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the real-estate assignment contract is kind of an essential tool in any real estate wholesalers tool belt you want mine it's the same one I've been using for more than 18 years as a wholesaler yours free I'll do you one better I'll even explain it to you line by line let's talk about that so look here's the deal real estate wholesalers it's not that complicated an assignment contract is you assigning a contract to somebody else they step into your shoes you get paid a little but it is an important thing for you to understand some of the nuances of for that reason I'm not only going to give you the same assignment contract I've been using for years and years and years and has made me many many thousands of dollars but I'm gonna hand you a video I made in 2008 walking through this exact same contract having said that the video you're about to see was from 2008 so the audio quality was bad it was a clunky old Windows laptop I was in the back porch so if he'll apologize the poor audio and visual quality there's no need for me to make this video because that's the same video I would make for you today so if you want to download my assignment contract go to the website you see on the screen here just follow the link or if you're watching this video on YouTube you can look in the description at the very top of the video description you'll see a link directly to the blog post where you can download this assignment contract for zero dollars alright if you already been sure what an assignment contract really is you want to understand kind of the best practices for a wholesaler and how to use it in your real estate business that is the next six and a half minutes of the video you're watching right now if you already understand contract assignments you don't really need the assignments 101 conversation skip ahead about six and a half minutes and you can proceed to the walk through line by line by line it's simple but it's important thanks guys keep it awesome and now JP from 2008 with a clunky laptop on your back porch I passed the baton to you and why would you start by defining quickly what an assignment agreement is Wikipedia says it's the transfer of rights held by one party via sign or to another party be assignee now that's a pretty simple explanation and it wraps it all up in a nice little nutshell for you but let me illustrate for you and kind of a boilerplate example of how this works in the real day to day real estate investing world so you've got Johnny Q wholesaler he finds a great deal Sally peace seller just inherited a house from her dear old recently departed grandmother she's so darn emotional about the whole thing she just didn't want to deal with it no how no way it's just a burden to her and her family to even think about it so she says look Johnny I know this thing needs a lot of repairs but I think it'll eventually be worth around $100,000 but I don't care about that if you can take it off my hands pretty quick here take it as is and put $40,000 in my pocket it's yours so Johnny sizes it up and says I'd see about 20,000 and repairs here and I got a pretty good idea who I can sell this thing to for a quick profit so yeah I can do 40,000 on this sold now you need to understand Johnny wholesaler is a wholesaler meaning he does not want to read have this thing and he does not want to have it as a rental property Johnny's in for the quick nickels not the slow dimes so he's gonna be quick flipping this puppy probably to another investor even more specifically probably to a rehabber or a landlord so when it comes down to it Johnny just as soon not take title to this thing he doesn't have to if possible Johnny's gonna find a solid buyer before his closing date let's give him 60 days so he's got 60 days to close with Sally peace seller and he wants to find a buyer within those 60 days someone who can step into his shoes and clothes in his place so Johnny hits the streets the emails his buyers list he puts out a sign or two makes a call or two before long he's got a couple of interested investors drooling over this thing and he quickly settles on quick flipping this thing to Ronda our rehabber now Rhonda's plan is to buy this little junker rehab the heck out of it and just turn it into a little gem sell it to a retail buyer within six months or so for a hundred thousand dollars so she wants to make a decent chunk of change on this thing and she likes the rehabbing game so when Johnny Q wholesaler shows with the 220 thousand dollars in work it needs and says hey it's yours for 50,000 she says sold so now Johnny's on his way to a quick 10,000 wholesale profit right so Johnny says okay Rhonda are rehabber I got it in a contract for 40,000 we're set to close in another 45 days from now so let's assign this contract over to you you step into my shoes aspire and its consideration for selling my position of this agreement to you just pay me an assignment fee of $10,000 which is the difference obviously so they agree they sign her up with an assignment contract like the one I'm about to go through with you and the deals done and before I go on let me just say I realize this is a very sanitized clean version of how a classic wholesale deal works and any experienced investors out there who are watching this might be inclined to accuse me of painting a really rosy picture of how the whole thing works the fact is I've done a lot of deals very much like that every deal