When I assign the contract to the final buyer, how do I get my birddogging fees?

When I put a facility under contract, and then assign the contract to the final buyer, can my assignment fee be handled in closing?
In Buying Property - Asked by Don W. - Feb 17, 2011
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Answer(s)

Rob B.
Chandler, AZ

Don.... Who is paying the assignment fee? If it is the buyer, have him give instructions to escrow and put the required funds in to pay your fee. If it is the seller, have him provide instructions to escrow to pay your fee out of the sales proceeds. In either case you should have a written agreement to substansiate your fee. Good luck Don..... Don.... Who is paying the assignment fee? If it is the buyer, have him give instructions to escrow and put the required funds in to pay your fee through escrow. If it is the seller, have him provide instructions to escrow to pay your fee out of the sales proceeds. To get paid from escrow you will have to submit a demand for payment to escrow. In either case you should have a written agreement to substantiate your fee. Good luck Don..... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Feb 17, 2011
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Felix B.
Developer
Gulfport, MS

Not that complicated. Remember: Get Paid.
I hereby assign all right title and interest in (the property) for $X. to (buyer). Why would anyone else pay you an assignment fee. Have them pay the assignment fee then or have them sign a promissory note with guarantees. You should never wait till the closing. You could get left out, stalled or freezed out and lose control once you assign the contract. Once you have assigned the contract, you have earned that assignment fee and have done you part.
Why would you take a chance on something going wrong or depend on someone else to perform. Title work should be done prior to any assignment to elimate issues and to guarantee seller can perform. You cant give the assignee any reason to back out of your fee because you are losing control with the assignment, so the "package" should be tied up in a nice little knott.
Be smart, get paid.
I earned my first assignment fee of $100K in Tampa in 1984 along with an exclusive right to resell the property for the assignee. I ended up buying the property back from the assignee using the balance of $50,000 that assignee owed me as earnest money for the new deal and developed a $10,500,000 apartment when his potential buyer (AG Spanos) backed out of the deal at the last minute.
The escrow part is just legal mumbo jumbo and not a big deal.
Remember, if you are a Broker, you must disclose.
Felix Bertucci
felixbert@cableone.net
Bertucci & Company, Since 1972
AudubonRealty.us

Feb 17, 2011
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Rob B.
Chandler, AZ

Don.... I just finished reading the answer that Felix gave you from Gulfport, Mississippi. It appears this is an answer that might very well come from a developer, while my answer comes from how I would conduct myself as a broker in the State of California. I am not aware of the real estate laws in the State of Mississippi, but I would not refer to going through escrow as "legal mumbo-jumbo". Maybe closing services in Mississippi are like the Louisiana Creole dish, "jambalaya". However, in any of the escrow states, I would not bypass being paid through escrow if you truly wanted your assignment fee to be handled in closing, as you stated in your question. I would advise you that if you have any further doubt on how to handle this matter, consult with an attorney, as that is where you can get your best "legal mumbo-jumbo". Good luck Don.... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Feb 18, 2011
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Kevin S.
Owner/Investor
Inglewood, CA

Don, if you are the principal on the subject contract then I presume your terms read that you have an option to buy or assign the contract by a certain time period. I would also presume that you put up some consideration ($$$) or at least a promisory note. If these presumptions are true then your contract allows you to SELL your rights in the contract to new buyer who would pay you to be assigned to the contract subject to its terms and conditions. The best way is to have the buyer pay you for the contract so that you are out of it. Then the buyer continues the purchase with the seller.

Feb 20, 2011
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Kevin S.
Owner/Investor
Inglewood, CA

Don, if you are the principal on the subject contract then I presume your terms read that you have an option to buy or assign the contract by a certain time period. I would also presume that you put up some consideration ($$$) or at least a promisory note. If these presumptions are true then your contract allows you to SELL your rights in the contract to new buyer who would pay you to be assigned to the contract subject to its terms and conditions. The best way is to have the buyer pay you for the contract so that you are out of it. Then the buyer continues the purchase with the seller.

