling price 210k. This leaves a 60k difference between what they owe and the selling price. You walk away with 42k, they get 18k on top of getting them out of debt. It may be some good motivation for them to give you the deal knowing that you are trying to help them and they will actually get some money out of it rather than them feeling like you are making money off of their bad situation. Once again just a thought. What do guys think??

The only thing I can think of from what your saying is that it could be construed that you are acting as an agent without a license. That's why an "assignment fee" works, you are being paid for the equity in your contract, not getting the house sold.

Matt, This is so interesting. Way to think outside the box! I have to ask you a couple questions.
First, sounds like a GREAT deal to lock up if you found one this good. But as far as the $20K cash back at closing, if that's built into the Purchase Agreement you are going to assign, your end buyer would be getting the benefit ($20K) I would think. What sort of contract would you have with the seller so you could get your $20K? Or were you thinking about a double-close with the end buyer instead of doing an actual assignment?
As far as your concern about the seller knowing: If you assign the deal, the seller never has to know how much you made on the house. Your buyer can pay the assignment fee OUTSIDE of closing. BUT of course the buyer would know exactly how much you are making, since he's paying you. Now, if you double-close neither the buyer nor the seller has to know what you are getting.

I look forward to hearing more of your thoughts.

Rina

The contract you would have with the seller is the "investor disclosure agreement" that Dean talks about in PFRERN which outlines everything to the seller that you intend to resell the property right away and you will be paid x amount. The only difference is instead of then having a "Discharge of Agreement to Purchase Statement" you just assign the contract to an end buyer for an assignment fee. Pretty neat how this could work huh. Now this is all just an example, I haven't done any deals yet, I was just going over everything in my head and thinking about all the different methods. I believe in a lot of preparation, I have been reading posts on the site for a couple of weeks and I see alot of people jumping in and then having no idea what to do next or not really having a full understanding about what they are doing and finding themselves in sticky situations. I want to avoid that as much as possible though I know its going to happen, thats just the nature of the business or any business for that matter but at least I want to have some idea how to handle it. Like I said in my post above, you have to gain the sellers trust, its all about how you market yourself and make the seller believe that you are trying to help them, not to take advantage of their bad situation. This is also the reason why Im not a big fan of the double closing. It just seems a little deceptive to me. I would only use it when doing an REO because if the bank doesn't want to accept "and/or assigns" they leave no other choice. But I have been reading that more banks won't finance if a seller hasn't held the property for at least 90 days which now can make it harder to do assignments if your buyer needs finanacing.

what do you think about my 70/30 idea in the post above?

Matt

I'll have to go back and read more about the IEE (haven't tried that technique myself). If you haven't done any deals yet, you might want to choose one strategy to start with, but if you're after the challenge of combining them then, hey, let's see how it works!
Curious as to why you feel double-closings are deceptive, or at least more so than the 70/30?
I know what you're saying as far as some possible complications with seasoning in a double close. That is why assignments are great. You never buy or sell the property yourself. You just lock it up and sell the contract.

Well, keep us posted on how things go! It's great to hear people moving forward, no matter what.
Good luck on all your deals and hope to hear some great stuff! Thanks for sharing your thoughts!

Rina