assignment document real estate

Assignment Definition

Investing Strategy , Jargon, Legal, Terminology, Title

Table of Contents

• What Is an Assignment?
• What is an Assignment in Real Estate?
• What Does it Mean to Assign a Contract in Real Estate?
• How Does a Contract Assignment Work?
• Pros and Cons of Assigning Contracts

REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.

An assignment or assignment of contract is a way to profit from a real estate transaction without becoming the owner of the property.

The assignment method is a standard tool in a real estate wholesaler’s kit and lowers the barrier to entry for a real estate investor because it does not require the wholesaler to use much (or any) of their own money to profit from a deal.

Contract assignment is a common wholesaling strategy where the seller and the wholesaler (acting as a middleman in this case) sign an agreement giving the wholesaler the sole right to buy a property at a specified price, within a certain period of time.

The wholesaler then finds another buyer and assigns the contract to him or her. The wholesaler isn’t selling the property to the end buyer because the wholesaler never takes title to the property during the process. The wholesaler is simply selling the contract, which gives the end buyer the right to buy the property in accordance with the original purchase agreement.

In doing this, the wholesaler can earn an assignment fee for putting the deal together.

Some states require a real estate wholesaler to be a licensed real estate agent, and the assignment strategy can’t be used for HUD homes and REOs.

The process for assigning a contract follows some common steps. In summary, it looks like this:

• Find the right property.
• Get a purchase agreement signed.
• Find an end buyer.
• Assign the contract.
• Close the transaction and collect your assignment fee.

We describe each step in the process below.

1. Find the Right Property

This is where the heavy lifting happens—investors use many different marketing tactics to find leads and identify properties that work with their investing strategy. Typically, for wholesaling to work, a wholesaler needs a motivated seller who wants to unload the property as soon as possible. That sense of urgency works to the wholesaler’s advantage in negotiating a price that will attract buyers and cover their assignment fee.

RELATED: What is “Driving for Dollars” and How Does It Work?

2. Get a Purchase Agreement Signed

Once a motivated seller has agreed to sell their property at a discounted price, they will sign a purchase agreement with the wholesaler. The purchase agreement needs to contain specific, clear language that allows the wholesaler (for example, you) to assign their rights in the agreement to a third party.

Note that most standard purchase agreements do not include this language by default. If you plan to assign this contract, make sure this language is included. You can consult an attorney to cover the correct verbiage in a way that the seller understands it.

RELATED: Wholesaling Made Simple! A Comprehensive Guide to Assigning Contracts

This can’t be stressed enough: It’s extremely important for a wholesaler to communicate with their seller about their intent to assign the contract. Many sellers are not familiar with the assignment process, so if the role of the buyer is going to change along the way, the seller needs to be aware of this on or before they sign the original purchase agreement.

3. Find an End Buyer

This is the other half of a wholesaler’s job—marketing to find buyers. Once they find an end buyer, the wholesaler can assign the contract to the new party and work with the original seller and the end buyer to schedule a closing date.

4. Assign the Contract

Assigning the contract works through a simple assignment agreement. This agreement allows the end buyer to step into the wholesaler’s shoes as the buyer in the original contract.

In other words, this document “replaces” the wholesaler with the new end buyer.

Most assignment contracts include language for a nonrefundable deposit from the end buyer, which protects the wholesaler if the buyer backs out. While you can download assignment contract templates online, most experts recommend having an attorney review your contracts. The assignment wording has to be precise and comply with applicable local laws to protect you from issues down the road.

5. Close the Transaction and Collect the Assignment Fee

Finally, you will receive your assignment fee (or wholesale fee) when the end buyer closes the deal.

The assignment fee is often the difference between the original purchase price (the price that the seller agreed with the wholesaler) and the end buyer’s purchase price (the price the wholesaler agreed with the end buyer), but it can also be a percentage of it or even a flat amount.

According to UpCounsel, most contract assignments are done for about $5,000, although depending on the property and the market, it could be higher or lower.

IMPORTANT: the end buyer will see precisely how much the assignment fee is. This is because they must sign two documents that show the original price and the assignment fee: the closing statement and the assignment agreement, respectively, to close the transaction.

In many cases, if the assignment fee is a reasonable amount relative to the purchase price, most buyers won’t take any issue with the wholesaler taking their fee—after all, the wholesaler made the deal happen, and it’s compensation for their efforts. However, if the assignment fee is too big (such as the wholesaler taking $20,000 from an original purchase price of $10,000, while the end buyer buys it for $50,000), it may ruffle some feathers and lead to uncomfortable questions.

In these instances where the wholesaler has a substantially higher profit margin, a wholesaler can instead do a double closing . In a double closing, the wholesaler closes two separate deals (one with the seller and another with the buyer) on the same day, but the seller and buyer cannot see the numbers and overall profit margin the wholesaler makes between the two transactions. This makes a double closing a much safer way to conclude a transaction.

Assigning contracts is a way to lower the barrier to entry for many new real estate investors; because they don’t need to put up their own money to buy a property or assume any risk in financing a deal.

The wholesaler isn’t part of the title chain, which streamlines the process and avoids the hassle of closing two times. Compared to the double-close strategy, assignment contracts require less paperwork and are usually less costly (because there is only one closing occurring, rather than two separate transactions).

On the downside, the wholesaler has to sell the property as-is, because they don’t own it at any point and they cannot make repairs or renovations to make the property look more attractive to a potential buyer. Financing may be much more difficult for the end buyer because many mortgage lenders won’t work with assigned contracts. Purchase Agreements also have expiration dates, which means the wholesaler has a limited window of time to find an end buyer and get the deal done.

Being successful with assignment contracts usually comes down to excellent marketing, networking, and communication between all parties involved. It’s all about developing strategies to find the right properties and having a solid network of investors you can assign them to quickly.

It’s also critical to be aware of any applicable laws in the jurisdiction where the wholesaler is working and holding any licenses required for these kinds of real estate transactions.

Related terms

Double closing, wholesaling (real estate wholesaling), transactional funding.

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How To Navigate The Real Estate Assignment Contract

What is assignment of contract?

Assignment of contract vs double close

How to assign a contract

Assignment of contract pros and cons

Even the most left-brained, technical real estate practitioners may find themselves overwhelmed by the legal forms that have become synonymous with the investing industry. The assignment of contract strategy, in particular, has developed a confusing reputation for those unfamiliar with the concept of wholesaling. At the very least, there’s a good chance the “assignment of contract real estate” exit strategy sounds more like a foreign language to new investors than a viable means to an end.

A real estate assignment contract isn’t as complicated as many make it out to be, nor is it something to shy away from because of a lack of understanding. Instead, new investors need to learn how to assign a real estate contract as this particular exit strategy represents one of the best ways to break into the industry.

In this article, we will break down the elements of a real estate assignment contract, or a real estate wholesale contract, and provide strategies for how it can help investors further their careers. [ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]

What Is A Real Estate Assignment Contract?

A real estate assignment contract is a wholesale strategy used by real estate investors to facilitate the sale of a property between an owner and an end buyer. As its name suggests, contract assignment strategies will witness a subject property owner sign a contract with an investor that gives them the rights to buy the home. That’s an important distinction to make, as the contract only gives the investor the right to buy the home; they don’t actually follow through on a purchase. Once under contract, however, the investor retains the sole right to buy the home. That means they may then sell their rights to buy the house to another buyer. Therefore, when a wholesaler executes a contact assignment, they aren’t selling a house but rather their rights to buy a house. The end buyer will pay the wholesale a small assignment fee and buy the house from the original buyer.