has its own personality it has its own unique challenges not every deal fits the boilerplate version of what I just described but many of them do and I want to keep things simple and just explain the basic mechanics for those who may not know of how this works so what just happened well long story short Johnny Q wholesaler just sold his interest in a real estate deal he never owned the property but rather his signature was on the purchase agreement he signed the purchase agreement to Rhonda our rehabber who stepped into his shoes so to speak Rhonda our rehabber went to closing with Sally P seller and paid an assignment fee to Johnnie of $10,000 Johnny took his ten thousand dollars and went happily skipping down the street now as I told the story there's three questions that come to my mind that I think you may be asking yourself so let me run through some quick answers for those before we jump into this contract first of all does my real estate contract have to have and/or assigns somewhere in it or on it in order for it to be assignable and contrary to popular belief the answer is no if you don't know what the heck I'm talking about there don't worry about it but some people say you have to have the words and aura signs on your original real estate contract in order for it to be assignable I said this in another video recently the fact is any real estate contract is by its very nature assignable unless it specifically indicates that it's not so myth busted second question when should I collect my assignment fee well you know a lot of people will tell you a lot of the gurus in fact will tell you you should collect your assignment fee right when you assign that contract but I got to tell you I don't like that and here's why okay imagine you're in a situation where you're Johnny Q wholesaler and you're explaining to Rhonda rehabber okay you're gonna step into my shoes and close on this deal and you're gonna pay me ten thousand right now and then you're gonna go to closing and the Nerada says well what if something happens and then we don't get to go to closing what about the ten thousand I just paid you when you've got one of two answers either you're gonna have to dig in your pockets pony up and give it back or you're gonna have to break it to Rhonda that you know that's too bad it wasn't your responsibility to see the deal closed she stepped into your shoes and assumed all the risks associated with that which is legally true but I tell you I just don't think that's good business my preference as a wholesaler has always been and still is to say - Rhonda rehabber look the fact is I want you to pay me at closing when you buy now when you sell this thing but when you buy when you pay the seller the 40,000 that's on this contract that you're assuming then you can pay me my ten thousand dollars at the same time what that does is it keeps me interested in making sure that that deal closes because the you know the seller still knows me as a personality the original person who built reported and secured this deal with her I really don't want to step completely out of the picture and you know sayonara so long now you got to deal with this lady and I'm not even in the picture at all I just don't feel like it's good for the long-term relationship so I'm gonna put off collecting my money until closing and I actually put that in my assignment agreement question number three is this document guaranteed to be the right one for me to use in my area no it's not guaranteed as I said in my disclaimer you need to check with your local area you need to ask another local investor maybe take a look at their agreement or have them look at this or just run it by your local real estate attorney for an opinion to be as sure as you can be about yes you're welcome to use my assignment contract but use it at your own risk okay now with all that out of the way let's run through the actual agreement not to giving you free of charge today okay here we are with my assignment of purchase and sale agreement and as you can see this is a pretty simple one-page form I'm going to bust through it pretty quick you can download it from the web page I gave you earlier so let me just run through this oh and I should say I'm recording this on the back porch this is part two and between Part one and Part two my daughter came home from school so to avoid any background noise from her I came outside but you might hear a dog barking in the background or something along those lines hopefully he won't mind so this assignment is made and as you can see I've kind of got this filled out the 27th day of August 2008 random date mr. Johnny Q wholesaler you'll remember him from the story I just told and Miss Rhonda our rehabber whereas now this is a little bit more legalese a little bit more formal sounding than some of the agreements have refused before but I think it'll still be pretty easy to understand and I don't know why the heck they use whereas all the time in these contracts but they just do whereas a sign or has entered into a certain real estate purchase and sale agreement with Sally's sellers was the original seller of the property the person who I as the wholesaler had my original contract with Sally seller was the seller and a sign or which is me right a sign or I'm the wholesaler so I'm the assign or the sign or as buyer which agreement was dated on and this is of course the date of that contract not today's date with the date of that contract by a