Home Buying & Selling When is it Appropriate to Assign Your Buyer Back to Your Seller?

When is it Appropriate to Assign Your Buyer Back to Your Seller?

by admin
0 comment

We have hundreds of transactions and continue to do so with the owner’s funding, subject to existing financing, leasing / purchasing, or sandwich leasing. However, in some cases it may be appropriate to return the buyer to the seller instead of collecting the standard three payday for each transaction we teach. In our business, this is called AO (assignment).

After redesigning the business in 2013, one of the first conditional transactions was an AO transaction. Depicted here is a simple ranch on Rhode Island.

If the realtor didn’t sell, how did you get it done?

I mailed some yellow letters to the free and clear property of this one zip code. The seller called me saying he bought it for his daughter who wasn’t at home anymore. It was empty and he accepted the terms (in this case lease / purchase).

But he said a few things, so I tried to stay there instead of using the AO as an exit. The numbers and details are as follows:

  • He wanted the property $ 220,000.
  • He wanted $ 1,500 a month, but I felt it was all the money at the time.
  • He didn’t want to give me or anyone else a major credit.
  • He had been working with a real estate agent for about a year and was still working.

He continued it with his realtor as he asked if I was okay to work with him. Most realtors said they didn’t like to do that, but this guy was a friend of the seller and knew me and that was fine.

Related: 4 Practical Ways to Find Real Estate Transactions in the Red Market

We have a lease / purchase agreement with the seller. I understood that I was unlikely to stay in the middle because the seller needed everything every month and didn’t want to give up the monthly principal. So we both knew that we had a plan to procure a buyer and assign that buyer to him. We placed a “rent to own” sign in the front yard, a few feet away from the real estate agent’s sign.

Within 11 days, there was a deposit from the tenant buyer and the transaction was completed. He was a mason who had been driving at home for 11 months but did not call the number on his sign. why? He knew his credit wasn’t in good shape yet to get a mortgage, so my sign said, “There’s no rent to own, no bank.” rice field.

Related: How to make a profit of over $ 130,000 with a $ 183,900 purchase

I had a house for $ 235,000 and received a 10% down payment. So I was able to split the deposit into 50/50 and collect $ 11,750 as one of the first conditions. Signing with the buyer was done at my law firm and everything was assigned to the seller. The house was monetized on time within 24 months and everyone was happy. Therefore, instead of the standard three payday for each transaction, we collected AO’s one-time checks and proceeded.

These are fine, but keep in mind that if you want to get paid you have to do something else. This will create the same “current” cash flow when you create three paydays for each transaction, but it will also create continuous cash flow and good backend cash out. This ensures stable cash flow in a variety of ways for all transactions for 24-60 months.

Below is the average actual payday created for our 2017 in-house transaction. In 2013, we made more AO transactions. Currently, I only do it once or twice a year.

The following represents about 22 transactions.

Untitled 1

When is the best time to use the AO (Assignment to Seller) method?

  • In Texas, you can’t stay in the middle with a sandwich.So do as many AOs as you
    You can (and of course, be eligible for owner funding) if you are in Texas.
  • If you can’t create a spread or reason to stay (there may be no spread, but the big principle pays off
    Guarantee to stay).
  • If there is no fairness or reason to wait for the backend anyway.
  • AOs are much easier to explain to sellers and therefore can reach an agreement, so you are new and nervous about promising monthly payments, and / or want to execute cash flow immediately. I think. Of my first 13 term deals, 12 were AOs.

Being a master transaction engineer who understands how to navigate incoming transactions will bring you good profits.

Blog ad 02

Do you have any questions about the AO method?

Share them in the comments below!

You may also like