The real estate assignment contract strategy is only as strong as the contracts used in the agreement. The language used in the respective contract is of the utmost importance and should clearly define what the investors and sellers expect out of the deal.

There are a couple of caveats to keep in mind when considering using sales contracts for real estate:

Contract prohibitions: Make sure the contract you have with the property seller does not have prohibitions for future assignments. This can create serious issues down the road. Make sure the contract is drafted by a lawyer that specializes in real estate assignment contract law.

Property-specific prohibitions: HUD homes (property obtained by the Department of Housing and Urban Development), real estate owned or REOs (foreclosed-upon property), and listed properties are not open to assignment contracts. REO properties, for example, have a 90-day period before being allowed to be resold.

What Is An Assignment Fee In Real Estate?

An assignment fee in real estate is the money a wholesaler can expect to receive from an end buyer when they sell them their rights to buy the subject property. In other words, the assignment fee serves as the monetary compensation awarded to the wholesaler for connecting the original seller with the end buyer.

Again, any contract used to disclose a wholesale deal should be completely transparent, and including the assignment fee is no exception. The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself.

The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers). As with any negotiations , proper information is vital. Take the time to find out how much the property would realistically cost before and after repairs. Then, add your preferred assignment fee on top of it.

Traditionally, investors will receive a deposit when they sign the Assignment of Real Estate Purchase and Sale Agreement . The rest of the assignment fee will be paid out upon the deal closing.

Assignment Contract Vs Double Close

The real estate assignment contract strategy is just one of the two methods investors may use to wholesale a deal. In addition to assigning contracts, investors may also choose to double close. While both strategies are essentially variations of a wholesale deal, several differences must be noted.

A double closing, otherwise known as a back-to-back closing, will have investors actually purchase the home. However, instead of holding onto it, they will immediately sell the asset without rehabbing it. Double closings aren’t as traditional as fast as contract assignment, but they can be in the right situation. Double closings can also take as long as a few weeks. In the end, double closings aren’t all that different from a traditional buy and sell; they transpire over a meeter of weeks instead of months.

Assignment real estate strategies are usually the first option investors will want to consider, as they are slightly easier and less involved. That said, real estate assignment contract methods aren’t necessarily better; they are just different. The wholesale strategy an investor chooses is entirely dependent on their situation. For example, if a buyer cannot line up funding fast enough, they may need to initiate a double closing because they don’t have the capital to pay the acquisition costs and assignment fee. Meanwhile, select institutional lenders incorporate language against lending money in an assignment of contract scenario. Therefore, any subsequent wholesale will need to be an assignment of contract.

Double closings and contract assignments are simply two means of obtaining the same end. Neither is better than the other; they are meant to be used in different scenarios.

Flipping Real Estate Contracts

Those unfamiliar with the real estate contract assignment concept may know it as something else: flipping real estate contracts; if for nothing else, the two are one-in-the-same. Flipping real estate contracts is simply another way to refer to assigning a contract.

Is An Assignment Of Contract Legal?

Yes, an assignment of contract is legal when executed correctly. Wholesalers must follow local laws regulating the language of contracts, as some jurisdictions have more regulations than others. It is also becoming increasingly common to assign contracts to a legal entity or LLC rather than an individual, to prevent objections from the bank. Note that you will need written consent from all parties listed on the contract, and there cannot be any clauses present that violate the law. If you have any questions about the specific language to include in a contract, it’s always a good idea to consult a qualified real estate attorney.

When Will Assignments Not Be Enforced?

In certain cases, an assignment of contract will not be enforced. Most notably, if the contract violates the law or any local regulations it cannot be enforced. This is why it is always encouraged to understand real estate laws and policy as soon as you enter the industry. Further, working with a qualified attorney when crafting contracts can be beneficial.

It may seem obvious, but assignment contracts will not be enforced if the language is used incorrectly. If the language in a contract contradicts itself, or if the contract is not legally binding it cannot be enforced. Essentially if there is any anti-assignment language, this can void the contract. Finally, if the assignment violates what is included under the contract, for example by devaluing the item, the contract will likely not be enforced.

How To Assign A Real Estate Contract

A wholesaling investment strategy that utilizes assignment contracts has many advantages, one of them being a low barrier-to-entry for investors. However, despite its inherent profitability, there are a lot of investors that underestimate the process. While probably the easiest exit strategy in all of real estate investing, there are a number of steps that must be taken to ensure a timely and profitable contract assignment, not the least of which include:

Find the right property

Acquire a real estate contract template

Submit the contract

Assign the contract

Collect the fee

1. Find The Right Property

You need to prune your leads, whether from newspaper ads, online marketing, or direct mail marketing. Remember, you aren’t just looking for any seller: you need a motivated seller who will sell their property at a price that works with your investing strategy.

The difference between a regular seller and a motivated seller is the latter’s sense of urgency. A motivated seller wants their property sold now. Pick a seller who wants to be rid of their property in the quickest time possible. It could be because they’re moving out of state, or they want to buy another house in a different area ASAP. Or, they don’t want to live in that house anymore for personal reasons. The key is to know their motivation for selling and determine if that intent is enough to sell immediately.

With a better idea of who to buy from, wholesalers will have an easier time exercising one of several marketing strategies:

Direct Mail

Real Estate Meetings

Local Marketing

2. Acquire A Real Estate Contract Template

Real estate assignment contract templates are readily available online. Although it’s tempting to go the DIY route, it’s generally advisable to let a lawyer see it first. This way, you will have the comfort of knowing you are doing it right, and that you have counsel in case of any legal problems along the way.

One of the things proper wholesale real estate contracts add is the phrase “and/or assigns” next to your name. This clause will give you the authority to sell the property or assign the property to another buyer.

You do need to disclose this to the seller and explain the clause if needed. Assure them that they will still get the amount you both agreed upon, but it gives you deal flexibility down the road.

3. Submit The Contract

Depending on your state’s laws, you need to submit your real estate assignment contract to a title company, or a closing attorney, for a title search. These are independent parties that look into the history of a property, seeing that there are no liens attached to the title. They then sign off on the validity of the contract.

4. Assign The Contract

Finding your buyer, similar to finding a seller, requires proper segmentation. When searching for buyers, investors should exercise several avenues, including online marketing, listing websites, or networking groups. In the real estate industry, this process is called building a buyer’s list, and it is a crucial step to finding success in assigning contracts.

Once you have found a buyer (hopefully from your ever-growing buyer’s list), ensure your contract includes language that covers earnest money to be paid upfront. This grants you protection against a possible breach of contract. This also assures you that you will profit, whether the transaction closes or not, as earnest money is non-refundable. How much it is depends on you, as long as it is properly justified.

5. Collect The Fee

Your profit from a deal of this kind comes from both your assignment fee, as well as the difference between the agreed-upon value and how much you sell it to the buyer. If you and the seller decide you will buy the property for $75,000 and sell it for $80,000 to the buyer, you profit $5,000. The deal is closed once the buyer pays the full $80,000.

Assignment of Contract Pros

For many investors, the most attractive benefit of an assignment of contract is the ability to profit without ever purchasing a property. This is often what attracts people to start wholesaling, as it allows many to learn the ropes of real estate with relatively low stakes. An assignment fee can either be determined as a percentage of the purchase price or as a set amount determined by the wholesaler. A standard fee is around $5,000 per contract.

