Fairway - the Victoria Realty Team Blog
Cheri Crause, CPCA
real estate agent in Victoria, BC
"I just love it when a plan comes together."
I think that phrase comes from a movie but I’m not sure. Regardless, it is true for me.
I recently had a friend become a client to buy a property that we both knew was a great deal—a work project mind you, but still a great deal. He had another investor friend who was interested in the property as well.
My friend was willing to assign the contract to purchase over to his investor friend. To assign a contract means that you are assigning it in whole or part to a third party, but we also added for everyone’s security that the original buyer (my friend) stays obligated under the terms of the contract of purchase should the assignee (his friend) default in any way. This really protects the seller as well as the first buyer. If the second buyer doesn’t default on the completion of the sale and takes possession of the property, than the deal is done and my friend has no claim or obligation going forward.
My client and friend knew that he might need to complete the sale, which meant he had to be approved for financing as well. An assignment can just be a name change to the contract but the mortgage must be in that name as well, so we had to make sure both buyers were approved for financing (even though only one buyer would actually get the property). Many tiny little details had to be handled to make this work for all concerned.
So in a nut shell, we had to make sure two buyers could independently buy this property before we knew which one was going to buy it in the end! And what is in it for the first buyer to assign the contract to the other buyer?? Money of course….the first buyer can charge a fee for finding the deal and assigning it. How much is in an agreement between the buyer. Should the second buyer default, the first buyer keeps the fee. To do this requires good paperwork. NO you shouldn’t try this alone!
To make all this happen it takes a team of people. I’d love to take all the credit but I can’t. I like to be the one to pull it all together but it takes more than me to make it happen.
Here is a list of all the people involved:
Mortgage broker – you need one who can pull all the data together and keep everyone in the loop as what is happening. In this case the same mortgage broker was working for both the buyer and his partner, so that made it easier.
Lawyer’s – in this case we had three to deal with. My friend’s lawyer, his partner’s lawyer and the seller’s lawyer. The seller was an estate, just to add another twist to the plot. These people had to be pulled together to make sure the agreement between both buyers was good. Also, to ensure that the contract was good for buyers and sellers alike, each lawyer had to approve it.
Home Inspector – he played a part to make sure we didn’t miss anything. Also added in were contractors and trades people to get a good idea of costs needed to bring the property up to snuff.
Realtor – both the seller’s realtor had a role to play as well as myself.
Spouses – we can’t forget the supportive spouses (wives in this case) that also have an impact on how smoothly things progress.
All these players are involved and needed to make it all happen. As you can see, it is not usually just a couple of people, but a team—a team with the same goals, and objectives, as well as one that works well together. My role as a realtor and in servicing my clients is to be the one to pull it all together. This is the part I like, somewhat like project management. I can be a great resource to put together a team for you if you don’t have one already.
And now this project is coming to an end. All financing is ready, the lawyers have all talked and have everything ready, inspection, and contractor quotes are in, spouses are on board and the seller’s realtor is helping the seller vacate the property.
Everyone has made money on the deal and everyone is smiling. I love it when a plan comes together!
Posted by Cheri Monday Jul 18, 2011 16:30
Categories: | Tags:
Cheri Crause is a real estate agent in Victoria, BC. This is her blog.
ROYAL LEPAGE COAST CAPITAL REALTY - OAK BAY
208-2187 Oak Bay Ave Victoria, BC V8R 1G1
Phone: 250 592-4422 • Toll Free: 1 800 263-4753 • Fax: 250 592-6600