How do I "SCREEN" an assignee investor???

What a fabulous question, I eagerly await a response - along with you

Your post pretty much answers your question, HisChosen. Before offering a specific property, I'd recommend a face to face meeting, or if you aren't in the same area, a long phone conversation, to make sure you are thinking alike regarding the deal.

All of your suggestions are in order, plus viewing his tax return if possible, if he claims experience in doing this. Also, if he is truly an investor, he should have the cash to close the deal, and it would be in a bank account or line of credit that could be proved by a bank statement.

You are wise to think about these things before you rely on him to take over the contract, since it would reflect badly on you if he fails to perform.

cactusbob

Cactus Bob is absolutely right... Very wise! In addition, my advice is never put all your eggs in one basket. So always have another buyer or two lined up. Don't count on just one, because anything can happen after they sign the papers, that's what escape clauses are for. Even if you do deem them reliable they can still change their mind and decide not to buy it. So I recommend having several back up buyers, just in case. After all this is your name and you want to keep it in good standing with whoever you deal with!

Another question,

Should you try to sell a house, that your going to make an offer on? Meaning - If I have been communicating with the seller, and got there bottom line - Should I try to tie it up on contract, before trying to sell it? Or can I submit it, to see what kind of offers I can get, so I know what my bottom line is to the 'original' seller.

Regards, and Happy Hunting

Elena M hit it right on the head! Having a list of buyers will go along way in getting that deal done and at worst case... Contingency is your best friend!
rand

In my opinion, I wouldn't advertise for it unless you have it locked up. Otherwise a more experienced investor will go in and take it out from under you. Also along those lines is you can't technically advertise for a house that you don't have equitable interest in. In other words, your name has to be attached to that property somehow in order to have the right to market it.

I was curious about this myself and I think the responses are very helpful.
Thanks!

Not only that, you also can request the buyers to make nonrefundable deposit of 500 to 1k into escrow. If the buyer default, the deposit is your to keep and you can take the contract to other buyer and you lose nothing, but only gain between 500 to 1k which you can pour it into more marketing for your real estate business.

Marcus

I really enjoy reading your responses they are very helpful specially for newbies like me;-)
thanks a lot
Keep it up please

Rania

Like they said in the comments above me. You can ask the buyer to show you his or her recent bank statement. Perhaps even go to the bank with them so they can show you whats current. I have heard of people who left between $8k and $15k of the deposite money on the table cause the deal didnt fall though. That you get to keep. So many different ways to make money in real estate I Love It.

This is a topic I had not read about before. There is a lot of information on this thread for potential buyers. If your buyer is in another city or another state would you have them fax or email the documents -eg bank statement?

I'm working on my buyers list and from what I've learned on here you should ask your buyer what kind of funds they have available when you put them on your buyers list. That way you know before hand the top buyers on your list. Cash buyers are of course the best because you can close quickly. When you add them to your list just specify what type of buyer they are. I hope this helps I'm new and still learning as well...

One thing that happens with all of the banks in this area is Proof of Funds is required as part of the offer. I am going to follow suit and require POF's from all of my buyers.

Thanks,

Scott

You can usually judge by the willingness to give a descent earnest money deposit. I would ask for 1500 no less. If they are a serious buyer then this is not an issue. Especially if your escape clauses are in place. Submit the offer with proof of funds required by a specified date. Have a back up plan! Much success to you....Lubertha

I've heard of this, but I've noticed that the list varies from a couple questions to a long list of questions. Is there an all purpose set of questions that when you pick up the phone for the first time to see if this property fits the bill-- these are the questions you ask!

Thank you for all the knowledge that you all provide

I recently ran across an article resolving this very issue. And I got it right here, and I hope the creater of the article doesn't get mad at me for sharing it with you guys lol. So yeah I hope it helps, and in no way am I taking credit for this, I'm just passing it on to people who need it.

_________________________________________________________________

Posted by "sistreat"

Posted on: Sat, 03/14/2009 - 23:49

"Essential Contract Clauses II
by Bill Bronchick

In a previous article, we discussed the importance of learning to use the "standard" real estate broker contract rather than the "seminar" contract when dealing with real estate agents. The following are some essential clauses and modifications I use when selling a property:

Limited Inspection Clause - Most standard broker contracts give the buyer the right to make the contract contingent upon the right to do a thorough inspection before a certain date. Make certain that the inspection period is short and that the inspection must be done by a licensed (if they are in your state) professional inspector. Limit objectionable items to roof, plumbing, electrical, heating and structural defects. An open-ended inspection clause will permit the buyer to "weasel" out of a contract because the garage door squeaks.

Choice of Escrow Company - As the seller, I insist on the right to choose the title or escrow company so that I remain in control. A conservative or uncooperative escrow or title company can make life very difficult if you are trying to do a creative deal.