The profit potential is not the only positive associated with an assignment of contract. Investors also benefit from not being added to the title chain, which can greatly reduce the costs and timeline associated with a deal. This benefit can even transfer to the seller and end buyer, as they get to avoid paying a real estate agent fee by opting for an assignment of contract. Compared to a double close (another popular wholesaling strategy), investors can avoid two sets of closing costs. All of these pros can positively impact an investor’s bottom line, making this a highly desirable exit strategy.

Assignment of Contract Cons

Although there are numerous perks to an assignment of contract, there are a few downsides to be aware of before searching for your first wholesale deal. Namely, working with buyers and sellers who may not be familiar with wholesaling can be challenging. Investors need to be prepared to familiarize newcomers with the process and be ready to answer any questions. Occasionally, sellers will purposely not accept an assignment of contract situation. Investors should occasionally expect this, as to not get discouraged.

Another obstacle wholesalers may face when working with an assignment of contract is in cases where the end buyer wants to back out. This can happen if the buyer is not comfortable paying the assignment fee, or if they don’t have owner’s rights until the contract is fully assigned. The best way to protect yourself from situations like this is to form a reliable buyer’s list and be upfront with all of the information. It is always recommended to develop a solid contract as well.

Know that not all properties can be wholesaled, for example HUD houses. In these cases, there are often anti-assigned clauses preventing wholesalers from getting involved. Make sure you know how to identify these properties so you don’t waste your time. Keep in mind that while there are cons to this real estate exit strategy, the right preparation can help investors avoid any big challenges.

Assignment of Contract Template

If you decide to pursue a career wholesaling real estate, then you’ll want the tools that will make your life as easy as possible. The good news is that there are plenty of real estate tools and templates at your disposal so that you don’t have to reinvent the wheel! For instance, here is an assignment of contract template that you can use when you strike your first deal.

As with any part of the real estate investing trade, no single aspect will lead to success. However, understanding how a real estate assignment of contract works is vital for this business. When you comprehend the many layers of how contracts are assigned—and how wholesaling works from beginning to end—you’ll be a more informed, educated, and successful investor.

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Assigning Real Estate Contracts: Everything You Need to Know

Assigning real estate contracts refers to a method of earning money from buying and selling real estate. You find a seller who is eager to sell their property at a price that is far below its market value. 3 min read updated on July 10, 2020

Assigning real estate contracts refers to a method of earning money from buying and selling real estate. You find a seller who is eager to sell their property at a price that is far below its market value. Then, you find a buyer willing to pay a higher price for it.

How Contract Assignment Works

The first thing you need to do for contract assignment is to find a motivated seller. This is a person who owns a property, and for some reason, needs to sell in a hurry. This is generally because of a problem they are having, such as needing to move to a new home quickly. You'll need to be able to tell the difference between this sort of seller and someone who isn't in so much of a hurry to sell, and perhaps just wants to know what the property is worth.

You can find motivated sellers by placing ads in the newspaper, marketing on the internet, or sending direct mail. A combination of strategies works best.

The next thing you need to do is to obtain an assignment contract document. You can find templates on the web, but it's a good idea to have an attorney look it over before signing anything. That way, you will know that everything is completely legal. You will also be able to use that attorney if things don't work out as planned.

After the contract is signed, you submit it to a title company or an attorney who handles real estate closings. They will then do a title search. This ensures there are no existing liens against the property. This step is crucial because you do not want to buy a property that has a problem with the title. The title company is objective and independent and therefore makes sure everything is fair and legal.

At this point, you may search for a buyer. This will require more marketing strategies and can be a difficult process, but when you do find a buyer, you can move on to the next step - closing on the property. You'll need to collect a non-refundable deposit known as “earnest money” to make sure the buyer won't back out. If the buyer does change their mind, you get to keep the earnest money. This amount can be determined by you or the buyer.

Next, you get paid! The amount you receive will cover the amount you agreed to pay the property seller, along with an amount you get to keep in return for finding the buyer and making the transaction happen.

While this process takes place, you should make sure the seller understands how the process works , and that you will make a profit from the transaction. Otherwise, either the seller or buyer may decide they don't like the idea of your profiting from the sale and may back out. Reassure the seller that they are still getting the amount agreed upon for the sale.

Most contract assignments are done for $5,000 profit or less, but you can do it for a higher amount if you choose. If problems arise, it's possible to do a double or simultaneous closing, thereby keeping both parts of the sale separate and anonymous. Some title companies may not agree to do this, so if it becomes an issue, you should discuss it in advance.

Drawbacks of Contract Assignment

Contract assignment, or wholesaling, can be a  profitable venture , but there are a few pitfalls to watch out for, such as:

• You cannot make any repairs or renovations to the property because you do not own it at any point.
• You cannot offer any type of financing to the buyer.
• You must get the sale accomplished within a short amount of time before the contract expires.
• The process of closing on the property is detailed and can be complicated.
• You must find a buyer who is willing to pay in cash because it's hard to find a lender who will approve a mortgage for an assigned contract.

You also need to check the laws in your state, because in some states it is not legal to market a property that you don't own.

If you need more information or help with assigning real estate contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• Property Contracts
• Sample Real Estate Contracts
• Land Sale Contracts
• Commercial Real Estate Contract Provisions
• Deed Contract Agreement
• Assignment Of Contracts
• Define Subject to Contract
• As Is Sales Contract
• Bill of Sale Land Contract
• Extension Addendum to Contract

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Lease Assignment Agreement

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A Lease Assignment Agreement is a short document that allows for the transfer of interest in a residential or commercial lease from one tenant to another. In other words, a Lease Assignment Agreement is used when the original tenant wants to get out of a lease and has someone lined up to take their place.

Within a Lease Assignment Agreement, there is not that much information included, except the basics: names and identifying information of the parties, assignment start date, name of landlord, etc. The reason these documents are not more robust is because the original lease is incorporated by reference , all the time. What this means is that all of the terms in the original lease are deemed to be included in the Lease Assignment Agreement.

A Lease Assignment Agreement is different than a Sublease Agreement because the entirety of the lease interest is being transferred in an assignment. With a sublease, the original tenant is still liable for everything, and the sublease may be made for less than the entire property interest. A Lease Assignment transfers the whole interest and puts the new tenant in place of the old one.

The one major thing to be aware of with a Lease Assignment Agreement is that in most situations, the lease will require a landlord's explicit consent for an assignment. The parties should, therefore, be sure the landlord agrees to an assignment before filling out this document.

How to use this document

This Lease Assignment Agreement will help set forth all the required facts and obligations for a valid lease assignment . This essentially means one party (called the Assignor ) will be transferring their rights and obligations as a tenant (including paying rent and living in the space) to another party (called the Assignee ).

In this document, basic information is listed , such as old and new tenant names, the landlord's name, the address of the property, the dates of the lease, and the date of the assignment.

Information about whether or not the Assignor will still be liable in case the Assignee doesn't fulfill the required obligations is also included.

Applicable law

Lease Agreements in the United States are generally subject to the laws of the individual state and therefore, so are Lease Assignment Agreements.

The Environmental Protection Agency governs the disclosure of lead-based paint warnings in all rentals in the States. If a lead-based paint disclosure has not been included in the lease, it must be included in the assignment. Distinct from that, however, required disclosures and lease terms will be based on the laws of the state, and sometimes county, where the property is located.

How to modify the template

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.

A guide to help you: Tenants and Subtenants Obligations under a Sublease Agreement

Lease Assignment Agreement - FREE - Sample, template

Country: United States

Housing and Real Estate - Other downloadable templates of legal documents

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• Sublease Agreement
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How to Use Real Estate Assignment Contracts for Investing

Real estate assignment contracts can lead to easy money

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• Definition of an 'Assign'

What an Assignment Conveys

Profiting by referring it along, building a buyer list.

