An assignable purchase contract, also known as a wholesale real estate contract, is a legal agreement between a real estate wholesaler and a seller. This contract allows the wholesaler to find a property, secure it under contract, and then assign the contract to another buyer.
In simpler terms, an assignable purchase contract is a way for a real estate investor to sell their rights to buy a property to another investor or end-buyer. This type of contract is popular among those in the real estate investing community, as it allows for quick profits without the need for large amounts of capital or long-term ownership.
The process of using an assignable purchase contract typically starts with a wholesaler finding a distressed property that is below market value. They then negotiate a purchase price with the seller, and put the property under contract. At this point, they have the right to buy the property, but may not necessarily have the funds or desire to do so.
The wholesaler then assigns the contract to an end-buyer, usually another investor who is interested in purchasing the property. The end-buyer pays the wholesaler an assignment fee, which is often a percentage of the purchase price, in exchange for the right to buy the property.
One of the main benefits of using an assignable purchase contract is the ability to earn a profit without actually owning the property. The wholesaler can make money by simply finding and securing a good deal, and then passing it along to an end-buyer for a higher price.
Another advantage is the speed at which these types of deals can be done. Since the wholesaler is not actually purchasing the property themselves, there is no need for financing, inspections, or other time-consuming processes that can delay traditional real estate transactions. This allows for quick turnaround times and the potential for multiple deals to be done in a short period of time.
However, it is important to note that assignable purchase contracts can be complex and require a solid understanding of real estate laws and regulations. Working with an experienced real estate attorney or agent can help ensure that all parties involved are protected and that the contract is legally binding.
In conclusion, an assignable purchase contract is a useful tool for real estate investors looking to make quick profits without the need for large amounts of capital or long-term ownership. By securing a good deal and assigning the contract to an end-buyer, investors can earn a profit and move on to the next deal quickly and efficiently.