Sales Contract // Assignment Of Contract

[gregb]

Real estate contract assignments are nothing new. You will especially find them in new home construction projects, due to the lag between the contract date and the completion date, so that an investor can benefit from a rising market with a profit without the cost of closing. Notice on the gse forms page one, the question as to whether the seller is the owner of public record? The three year sales history of subject is a challenge to some underwriters where there is only a contract assignment, not a contract closing.

 

[J Grant]

Whether it's a challenge to the UW is not our concern. The appraiser has to answer the page one question as asked. As of X effective date, which is our appraisal date, is the seller on the contract the subject owner of public record? That is a different question than 3 year sale history of subject (subject 3 year history of sale or transfers prior to eff appraisal date)

If the appraiser chooses to use the second assignment contract and its price as "The contract" , the answer to page one is seller owner or public record question is NO.

If appraiser uses first contract with recorded owner as seller then the answer to that page one is the seller the owner of public record, answer is YES.

As an appraiser, I'd want to be very clear about how I answer that question and if it were me, I'd be a lot more comfortable using first contract between owner and buyer and explaining/disclosing the second assignment contract and its price.

 

[Howard Klahr]

if a contract terms are typical or not.

When you gain a better understanding of actual real estate transactions and the documents associated with them, maybe you could then distinguish between those that are typical and which are not. There are far more contract assignments that occur than you might be aware. This is a very common type of transaction, especially in Florida.

The client sent 2 contracts to analyze, not one.

Two contracts, one transaction. Parse it up however you wish it will be handled in one closing.

Most contracts that I see are not assignable.

Most of the contracts that you see as a Florida appraiser are on a FARBAR form contract which does not prohibit assignment. Maybe you should do a better job of actually understanding that which you read.

Assigning contract is legal, but it was used for fraud/straw buyer and flipping during the boom.

As were contracts that were NOT assigned. So what is your point? Oh and you might want to avoid using terms that you don't fully understand.

 

[J Grant]

When you gain a better understanding of actual real estate transactions and the documents associated with them, maybe you could then distinguish between those that are typical and which are not. There are far more contract assignments that occur than you might be aware. This is a very common type of transaction, especially in Florida.

In my experience, it is uncommon since boom, I have not seen a single contract with an assignment in the past 10 years ( I do about 5 or more a week). I do not view them as typical since they are not common on market to date in my area recently. It would be up to each appraiser on their own assignment contract analysis if they want to describe it as typical, or not, or refrain from commenting .

Two contracts, one transaction. Parse it up however you wish it will be handled in one closing.

However they handle it at closing is on their end. The appraiser has to carefully explain it on our end. I'm surprised at your cavalier advice about it.


Most of the contracts that you see as a Florida appraiser are on a FARBAR form contract which does not prohibit assignment. Maybe you should do a better job of actually understanding that which you read.

And most of them are marked by seller or agent as not assignable when the blank contract form is filled in. Maybe you should do a better job about differentiating a blank contract which does not prohibit assignment, vs a filled out executed contract where it is marked contract is not assignable.

As were contracts that were NOT assigned. So what is your point? Oh and you might want to avoid using terms that you don't fully understand.

Oh and you might want to explain specifically, in your view what terms you think I did not fully understand? Tell me exactly what they were and tell me how I did not understand them.

 

[Greg Parker]

Thanks for all of the input. I know how I am going to proceed now. It is clear that copious amounts of explanation will be required.

I am still stuck on one issue, and this does not have so much to do with the appraisal itself, but rather a curiosity for my own education. Why would a bank allow/become involved in a transaction like this? It seems to me that having the borrower (in my original description, this was party B) as the individual being financed makes no sense when they are immediately giving the rights to the property to party C. Party B, now financed (even if it is for one penny) has no collateral to back up the loan. In this case, would the mortgage immediately be closed on the same day, with both transfers listed in public records? Or, because of the secondary contract, is Party B never going to show up as any part of the sale? I think I understand that this is a single transaction, I'm just not getting why Party B would continue to be named on the appraisal as the borrower, unless Party C is immediately paying cash for their part in the transaction. On the second contract, Party C is named as the assignee, with Party B as the assignor. On the second document, it states -- Assignor has negotiated a purchase price on the subject property of $68,000 Adding the assignment fee of $19,000, the Assignees total purchase price is $87,000. Since the Assignee is NOT the borrower in this case, what difference does the second contract make? For my engagement letter, there is the client and party B. Party B is still buying the home from Party A for $68,000. I'm sorry to sound so dense on this, but I am just trying to wrap my mind around all the involved parties.

 

[J Grant]

Perhaps the bank has a special program is okay with it. I can't answer for the bank, but no guarantee this deal will get approved. It might, it might not.

As you noted disclose and, explain in report about the contracts and assignments, so you CYA that you did an analysis. Then appraise the property.

 

[TRESinc]

Oh and you might want to explain specifically, in your view what terms you think I did not fully understand? Tell me exactly what they were and tell me how I did not understand them.

there isn't enough bandwidth in the world...

 

[J Grant]

there isn't enough bandwidth in the world...

You have nothing better to do with your time? First of all, I never said what you put in blue to you. It was in response to a statement made by someone else.Had nothing to do with you. .

Why do you post snark like this? I wish the board had a policy against it.

 

[residentialguy]

J G...you're supposed to laugh at clowns, not reason with them.

 

[sandpiperapp]

J G...you're supposed to laugh at clowns, not reason with them.

Yea, but sometimes they scare me.