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Jim Kimmons is a real estate broker and author of multiple books on the topic. He has written hundreds of articles about how real estate works and how to use it as an investment and small business.

Visualize a real estate purchase contract with just a few extra words added to your name as the buyer. It would look something like this:

"Buyer: John J. Doe, and/or assigns."

That's it. You've provided for a real estate assignment contract. It seems simple, and it is, and it opens up many opportunities for profits in real estate investing .

Who or What Is an 'Assign'?

Your "assigns" would be anyone to whom you want to pass your purchase rights. Maybe you've effectively locked up a property with a purchase contract. You can now go ahead and buy it, flip it, rehab and rent it, or apply any other strategy that's legal.

Or you can also pass it along to someone else for profit, never actually buying it yourself. This is an assignment contract.

Control is all in your court at the beginning; you don't have to turn the deal over to anyone else if you decide not to, or until such time as it best suits you financially if you decide to go ahead with the assignment. The downside is that if you can't find anyone to take over the contract and that was your intention, you'll be legally obligated to consummate the sale yourself.

You're not just passing your purchase rights along. You're also passing your obligations in the contract. This means that you're no longer involved in the transaction at all after the assignment takes place.

You don't have any right to make claims against the seller if there are problems with the deal moving forward, however. The person or company to whom you've assigned the deal to is now responsible for taking the deal through to closing. 

Of course, this assumes that you've actually assigned the contract to another party. Until that time, you're on the hook. The contract is a legal document, governed by individual state laws, so the seller might have various means of recourse if you don't assign the contract and you don't follow through and close on the property.

You probably won't be receiving your fee or profit until closing, so you might be understandably nervous as you wait for the deal to close.

A Note About State Laws

A few states won't let you transfer liability in this way, so you might want to check with an attorney in your area to make sure you understand the laws in your jurisdiction before you jump in with both feet.

HUD homes and real estate owned properties or foreclosures generally aren't open to assignment in any state.

The simplest way to profit in this situation is to locate one or more buyers in your buyer database, show them the value in the deal, and take a referral or "bird-dog" fee for bringing it to them.

Bird-dogging doesn't involve getting technically involved in the deal at all. It's more or less an arrangement where you locate the property, then say, "Here you go, Investor," and the investor takes it from there, personally entering into a purchase contract with the seller—in exchange for a fee to you, of course.

You'll then assign your rights to the deal, and they'll go forward to closing.

They'll pay you your fee at or after closing. You could profit handsomely, even though all you had at risk was whatever earnest money deposit was required. And that risk is pretty low if you know who your buyers are likely to be before you contract the property, assuming the value is there.

You'll also begin to build and maintain an active investor buyer list for your customer pool. This is critical because you really want to be sure you have a ready buyer or two for a home before you commit that earnest money. You should be covered pretty well if you do a good job of building your list .

The list should include both fix-and-flip and rental property investors who have an interest in buying depending on the condition of the property. 

Rental investors normally want a house ready for occupancy, or at least with only cosmetic or minor repairs necessary.

Back-to-Back Closings for a Flip Sale

You can also take on the purchase personally and immediately selling it to another investor or a retail buyer. You might want to take this approach because your profits would be more significant.

Unfortunately, you can no longer use the funds from one deal to close on another in simultaneous closings since the mortgage crisis in 2007. Lenders just won't allow it. But you can explore resources for short-term funding, such as a relative, your own cash, or a hard money lender.

You only need the money long enough to close the purchase and resell. This might be hours, but it should never be more than a day or two.

A Great Real Estate Investment Strategy

Ideally, you've perfected your techniques and you can locate really great deep discount real estate deals with others. There are many ways to get to a good deal early, and your value to your buyer-customer is that you've got the property in your control. They'll only get it if you pass it along.

You can make this work well for you by honing two tasks: First, have a really good buyer database with information about what each is looking for, and second, learn and put into play various strategies for locating great property deals before they become general knowledge.

Using real estate assignment contracts can be your ticket to real estate investing profits with little of your own money at risk if you get these two things in line and operating for you.

• The Basics of Real Estate Wholesaling
• Real Estate Wholesaling - A Viable Real Estate Investment Strategy
• Investing in Real Estate Without Cash
• Building Your Real Estate Success Investment Team
• Earnest Money Basics
• Real Estate Consulting as a Business Model
• The Equity or Mortgage REITs Decision - The Differences Explained
• How to Build a Buyer List for Real Estate Investing
• What to Know Before Investing in Real Estate
• Guide to Real Estate Contract Amendments and Addendums
• Is It Mortgage Assumption or Subject to Mortgage?
• Why Buyers Use Blanket Mortgages
• Elements of Real Estate Lease Agreements
• Commercial Real Estate Financing: Banks vs. Private
• Real Estate Investment Analysis
• Calculating First-Year Return on Equity for Real Estate Investments

• Purchase Agreements

Real Estate Purchase Agreements

Purchase agreements are most commonly used for creating a transaction between a buyer and a seller of residential real estate. The purchase agreement will outline the final negotiations between the parties including the sales price, contingencies, and when the closing must occur. In most transactions, the agreement will be dependent on the buyer obtaining financing from a local financial institution, therefore, it’s recommended that the seller not agree to any sales contract unless the buyer is preapproved or prequalified for the loan.

• Connecticut
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• West Virginia

What is a Real Estate Purchase Agreement?

A real estate purchase agreement is an instrument that is employed when individuals partake in the purchase & sale of a residential dwelling. This can be applicable to a single-family house, condo (or another type of common-interest community property), duplex, etc. Once a buyer shows interest in a residence for sale, they will submit an offer in the form of this agreement. Listed within the content of the agreement is the prospective buyer’s desired contractual terms, such as their proposed purchase price, provisional requests, protective contingencies, and the amount of earnest money they are willing to deposit. The seller will typically be given a time limit to either accept, deny or counteroffer the submission. If accepted, the seller shall sign the offer creating a binding purchase agreement that will start the process of transferring the property. Otherwise, they may counter with an alternative proposition that includes the terms that they are more comfortable with (also using this very agreement).

Can a Seller Back Out of a Purchase Agreement?

Once a purchase agreement for the sale of residential property has been signed and is in escrow, participants are legally bound to uphold the commitments registered within the form. If the seller has a change of heart and would like to back out of the agreement, they may have some options to do so:

• While the Contract is Under Review – A lot of times after an agreement has been signed, it will be held under a five (5) day reviewing period where attornies can comb through the contract for verification purposes. The seller has the right to terminate the agreement at any time within the duration of this process.
• Back Out Addendum – If the seller included an addendum within the purchase agreement that allows them to back out at any time during the course of the contract, they may do so without any repercussions of the law. Most buyers will not agree to include this addendum within the content of the purchase agreement.
• Breach of Contract  – When formulating the sales document, both parties will typically record certain contingencies that allow them to terminate the contract if they are not met prior to closing.
• Put in a Request to the Buyer – If all else fails, contact the purchasing party explaining the reasons why you would like to terminate the agreement. You never know, a buyer could have compassion for your situation and agree to void the contract. It never hurts to ask.

If the seller is unable to lawfully withdraw from the contract and still refuses to continue with the sale, they can face legal consequences and be held liable to compensate the buyer for an array of damages.

What are the Common Contingencies in a Purchase Agreement?