Qualification of Buyer - The most important thing to keep in mind when selling is that time is money! The single biggest mistake sellers make is allowing an unqualified buyer to tie up their property under contract for two months. Do not believe any claims of the buyer, his agent or mortgage broker about their ability to qualify for a loan. You should know exactly what the qualifications are for an FHA or FNMA loan in your area and qualify the buyer yourself.

I use the following clause:

"Within 48 hours, buyer shall provide seller with buyer’s complete financial and credit information for seller’s approval. Within 72 hours after receipt of such information, Seller may terminate this contract and refund buyer’s earnest money if, in seller’s sole opinion, buyer does not have the creditworthiness to qualify for a loan from a third party. Seller’s decision and opinion shall be final in this regard, and buyer shall have no further recourse after return of this earnest money deposit."

NOTE: Be certain you do not engage in illegal discrimination in rejecting a buyer's credit worthiness.

Permission to Contact the Lender - I hate being in the dark! I always want the ability to control the entire loan process and be able to get information from the lender along the way. The buyer's lender won't talk to you directly, without express written permission of the buyer.

To remedy this problem, insert the following clause:

"Buyer hereby gives express permission to all parties, including lenders, employers, financial institutions, credit agencies, mortgage brokers and real estate agents to release any appropriate financial information to the seller."

Now you can take control, get on the phone and scream "What's holding up this loan!"

I am just catching up with this thread with such great info. One thing on the Proof of Funds that Scott mentioned above...if I understand it correctly (and I’m not sure I do!)….basically a buyer could go to that Coastal Funding (www.coastal-funding.com ) and get a Proof of Funds certificate instantly on the internet (as I see several do on this site themselves), so in essence, while it’s great to use as a “no money down” and stalling technique for yourself, just merely requiring Proof of Funds from your buyers (assignees) would not be sufficient (if you don’t know them at all) due to companies like this, correct? Or does coastal funding only fund the escrow amount and would not provide Proof of Funds for the ENTIRE transaction?

If I’m not correct, then I am sure even my post doesn’t make sense

I know there is a lot more info above that is great for qualifying...I just wanted to dig in on this note, and make sure I get this point.

Just trying to figure all of it out...off to read more threads and understand everything!

Thanks!!
Louisa

I think the comments made here hit it right on the head...to put it nicely the above info will save all of us an unbelievable amt of heartache, headache and setting us back to square one.

What I hear is: take the bull by the horns and take charge with all the info we've just read here..absolutely priceless...it gives me hope not to get the short end of the stick.

Jerry

Require a
1)- Certified check for earnest money. Non refundable after the due diligence period.
2) - Request proof of funds letter. When you get the letter it should have contact information on it to verify. I have a investor (when I am his buyers agent)that gives me a proof of funds letter that has his name, bank name and date with account #'s blackened out.
3) - The letter should have a way for you to verify funds.
4) - If it does not ask for it. Also, ask if it is a tranactional funding letter. Ask and you will get a answer or if you do not get a answer that is probably the answer.

* If the buyer is legit they will not have any trouble proving it. If it is a good deal and they want the deal bad enough they will bend over backwards getting you the required info. to get the contract.

Hope that helps!

Have them send a proof of fund letter.

It can be a copy of a bank account statement, a proof of funds letter from a hard money lender...etc.

Also their willingness to put a large deposit is a good indicator.

When I have a buyer ready to buy one of my properties or buying my rights to a contract I always put in writing that they have 5 to 7 days to turn in a proof of funds letter from their bank or I let my 2nd choose buyer take a shot at my conditions. Now to the earnest money, I have the buyer put $1,000 or more down to lock in the offer. If the deal is a great money maker I let the buyer know that he or she earnest money will be deemed, earned, and released to me once the contract becomes valid. If it is a regular deal I do the same with the earnest money but I give them 5 to 7 business days. This is so I can continue marketing all my properties. If they back out I hope to have another buyer ready to purchase this property but if not my marketing on this deal is amped up and I now have the money to do so.

Thanks for sharing all and Bill Bronchick has been in this business along time ran into him when I took some learning classes with AD Kesser who is from Carlsbad California. Theyd be hard pressed to match Dean Graziosi even though they have all been successful in Realestate Investing.AD was shot down and up in WLL 2,he was a bomber pilot and was told hed never walk again and he proved them wrong and they said his son who was born with no hearing would never hear wasnt again he proved the Doctors wrong, great human being with a wonderful dont quit attitude and so down to earth, Jim (AD did his first assignment deal with his last $100 and he was laughed at but one person was willing to give him a chance and he came back again a winner and did very well off that first deal)NEVER QUIT!!!!!!!!!!!!

Very simple.
1. I have my potential buyer do his due diligence BEFORE signing the contract.
2. When he decides to do the deal and signs my contract the earnest money (certified funds) is non refundable unless I the seller do not perform.
3. My contracts are non assignable.
4. I don't care about his POFs!!!! If he puts up a non refundable deposit he WILL close.
5. If he won't put up the non refundable certified check he is BSing!! Buyer has been screened. Easy as pie!!

