In simple terms, you can not assign a bank owned property unless you get the permission of the seller and buyer. This is because banks put this into their contracts…
“This Contract may not be assigned without the written consent of Buyer and Seller. If Buyer and Seller agree in writing to an assignment of this Contract, the original parties to this Contract remain obligated hereunder until settlement.”
This doesn’t mean that they will not allow an assignment. On rare occassions I have heard of investors being able to get the banks to sign off on an addendum at the last minute to allow the assignments. This doesn’t happen enough to make it a viable strategy however.
Over at Flipping Homes, where Steve Cook makes his home, I came by a method that you can use as your wholesaling real estate strategy of choice. The basic concept is that you purchase the REO in the name of an LLC, and then you sell the controling interest in that LLC to your buyer for your assignment fee.
The reason why this works is that as far as the bank is concerned the buyer, which is the LLC, has stayed the same. Once you have the assignment signed you then can give your buyer the LLC documents, just make sure you don’t hand those over until you get paid!
One little tip is that you don’t have to setup your LLC before you make the offer. Once the offer is accepted you can then create your LLC. And a good idea is to use the street address of the property for the LLC name, that way you can almost garuantee the LLC name hasn’t already been taken. For your first attempt at this method you might want to setup the LLC ahead of time just so you can get the process down and get a feel for how long it will take.
Hope this helps…
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