A contingency is essentially a clause within the contract that stipulates that if a certain requirement is not met, then the contract is void or open to further negotiations. These contingencies can be directly inserted within the content of the purchase agreement or attached to the contract in the form of an addendum. When creating your purchase agreement/offer, it is important to include any contingencies that will provide security for the transaction. Listed below are some of the more customary contingencies that buyers/sellers will want to include within the purchase agreement:

• Appraisal – Required by most banks, this clause states that an appraisal must be conducted before the transfer of property can occur. If the estimated value of the home is lower than the agreed-upon sales price, then the buyer must either terminate the contract, renegotiate the purchase price, or switch lenders in order to receive a second opinion.
• Financing  – The contract may be terminated if the purchaser is unable to secure financing from a lender.
• Home Sale  – The sale is contingent upon the buyer being able to sell their home by a specific date in order to continue with the purchasing of the seller’s property. (Sellers may be reluctant to accept this contingency and are usually more prone to accept offers that do not include this.)
• Homeowners Insurance  – Insurance companies will sometimes refuse to provide coverage to high-risk properties that are located within certain regions of the country (flood zones, wildfire zones, earthquake fault zones, etc.). This contingency allows purchasers to back out of the agreement if they are unable to insure the property.
• Inspection  – This type of contingency mandates that after entering into an agreement for the sale of a home, the buyer will have a certain period of time to have a professional perform a property inspection. If the inspection report indicates that there is a significant material defect contained within the property, the buyer has the right to cancel the agreement or propose a new deal with the seller.
• Kick-Out Clause – A compromise for the above-mentioned home sale contingency, this grants the seller the authority to proceed with the marketing of their property while under contract with the buyer. If the seller finds another buyer who does not require that they sell their home first in order to purchase the seller’s, they can then end the current sales contract and move forward with the new buyer who doesn’t implement the home sale contingency.
• Title – This requests that the seller provide confirmation that the property’s title is free and clear of any liens or encumbrances before finalizing the transaction. It also stipulates that the buyer has the right to review all documentation concerning the property’s title before the closing date. If an issue with the title arises, they will have the option of terminating the purchase agreement.

What is an Addendum?

An addendum is an additional form that can be attached to the purchase agreement. It can provide supplementary terms to the contract that either alter the course of the previously arranged agreement or simply just add to it at the time of its inception. As mentioned in the previous section, a contingency can come in the form of an addendum. Here are several different types of addendums that can be implemented, some of which incorporate the common contingencies listed above:

• Closing Date Extension Addendum
• Condominium Association Addendum
• Earnest Money Receipt
• Earnest Money Release
• Escrow Holdback Agreement Addendum
• Estoppel Certificate Addendum
• Inspection Contingency Addendum
• Owner (Seller) Financing Addendum
• Short Sale Addendum
• Termination Letter to Purchase Agreement
• Third (3rd) Party Financing Addendum

What is a Realtor?

A lot of people use the terms “Realtor” and “real estate agent” interchangeably and do not realize that they are not technically the same. Read the descriptions below to better understand the key differences between the two.

Real Estate Agent vs. Realtor

A  real estate agent  is an individual who has completed the required salesperson course for their state (this course will vary in the number of hours needed to pass depending on the state). After passing the course, they are instructed to take the mandatory state exam in order to demonstrate that they have sufficient knowledge of the local real estate laws and protocol. They must then join an agency that is overseen by a broker in order to legally serve clients who seek assistance with their selling or purchasing needs.

A Realtor  is someone who has fulfilled all the requirements needed to become a licensed real estate agent and is also affiliated with the National Association of REALTORS® . Becoming a member of this organization means that you are held to a higher standard than your average salesperson, as you have to follow a certain code of ethics that is enforced by the association. In short, it is an extra credential that further legitimizes the agent and grants them access to the group’s various resources that can help facilitate a sale.

How to Find a Listing Agent

As most homeowners looking to sell their property are busy with their careers, families, and other obligations, they do not have the time nor the experience/knowledge to sell their own property by themselves. Luckily, there are agents who specialize in the sale of residential real estate who can help ease the process and maximize your final proceeds. A listing agent can perform the following tasks:

• Pricing the Home
• Advertising the Property
• Coordinate Showings
• Negotiating & Accepting Offers
• Managing the Essential Paperwork
• Preparing the Necessary Disclosures

But you can’t just hire anybody who has a license, you are going to want to recruit an agent who is qualified and has valuable knowledge of the area your property is located in. This means that you should avoid hiring someone who just recently acquired their license because they are a friend or family member. Begin the process by:

Researching Local Agents – Find out who the available agents are in your area by:

• Asking your friends, family, and co-workers if they know of any agents that they could recommend for hire.
• Driving around the neighborhood and taking note of any agents who are prominently displayed on the various “for sale” signs along the road.
• Attending open houses of similar properties to network with the agents showing the homes.
• Coldwell Banker
• Keller Williams Realty

Reviewing Their Record – When deciding whether or not you are going to sign with an agent, make sure that you first check their credentials. Try to verify the following info:

• How long have they been actively selling real estate?
• Are they doing it full-time or part-time?
• How many homes have they sold in the past year?
• Are they receiving top market prices?
• Do they sell within an efficient time frame?
• Are they proficient in selling homes within your neighborhood?
• Do they belong to a respected agency?

It is suggested that you interview a minimum of three (3) agents prior to entering into a listing agreement. Be cautious of hiring an agent who gives you a significantly higher estimate for the value of your home than other agents you’ve interviewed, they may just be trying to entice you to list with them.

Real Estate Agent vs. FSBO

“ For Sale by Owner “, or FSBO, is the act of selling a residential property without the assistance of a realtor/real estate agent. Although the majority of home sellers enlist the help of a real estate agent, that does not mean selling a home on your own is an inconceivable task. It does, however, require a lot more time, research, and work for the seller (marketing your home can be a full-time job). When considering the idea of selling your property on your own versus with an agent, you should first assess the pros & cons associated with both approaches:

Benefits of selling your own property :

• Not having to pay a listing agent’s commission (which can usually range from 4-7% of the sales price depending on the agent’s reputation and location of the sale).
• Determining your own asking price.
• Having full control of all advertising, showings, and negotiations.
• Buyers may underestimate your ability to sell the home accordingly, thus giving you the upper hand when being approached.

Disadvantages of selling your own property :

• Lack of expertise in the local market.
• Amount of time that will be taken away from your personal and professional life.
• Liability to follow the state’s real estate laws and provide the required disclosures.
• Handling all the necessary paperwork and approving the buyer.
• If the buyer has an agent, you will still have to pay their portion of the commission (typically 3% of the sales price).
• On average, FSBO properties tend to get less money than properties listed with real estate agents.

How to Sell Real Estate on Your Own

For the majority of the United States population, their home is their biggest asset. When a homeowner decides that they would like to sell their property, it can seem like a very intimidating task. Owners want to make sure they get top dollar for their property and hopefully even make a profit. So, it is important that before you put your dwelling on the market, you really reflect on whether or not you are truly ready to sell.

Whether you’re looking to sell your property because you would like to upgrade, downgrade, or relocate, this guide can help you take the necessary steps to sell your home without the assistance of a listing agent.

Step 1 – Prepping Your Home for the Marketplace

When preparing to sell your home, it is important to ensure that the property is presentable for public viewing. Here are some various ways you can make your property look more appealing to prospective buyers:

Administer a Deep-Cleaning – The first step should involve you making sure that the interior of the home is immaculate. This can be achieved by:

• Removing any unwanted clutter.
• Wiping down all the surfaces.
• Washing the windows.
• Vacuuming and mopping the floors.
• Shampooing carpets that have unsightly stains.

