Assign Contracts In 8 Easy Steps

There’s the long line at the checkout. And then there’s the curiously, suspiciously short line.

Which one do you choose?

There must be something wrong with the short line, right? Maybe the cashier is closing up shop after the next customer.

Or maybe not.

You know the short line assumption… and the same concept applies to the seemingly complex process of assigning contracts.

Hey Moguls, Jamel Gibbs here, and I’ve been hanging with Mogul for a while sharing some (hopefully helpful) tips of the trade. I’m happy to say, however, that the thrill is still alive. I’m psyched to be back - this time to share with you some simple steps to follow when assigning contracts.

Just 8 simple steps, to be exact.

So my first question is: Do you fall into the short line trap when you assign contracts? The process is actually super simple, but I’m always puzzled by how much investors are thrown by this. Simplicity. It’s a beautiful thing, so don’t knock it!

I’ll give you this though... simplicity doesn’t always mean seamless. Sometimes there are snags, and today I’m going to share my checklist with you, so you can power through the process of assigning your contracts to other investors. If you want your contracts assigned and, more importantly, closed, here’s what you need to do:

The First 5

1. First and foremost, use an assignment of contract agreement and get the property assigned to your cash buyer.

2. Make sure your buyer understands that he/she will be paying you a “NET” profit not a “Gross” profit. This should be outlined in the contract.

3. Collect at least double the amount of money that you put down on the property. This will ensure that you have a true no money down deal. Plus, if the buyer bails at the 11th hour, you can recoup your deposit with the seller. In other words, be sure your buyer has some “skin in the game.”

4. Once the buyer signs the contract and gives you the initial deposit, give the buyer a copy of the contract AND a copy of the initial seller contract.

5. Once you have the deposit, contracts are signed, and you’ve given copies to the buyer, you need to contact the title company to prepare the settlement. You can use an attorney, but it’s not required in most states. Just be sure to check out your state’s laws.

Special Note about Closing…

You can also close by transferring the deed (yourself) to your local courthouse or through a notary. If you choose this method, be sure your buyer clears the title at the courthouse. At this point, have your buyer pay you the necessary funds to close the transaction as well as your assignment fee, and then have the seller sign the deed over to the cash buyer.

The Remaining 3

6. If you decide to go with an attorney or a title company (which you should), know that they want numbers. Let them know how much you paid for the property, how much you sold it for, and what your net profit is. Be sure to give them a copy of the contracts.

7. The title company will handle the closing at this point.

8. On the closing date, be sure to show up and collect your check as well as a copy of the settlement sheet (HUD-1).

That’s it!

Really, it is! See how assigning contracts really is easy? Once you have a deal that you’re ready to assign to a cash buyer, use these tips as your checklist to guide you through the transaction.