3 Essential Assignment Contract Clauses

clauses Today we have another great lesson from our long-time friend and advisor Jamel Gibbs. He’s already published a whole bunch of awesome lessons. If you haven’t seen them, definitely check them out:

We love Jamel so much because (i) he passed the “solid dude” test with flying colors, (ii) he knows real estate like The Donald knows swoopy hair, and (iii) he knows how to educate others about the trick of his trade – as evidenced by the fact that he coaches and consults people all across the country to help them become real estate investors.

In this lesson, he throws down his essential, non-negotiable components for every Assignment Contract he deploys. So let’s jump in and see what Jamel’s got simmering for us…

Jamel’s 3 Essential Assignment Contract Clauses Explained

We often hear people talk about important clauses you need in your purchase contract. But I’ve noticed I don’t often hear folks teach on the essentials of what you need to make sure you include in your ASSIGNMENT contract.

If you don’t already know, an Assignment Contract is one of the most core, fundamental pieces of paperwork in your REI arsenal. If you’re a wholesaler, it’s a non-negotiable, you gotta have it and know how to use it.

What is it? In a nutshell, it’s basically the document you use when you have a property under contract to assign your interest in that contract over to a new buyer. It specifies the key terms of you letting them step into your place, what you’re gonna get paid and what everyone’s roles and responsibilities are.

It’s really not complicated at all, but I do have a few, essential “best practices” that I always make sure are included in every assignment contract.

sidenote A side note – if you’re a more experienced investor, I realize these may seem like obvious no-brainers, but frankly, I'm surprised at how often people DON'T know this info.

So it’s worth taking the time to share these details that you must have in your Assignment Contract when you’re wholesaling a property to a buyer.

1. Purchase Price & Your Assignment Fee

Clearly spell out these details in plain English. For example: The purchase price of the property is $50K, my assignment fee is $10K – make sure both amounts are clearly spelled out.

2. Non-Refundable Earnest Money

I personally don’t put a lot of money down on properties. My rule of thumb is, at a minimum, I typically like to collect double the Earnest Money Deposit (EMD) from my buyer that I put down. If I put down $500 bucks on a property, then I expect $1000 from my buyer. If I put down $1000, I expect $2000 from my buyer.

If I put nothing down, I collect a minimum of $1000.

And make sure your buyer knows that their EMD is NON-REFUNDABLE. The only way the buyer can get their money back is if the deal doesn’t close.

3. Closing Date

Try to close your buying contract a couple of days earlier when/if possible. If you have 30 days to close a deal, what I like to do is close the deal within 28 days of that contract with my buyer. Why? Well, it allows me to close a bit earlier and I can get paid a lot faster.

If you have these three components on your Assignment Contract, then you’re set and you’ll stand make a lot of money in this business. And when you do, be sure to let me know how awesome you’re doing at closing deals!

Mogul Elite Members: For a quality assignment agreement that includes all of these clauses, see the PowerPack tools for this lesson – just click it over there on the right side of this page.

Learn What an Assignment Contract Is – It’s okay if you don’t know what it is now… but now that we’ve told you how crucial it is for you to know, well, learn it!

Know the 3 Essentials for the Contract – Make this your Assignment Contract mantra: Purchase Price & Assignment Fee, Non-Refundable Earnest Money and Closing Date. Understand, digest, use, repeat.

Use the Contract – The Assignment Contract is a non-negotiable. You must use it. Go find some deals and put the doc in play. Happy investing everyone!