List the Various Damages/Deficiencies – Walk through the home and write down any noticeable flaws contained within the dwelling. Next, decide whether or not they are worth fixing for the purpose of improving the home’s appearance and potentially receiving more money from the sale. You don’t want to deter buyers from purchasing your home because of minor defects that could have easily been repaired. This could include:

• Repairing any defective components within the home, such as a broken window, malfunctioning appliance, faulty garage door, etc.
• Making cosmetic enhancements, such as adding a fresh coat of paint to areas in need, replacing the carpet, updating light fixtures, etc.

Staging the Property – This is another common technique used in the real estate world that involves a professional coming in and enhancing the visual aesthetic of the home by outfitting the property with:

• Attractive Furniture
• Decorative Pieces
• Complementing Accessories

Enhancing the Curb Appeal – Once the inside is taken care of, you should improve the property’s external appearance by:

• Clearing out any unnecessary items in the yard.
• Having the property freshly landscaped (mow the lawn, weed wack, add fresh mulch to the beds, rack leaves, trim, etc.).
• Touching up any cosmetic defects found on the structure (chipped paint, dents on the siding, missing shingles, etc.).
• Removing debris out of the gutters.
• Paving the driveway.
• Cleaning the pool and/or hot tub (if applicable).

Now that your home is fully prepped for sale, you may want to consider having a professional conduct a:

• Pre-inspection – Although it is generally thought that the buyer is responsible for having an inspection performed, it is also considered a good measure for the seller to carry out their own before putting their home on the market. This way, the seller is aware of any major defects prior to entering into an agreement with a prospective buyer and can avoid the hassle of a stalled closing. This also demonstrates a sign of good faith to the buyer. (The ASHI offers a search program that allows individuals to look up certified home inspectors that are available for hire in their area.)

Step 2 – Determining the Market Value of Your Home

The most important element when getting ready to put your property on the market is settling on an asking price. This measure requires research and a lot of consideration in order to sell your home in a timely manner. Some of the factors that contribute to a property’s value include:

• Current Economy
• Improvements
• Interest Rates
• Location, Location, Location
• Number of Bedrooms/Bathrooms
• Square Footage of the Home
• Supply & Demand
• Time of Year

Listed below are some of the methods used to price residential properties:

• Online Pricing Tools  – Numerous websites that are geared towards the sale of real estate offer pricing tools that can help calculate a rough estimate of what your home is worth, Zillow.com being among one of the more popular. (This should only be used for a basic idea of what the real estate’s value is.)
• Comparative Market Analysis (CMA) – Frequently implemented by agents in the real estate business, this method calculates the value by comparing the residence for sale to other similar properties that have been recently purchased. Typically, the individual performing this task will get the data of at least 3 other comparable homes in the area and adjust the price by adding & subtracting the different features of the properties. After running the calculations, you should be able to determine the ballpark figure of what the home is worth. (Although you should only use properties that have sold for your CMA calculations, it doesn’t hurt to also study similar properties that are currently on the market.)
• Hire an Appraiser – Any buyer that has to obtain financing from a lender will most likely have to have an appraisal conducted on the property per request of the mortgage company. Having said that, it is also an option for the seller to have this implemented beforehand in order to get a better feel for what the home is worth. (The average cost of an appraisal can range from $300-$400 for a single-family dwelling.)

Think about the following questions when pricing your home:

• Am I in a Rush to Sell? – The owner must decide what is more important, selling the property quickly or holding out for a higher number. If the owner is in a rush to get rid of the home, they should ask for an amount no higher than the estimated value that they calculated when pricing the property. Listing your home right can even drive up the price, as you will probably receive multiple offers and be able to use that as leverage when haggling with interested parties. If there is no hurry to sell, the owner can start high and then periodically reduce the price until a sale is achieved. But keep in mind, the longer the home is on the market, the more suspicious buyers become of the property.
• Should I Add a Percentage for Closing Costs to the Sales Price? – Traditionally, the seller is responsible for paying the bulk of the closing costs connected to the sale of the property. But if the market is in their favor, they can try to incorporate the anticipated cost of closing into the listing price. Luckily for FSBO sellers, closing costs are already significantly reduced since they will not be paying a listing agent’s commission.

Step 3 – Marketing Your Property for Sale

Take Photos  – Once the property is in pristine order, you are going to want to capture quality pictures of the residence inside & out that highlight its best features. It is recommended that you hire a professional photographer who has all the necessary equipment and knowledge it takes to snap top-grade photos. A good real estate photographer can even create a virtual tour that allows online visitors a 360-degree view of the property’s interior layout. If you are looking to save money, you can make the decision to take the pictures yourself as long as you have a high-definition camera and the confidence in your abilities. But remember, this is the most significant element when promoting your property, as most people base their opinions on the property’s appearance in the photos.

Write a Description  – It is important that you write a detailed summary that describes the home for sale and all its selling points. Take your time when crafting the description, as it will need to be included in every ad that you post. Be sure to include an enticing headline and your personal contact information so that interested parties can reach you. Details about the home that you may want to consider covering in your description include:

• Additional Rooms (gym, office, den, etc.)
• Amenities (pool, hot tub, fireplace, etc.)
• Attic/Basement
• Garage (number of bays, if applicable)
• Heating/Cooling System
• Landscaping
• Nearby Access to Transportation
• Number of Bathrooms
• Number of Bedrooms
• Renovations/Upgrades
• Septic System
• Special Promotions (home warranty, owner financing, flexible closing date, etc.)
• Square Footage
• Style of House (ranch, colonial, cottage, etc., if applicable)
• Type of Home (house, condo, duplex, etc.)

Display a “For Sale” Sign – Don’t underestimate the effectiveness of displaying a “For Sale by Owner” sign on the property, especially if the home is located in a high-traffic area. This is essentially free promotion as anybody passing by will be made aware that the property is on the market. Make sure that the sign is positioned in a way that is most visible to people commuting to their destination. Write your telephone number within the indicated area of the sign, making sure that the print is legible and easily seen from a distance. Not only will this inform passersby, but it can also help interested parties locate your property for showings. If you live in a common-interest community, you may want to refer to the association’s rules as to whether or not you are allowed to post a sign on the premises. (FSBO signs can be found at most home improvement stores and can vary in cost. You can also order online through websites such as Lowes.com .)

Post Online Ads – Now that you have taken care of the preliminary measures, it’s time to place your ads. In the earlier days of selling property, homeowners would have to advertise their residence in a local newspaper or magazine. Thanks to the internet, it is much easier for sellers to market their own home without the assistance of a real estate agent. There are various websites fully dedicated to promoting homes for sale, the top sites being:

• Trulia.com (partners with Zillow)
• HomeFinder.com

The following sites listed below completely focus on the buying and selling of FSBO properties:

• ForSaleByOwner.com

In order to post ads, you are first going to need to create an account for each website. Once you have signed up, upload the photos of your property and insert the written description that you produced earlier within the corresponding text boxes. You may then publish the ad once you feel it is ready to be presented to the public. Congratulations! Your property is now displayed on a prominent home sales website. Now it’s time to sit back and await responses. (It also doesn’t hurt to inform friends, acquaintances, and family members of your available property by posting on your various social media accounts, e.g. Facebook.com .)

Unfortunately, FSBO sellers are unable to directly advertise on MLS.com and Realtor.com , which are popular websites reserved for properties that are listed with licensed real estate agents. But, if interested, there are several third-party companies available online that can list your property for you on the aforementioned websites for a fee.