Feb 20, 2011
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Felix B.
Developer
Gulfport, MS

In response to Rob. B. and his somewhat disparaging and "know it all" remarks about Mississippi or my knowlege or experience as a Broker and his limited knowlege of an "Assignment" in the real world.
As indicated in my response, I am and have been a Broker for almost 40 years. I have been in involved in almost every kind of assignment and 75% of my commercial deals involve an assignment in some form or fashiion. Ninety percent of my deals are commercial transactions.
No matter what you do in the real estate business, development business, or construction business, if you are a Broker, you are regulated as a Broker. You lose your normal rights as a regular citizen and are then regulated as a licensed Broker, no matter what. You can't be just a developer, when you are a Broker governed by respective state laws. There are several southern states that have reciprocity, so a broker could realistically have a license simulatneously in Florida, Alabama, Mississippi, and Louisiana. The laws are different in each state and a requirement for a mulitstate broker would include passing that state's real estate law test.
In a cash, commercial transaction, there are only a couple of closing documents really necessary. In a contract assignment and payment prior to closing, only a simple assignment agreement and a payment from the assignee is necessary. There is no closing or escrow required for the assignment transfer and payment.
If a contract owner is smart and the contract which always requires consideration is written correctly, the contract principal should get paid "upon the assignment". You are then out, absolved of further liabliity in the contract and don't even have to show up for the closing, if there is one. My contracts are always written where any Earnest Money is the "total liability" and there is no further recourse, and I always have the "right to assign the contract" which is a requirement for said assignment. And contrary to what Rob B. suggests, why would you ever, ever wait till closing where you have lost control of the contract and may not ever get paid or why would you ever get a seller involved in your new transaction with an assignee that you have no control over and potentially let a contract get to the last minute in time.
There are very few times when a seller likes to see a property sell for a higher price prior the original contract closing. What happens when you get to the closing table without any payment for the assignment and the Seller and Assignee get together and decide to make a new deal without you? What then Rob B? What do you think a guy like Donald Trump would do to you?? There are a lot of them around. Waiting until closing to get paid for an assignment is a lesson in how to lose some sleep.
In my first $10Million dollar deal in Tampa in the mid 80's, everyone (builder partner signing the note and the lender) at the closing table had a nice private jet but me. My only leverage was ownership of the contract. That was the first one where I received 100M for an assignment fee. The loan committment was done months prior.
In my first $10Million dollar deal in Tampa in the mid 80's, everyone (builder partner signing the note and the lender) at the closing table had a nice private jet but me. My only leverage in the deal was ownership of the land contract. That was the first one where I received 100M for an assignment fee. The loan committment was done months prior. The closing on that deal and another similiar deal in Orlando took from 8 am to past 5 pm for each one. I can assure you there was hours of closing legal mumbo-jumbo consisting of a one inch thick loan committment and a one inch thick construction agreement.
I would suspect that Rob B. has been involved in very very few contracts where Rob has actually received any compensation from an assignment. He sounds like a typical broker on the sidelines watching the action. It would be interesting to know how many times Rob B. has actually READ all of the documents completely (legal mumbo jumbo) at a closing, ie, title opinions, deeds of trust, deeds, accuracy of surveys, disclosures, HUD or Fannie forms, etc., etc. at a closing or even attended.
No two states have the same real estate laws and it is up to the closing agent/attorney to handle that part of the transaction. Keep in mind Brokers can't give formal legal advise. In Mississippi all Title Insurance Policies are written by and all closings are performed by ATTORNEYS!! Closings in Florida are performed by Title Companies.
Regarding the Kevin S. response:
You do not necessarily have the right to sell or assign the rights in a contract unless it is specifically spelled out in the contract. Keep in mind a seller made a deal with a buyer specifically and that buyer may not have the right to assign or sell the contract unless agreed to prior.
"Birddogging fees" are illegal in the states I am familiar with. There

May 11, 2011
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Larmondo G.
Owner/Investor
Montgomery, AL

It's too simple! Visit me at The Property Man at http://thepropertyman.webs.com

Nov 3, 2013
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Felix B.
Developer
Gulfport, MS

This couldn't be any simplier.
The Contract for Purchase should read: "xyz, and or assigns", hereinafter know as the Buyer.
That gives you the full right to assign the contract and acknowledged by the Seller.
Then you merely have to enter into an agreement to sell the contract under any terms or conditions you can negotiate either thru a simple assignment prior to the closing or a Contract for Sale and Purchase with a simultaneous closing, or a "Flip" where the money for the new Buyer is used to close the original transaction.
The only difficult part is finding a property for less than its potential value or a Buyer that is willing to pay more than a purchase price you have negotiated.
Welcome to the world of transactional real estate and as Trump says: The Art of the Deal.
Good Luck.

Aug 14, 2015
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