I have hundreds of buyers on my list. When one that I have not dealt with before says he wants to buy one of my properties then and only then do I do any "screening". I follow the steps above. Hey the guy could have all the money in the world, great POF and NOT close!! My way guarantees the buyer will close OR loose money or he will back out because he had no intention of closing in the first place. Saves a lot of time also. Often a newbie just wants to lock up my property while he searches for a buyer. Not going to happen!!

Mentoring/Team building
Michael Mangham
MD Home Acquisitions LLC

Just wondering for assignment purposes if I did have a buyer default and leave the 500-1k how do I get that out? Example: I have another buyer provide more earnest money and is going through with the deal. I want that money to not be added to the principle or have it go towards the purchase of that house but be returned to me? Do I have something signed by the first buyer stating it is non-refundable and that I get it if they default as insurance to be given to the escrow agent? Just wondering how that process works is all because I know in most cases end buyers I have spoken to prefer to have that money wired to the escrow account and not go through me.

Not sure how that makes him a newbie. If the buyer talked you into selling less then full price like 70% of ARV, your agreeing to selling it, and he wants to assign it that sounds like he did his job correctly newbie or pro...and if he is able to come up with that non refundable EM check via his end buyer who cares.

If he puts up the non-refundable earnest it is his problem if he can't find a buyer. However, pros will have their buyer lined up in advance and will put up the hard earnest. A newbie that does not have a buyer will not put up a non refundable earnest money deposit. That is the difference and how my screening works in the real world. I don't have time for you unless you have a buyer in advance or you actually have money yourself. Pro or newbie have done their job if they have MONEY/BUYER before they sign the contract. AGAIN, my contracts are not assignable. (As stated in post 25) SO I don't care if the newbie wants to assign my contract. He can't!

Figuring out what happens to your earnest money on a deal is quite elementary math. On a contract assignment. EXAMPLE:
You put down $1000 with the seller
Your buyer puts down $2500 with you. Non refundable as per your contract.
You take the two contracts to your title company
Your fee is $5000.
You get a check for $3500 at closing.
If the buyer does not close the seller takes your $1000, you get the $1500 left over. I keep the earnest money from my contract with my buyer in MY business account. The title company looks at the contract and subtracts what the buyer and adds what I have put in if we close!

Now go make an offer!

Mentoring/Team Building Nationwide
Michael Mangham
MD Home Acquisitions LLC

Thanks for these steps they are great. I'm new to investing and getting ready to start summiting offers with my real estate agent, but was confused on how to lock in my end buyer once I had a property locked up and your post has clarified most of my questions. Also what is the best way to build a buyer's list. I have about 9 on my list but I think I need way more so I don't run into a problem if my buyer flakes on me. Please advice. Thanks!!!!

Jose, I think networking at every and any REI event or club meeting is a great way to meet real people face to face. Get their card and add them to your list. Give them your card also.
Going to the county public trustee auctions is also a great way to meet REAL buyers that are in the business for real and they have money.
I have found a few REAL buyers off my adds on craigs list also. I constantly run adds there. NEVER stop building your buyers list!!!
Most of what I have gotten off websites, facebook, etc are newbies with no money. Trying to build their buyers list, representing themselves as buyers and mostly a waste of my time.
So, get out in your market place and network face to face is my advise. The deals I have found and the people I have met I would never have run across sitting at home Blogging. I did not come on DG for the first 6 months of starting my business!! Now I have time each day that I try to help people here. I see posts here from newbies so long they could have made three offers instead!!
I met a great buyer at a property we were both looking at!! One more thing, most active cash buyers don't facebook, twitter, have a website themselves etc. etc. They are out doing business. Look for them there! NETWORK!!

Eric, I have my buyers do the inspection as part of their due diligence before they sign contracts with me. Most of my serious buyers that fix/flip multiple properties a month know what they are looking at. They may do a quick sewer scope first but that's about it. If there are structural issues they usually have that estimated in advance. And of course they are not the true "end-buyer". They will fix and sell to the owner/occupant/end buyer. The end buyer than goes through the whole process of inspection, appraisal and financing in order to get qualified and purchase the property.

Mentoring/Team Building Nationwide
Michael Mangham
MD Home Acquisitions LLC

I'd ask them for documentation on deals they have closed. Don't take their word for it, ask to see the deals. Don't be shy in having them produce evidence of the cash they will use to buy the property. I would only accept bank accounts or commitment letters from a bank.

The other safeguard would be to require that they put up more in a deposit than you have put in as earnest money deposit. Have that money release to you. If your EMD is in the form of a note, you can use their money to replace the note and pocket the balance.

As a wholesaler, what is an approach to use when you have a buyer...when asking how they will fund the deal? What is the best way to qualify that investor?

If a retail buyer comes through, what is the best approach to verify the ability to close this profitable deal?