sign art and said seller for the purchase and sale of certain real property lying and situate in of course you put your county name here and your state right here and more particularly described in set agreement copy of set agreement being attached here to as exhibit a here to what a great word so basically your real estate contract becomes an attachment to this assignment exhibiting where as a sign or that's me the wholesaler desires to assign transfer and sell and convey to assignee all of my rights title and interest in to and under said real-estate purchase and sale agreement and whereas the assignee the investor I'm flipping this thing to desires to receive all of my rights title and interest in and under the real estate contract now therefore and in out there for for in consideration of the sum of let me just get rid of that I hate those things now this is going to be your consideration as the wholesaler that you're going to receive basically this is your assignment fee so and this pretend transaction I'm receiving $10,000 if you remember from my story I had a contract on it for 40,000 and Rhonda rehabber agreed to buy it for 50,000 the difference is 10 so that's my assignment fee here and other good and valuable considerations it's just legal contract mumbo-jumbo this efficiency of which is hereby acknowledged a sign or has a signed transferred and sold and conveyed and by these presents does hereby a signed transfer sell and convey good grief unto a signing all of a signers rights title interest to and under the real estate purchase came this is basically saying I'm giving them all that I had as a person on this contract any rights I had any ups downs positives and negatives that I was entitled to as a signer on this contract I am turning over to Ronda rehabber I also agreed to receive and Rhonda rehabber agrees to pay in full the assignment consideration that we mentioned up here on or before the closing date of the real estate purchase and sale agreement attached now you remember I said I actually added this in myself because I don't think it's really fair for everyone for me to try and get paid right away when you know we might be two weeks away from closing and I just kind of say okay see a siren sayonara - Rhonda rehabber and Sally seller so I take my assignment fee when Rhonda rehabber closes on her purchase her acquisition of this property this assignment shall be binding upon a signer and shall enter to the benefit of assignee and his successors heirs and assigns assignee hereby assumes all of the signers duties and obligations required by a sign or under the set agreement and agrees to defend and dignify and hold a signer harmless from any liability or obligation under the agreement okay so basically this is saying that when the assignee takes my place in this contract he or she in this case she Rhonda rehabber is agreeing to hold me harmless from any liability or obligation under this contract I was told at one point that without a clause like this in my assignment agreement then technically the person I'm assigning assigning this contract to could come back to me and have some grounds for coming back to me and holding me accountable if something goes awry in the contract between the original seller and the new buyer of course I don't want that to be the case as far as I'm concerned they I'm gonna I'm gonna stay there and help things along helping there's things along but I don't want to have any legal liability remaining over my head in this process so that's an important clause to understand why it's there and to leave it in their assignee that's Rhonda further agrees to hold a sign or me harmless from any deficiency or defect in the legality or enforceability of the terms of the agreement same thing there so this is this is saying look you're stepping into my shoes not just for the profit not just for the property but also for the liability assignee agrees and understands that I am not acting as a real estate broker or an agent in this transaction and I'm not representing either party but rather acting as a principal in selling my interest in the above referenced agreement to you Rhonda of course I'm paraphrasing a little there but I'm trying to make it crystal clear now I added this in once I became licensed as a real estate agent here in Tennessee in 2004 because I wanted it to be crystal clear that I am NOT representing anyone here as an agent that this is meet them thinking that the money I'm receiving the 10k up there is a real estate commission time is of the essence in this Agreement this is a good thing to have in your contracts in general it helps make time frame any time frame that's mentioned enforceable and assignee is in position of the original agreement this is basically saying Rhonda I'm giving you the original contract now I will keep a copy in my file so I just so I have a record of it but I'm gonna go ahead and give her the original blue ink signature version and then of course you got signed signatures and dates from both parties and that's it it's a simple one-page agreement again I know it's a little more legalese than some of the other agreements I've gone through before but it's still pretty darn easy done where many years feel free to use it in your own business use it at your own risk but use it to your heart's content feel free to tweak it I do suggest you get it run by a local professional and see if there's any tweaking that needs to happen on your end [Music]