Step 4 – Showing the Property

Now that you have publicized your property for sale, you will begin to receive inquiries. It is imperative that you keep track of your email and answer/return all incoming phone calls. People will be contacting you asking various questions concerning the home and eventually request to view the property. Showing your home can be a bit of a hassle, especially when you have other family members in and out of the dwelling. But, it is important to realize that the more people who view the home, the more chance of you receiving an offer. Follow the guidelines listed below to enhance the quality of your showings:

Prepare Your Home for Viewing  – As you already took the necessary steps to improve your home’s appearance when prepping it for the marketplace, all you will have to do now is maintain its presentability for showings. This means you must:

• Make sure that the home is clean, smells good, and is set to an appropriate temperature.
• Turn on all the proper lighting so that each room is easily visible.
• If you own a pet, secure it in a cage or fenced-in area during the duration of the showing. This way, your pet won’t get loose or disturb any visitors viewing the property.
• Put away any valuable items in a safe place as a precautionary measure.

Private Showings – This occurs when a private party requests to view the property by appointment. The appointment can be made in advance or sprung upon you at the last second. This is why it is important that the seller:

• Give other members of the dwelling sufficient notice of any known showings so that they can tidy up the home and vacate the premises before the viewing party arrives.
• Coordinate a certain protocol with the other occupants of the household on what to do in the event of a last-minute showing.

Open House Showings – An open house is when a property is available for anyone to walk in and view the home within a specified time period. Some people question the effectiveness of this practice and don’t find it necessary to frequently conduct them. Others believe that they are productive and insist on carrying one out every other week. Ultimately, the choice is yours as to how often you would like to incorporate this tradition. If interested, sellers should strongly consider:

• Hosting an open house on the first weekend of the property being on the market.
• Opening their home to the public on Sunday during the afternoon.
• Purchasing and displaying an open house sign to indicate that the property is available for viewing.
• Going the extra mile and offering a spread of food & drinks to the visitors and even playing some light music for a more sociable ambiance.

Create a Comfortable Environment for your Guests – As interested parties approach to view your home, whether it be a private or open house showing, it is important that you make them feel welcome. You can start by:

• Greeting them at the door in a friendly manner and inviting them into the residence.
• Offering to answer any questions or concerns they may have during the course of examining the property.
• Giving the viewers enough space to explore the property for themselves. (We’ve all gone to a store where we would just like to freely browse the inventory but end up getting pestered by an overzealous salesperson. Don’t be that salesperson.)
•  Be sure to thank everyone for coming as they leave the premises.

Step 5 – Receiving an Offer to Purchase the Real Estate

Hopefully, after showing your property to various parties, you will receive an offer from a prospective buyer looking to acquire the dwelling. This offer will come in the form of a purchase agreement that encompasses their desired terms. The seller should then review the listed terms and decide whether they agree to the conditions or not. If not, they may simply decline the offer altogether or submit a counteroffer expressing their demands. If they accept the terms provided, they can sign the offer converting it to a binding contract. Sellers should favor buyers who offer the following:

Letter of Pre-Approval  – Is documentation distributed by a mortgage company validating the buyer’s ability to acquire financing. It can be a big waste of time and effort to enter into a sales contract with a buyer, only to find out later that they can’t even fund the purchase.

Earnest Money Deposit  – This demonstrates that the party offering to purchase your home is serious and capable of buying the property. The amount usually ranges from 1-5% of the total sale price and later goes towards the purchaser’s down payment once the transaction is approved. The buyer will normally protect themselves with certain contingencies that ensure that the money is returned if the exchange doesn’t occur. But if the buyer decides to back out for any reason that is not safeguarded by a contingency, the seller may have the right to retain the funds held in escrow.

Cash Offer – When someone offers to purchase the home in cash without borrowing the money. This is considered more favorable to the seller because it takes less time to close on the property, as opposed to a transaction that involves a buyer who has to obtain financing from a loan company.

Some other considerations that the seller should think about when negotiating offers include:

Making Concessions – If the owner is really motivated to make a sale work, whether they aren’t receiving many offers, are in dire need of the money, or are looking to relocate by a certain date, they can offer the buyer certain incentives that will entice them to follow through with the exchange. Some concessions that might influence the buyer to carry out the deal include:

• Covering all the closing costs.
• Making repairs to the home.
• Upgrading certain appliances.
• Including any personal property that the purchaser may desire.

Owner Financing – This is when the seller acts as the lender and accepts payments from the purchasing party instead of them borrowing money from the bank. If both parties can come to an agreement on the terms of the loan, they must then execute a promissory note to be filed into the public record. Some of the benefits of owner/seller financing include:

• Certain tax breaks.
• Getting a return on your money from the loan’s interest rate percentage that is included with each payment provided by the buyer.
• Accelerates the closing process.

Step 6 – Meeting the Terms of the Purchase Agreement

After signing the offer, both parties will be required, by law, to follow through with the contractual obligations contained within the form. All federal & state regulations concerning the transfer of residential property must also be complied with in order to lawfully execute the sale. The rules can vary from state to state but sellers nationwide should always be prepared to supply the following:

Property Disclosure Form – Upon the acceptance of an offer, the seller is typically compelled, by law (depending on the state), to provide the buyer with a disclosure form giving an overview of the property’s current condition and indicate whether or not there are any adverse defects present within the home. Even if not required by the state’s law, this is commonly requested by prospective buyers in order to proceed with any type of transaction.

Lead-Based Paint Disclosure Form – No matter what state the sale is taking place in, the seller of a property built before 1978 is required to deliver this disclosure form to the buyer according to federal law.

Also, just because the home is now under contract, doesn’t mean that the sale is guaranteed to go through. In order to maintain the obligated terms of the contract, the buyer and seller must adhere to all the conditions made within the agreement. A few of the most common factors that can contribute to a delay in the closing process are:

Appraisal – Any findings that indicate that the property is worth less than the purchase price can halt the proceedings and require adjustments to be made to the agreement.

Financing  – When a buyer is relying on a financial institution to provide the funds needed to purchase the home, it can sometimes go awry. If they have not been pre-approved, they may be notified during the course of the agreement that they do not meet the standards necessary to secure the loan. Actually, this can sometimes happen even if they were pre-approved, as the bank has the right to alter their decision if they receive any information during the process that indicates that the buyer is not qualified to obtain financing.

Inspection – If there is a major issue identified during the inspection, the buyer has carte blanche to terminate the contract unless the seller facilitates the issue by either incurring the cost of having a professional repair the issue or subtracting the cost of the repair from the purchase price. This could potentially prolong the amount of time it will take to reach the closing.

Title  – Another element that can postpone a closing date is an issue with the property’s title. Most buyers will have a title search conducted while under contract to ensure that it is free and clear of any encumbrances. Complications that can be linked to the title include:

• Clerical Errors
• Encroachments
• Hidden Easements
• Invalid Deeds
• Unpaid Property Taxes

Step 7 – Getting the Home Ready for Transfer

As you approach the closing date, it is important that you start to coordinate your move out of the property. You can start by:

Moving Your Belongings Out of the Home – Sellers should have all items that are not included in the sale removed from the property at least twenty-four (24) hours before the buyer’s scheduled move-in date. Prepare in advance by:

• Packing smaller items into boxes weeks prior to your move, as the little things can be the most time-consuming.
• If you are going to hire a moving company, preemptively schedule a date to ensure that you will have the company booked before you are supposed to vacate the premises.
• If your other property is already available, start bringing items over to the new home on the days leading up to the move-out date.

Cleaning the Property – After the home is emptied, it is considered common courtesy to give it one final cleaning. In fact, it is not uncommon for a seller to pay a professional cleaning company to come in and service the property prior to closing. Just make sure to:

• Vacuum and wash the floors.
• Wipe down countertops and sinks.
• Empty/Clean the refrigerator.
• Scrub toilets and bathtubs.
• Take out any remaining trash.

Canceling Services Registered Under Your Name – On the days following up to your move-out date, contact any companies that currently provide services to the home and have them canceled or transferred to your new residence. Some services that you may want to adjust include:

• Utilities (gas, electric, water & sewage)
• Cable/Internet & Telephone
• Postal (change mailing address)
• Trash Collection
• Security System
• Newspaper Subscription
• Homeowners Insurance Policy (only cancel after the title search has been performed)

Secure the Property – Once you feel that the property is fully prepared to be transferred over to the new owner and you are ready to leave, it is vital that you properly close down the home. Ensure that the following tasks occur:

• Turn off any unnecessary lights/electricity.
• Unplug any potential hazards.
• Shut off any water valves that could potentially cause flooding.
• Set the thermostat to an appropriate climate.
• Close and fasten all the home’s windows.
• Lock all the doors that give access to the property.

Final Walk-Through – Grant the buyer access to the property within twenty-four (24) hours of the closing. This allows them to examine the property one last time before finalizing the transaction, giving them the chance to verify that the property is as it should be.

Step 8 – Closing on the Property

Finally, the day has arrived where you will be officially closing on your property. This will usually take place at the title/escrow company’s office where you will be executing all the final paperwork that is necessary to formally conclude the sale. It is important that you bring the following materials:

• All the property’s keys and passcodes.
• Additional Funds (if necessary)
• The deed to the home (if the mortgage has been paid off).
• Invoices of any repairs made per the buyer’s request.
• Any other documents regarding the property or its appliances.

Signing the Closing Documents – Since you are selling your own home and do not have a listing agent assisting you with the presented documentation, it is important that you take your time and thoroughly read each form. If there are any sections that you are unsure of, ask the closing/escrow agent present (or attorney, if applicable) to clarify the information provided. Once you have a full understanding of all the paperwork distributed, you may sign the following documents within the designated areas to complete the process:

• Bill of Sale
• Certificate of Title
• Closing Statement
• Mortgage Note (or Loan Payoff)
• Tax Disclosure

Receiving the Net Proceeds of the Sale – Congratulations! You may now collect your money from the title/escrow company. But keep in mind, all the money you receive from the sale will not directly go into your pocket. You must deduct:

• Balance of your current mortgage.
• Any property taxes or other unpaid bills.
• Escrow/Attorney Fees
• Commission of the buyer’s agent.

This will all be arranged by the title/escrow company at the time of closing, who will then give you a full breakdown of all the charges imposed. Whatever is left over is yours, whether it goes towards a new home or into your bank account.

How to Write a Real Estate Purchase Agreement

Step 1  – Download the document in  Adobe PDF  or  Microsoft Word (.docx) .

Step 2  – Identifying the Buyer & Seller – Fulfill the first section of the form regarding the participating parties by entering the following information:

• Date in which the agreement is being put into effect (month, day, & last 2 digits of the year)
• Buyer’s Full name
• Buyer’s Mailing Address (street, city, & state)
• Seller’s Full Name
• Seller’s Mailing Address (street, city, & state)

Step 3  – Identifying the Property for Sale – Next, you are going to want to describe the property that is being sold/purchased by inputting:

• Address of the Property (which may be the same as the seller’s mailing address)
• Single-Family Home
• Condominium
• Planned Unit Development (PUD)
• Other (If none of the abovementioned options apply, you may check this box and insert your own description of the property.)
• Tax Parcel Information – Enter the number associated with the property’s “Parcel ID” or “Tax Map & Lot” (this may differ from state to state).
• Personal Property – Be sure to write in any of the seller’s personal property that has been agreed to be included with the sale of the home (be as specific as possible).
• Fixtures – A fixture is something that is physically attached to the structure and is considered real property. If the seller would like to remove a fixture and keep it for their next home, they must stipulate it within this section.

Step 4  – Stipulating the Purchase Price & Method of Funding – In the top portion of this section, enter the proposed purchase price into the corresponding spaces (in numerical and written form). Once the purchase price has been established, select how the buyer will supply the funding for the acquisition. They have the following options:

• Check the box indicating that it is an “All Cash Offer”.
• Enter a date & time in which the buyer has to supply the seller with documentation from a third (3rd) party that confirms that they, in fact, do have the necessary funds to pay the full purchase price of the property.

• Marking the box next to “Bank Financing”.
• Conventional
• Other – If the type of loan being used is not listed, select this option and input your own description (for example, a USDA loan).
• Provide a date in which the purchaser has to furnish the seller with a letter of pre-approval from the lender.
• The loan approval is contingent on the lease, sale, or recording of another property.
• The loan approval is not contingent on the lease, sale, or recording of another property.
• Enter the number of days the seller has to provide written notice to the buyer stating that they are terminating the contract due to the buyer’s failure to supply the needed loan approval documents by the date recorded in Section C.

• Check the box that indicates “Seller Financing”.
• Enter the amount of the loan in dollars.
• Record the value of the down payment.
• Insert the percentage for the interest rate.
• Enter the term of the loan (in months or years).
• Specify the date in which the buyer must deliver any requested documents to the seller by (month, day, & last 2 digits of the year).
• Select a date in which the seller has to approve the purchaser by (month, day, & last 2 digits of the year).

Step 5 – Earnest Money/Sale of Another Property Contingency/Closing Costs – Determine the following aspects of the sale:

• Insert the amount of the deposit in dollars.
• Supply a date & time in which the buyer has to make the deposit.
• Check whether or not the earnest money is required to be held in a separate trust or escrow account.
• Buyer’s Mailing Address (street, city, state)
• Number of days the buyer has to sell their home from the effective date of the purchase agreement.
• Both Parties

Step 6  – Closing & Survey Details – The following sections require the individual filling out the form to define the following terms:

• Closing – Establish a date & time in which the closing must take place by.
• Enter the number of business days from closing that the buyer has to notify the seller that there was an issue discovered during the course of the property’s survey.
• Enter the number of business days the seller has to remediate the issue from the time of being notified (must also be prior to closing).

Step 7  – Title – In regard to the “Title Search Report”, the party supplying the information to the form should:

• Include the number of business days the buyer has to inform the seller that there is an issue with the title after receiving the report.
• Register the number of business days the seller has to rectify the problem.

Step 8  – Property Condition – This portion of the agreement essentially states that the seller agrees to maintain the current condition of the home until the time of the sale and that the buyer has the right to hire a licensed inspector to further investigate the property. The following conditions should be recorded concerning the inspection:

• Provide the date & time that the buyer has to have the property inspected by.
• Issue a date & time that the buyer has to present the seller with any newly discovered property defects. This must be delivered, in writing, by the time listed.
• Input the number of business days that both parties have to come to an accord on how to remedy any recently uncovered defects contained within the home.

Step 9  – Appraisal & Termination – Outline the requirements associated with the following components of the sale:

• If, for whatever reason, you feel an appraisal is not necessary to continue with the exchange, check the box stating that the agreement shall not be contingent upon an appraisal being equal to or greater than the prearranged sales price.
• As for the majority of individuals taking part in the sale of real estate, mark the second (2nd) option stating that the transaction  shall  be contingent upon an appraisal being equal to or greater than the asking price that was settled upon. After indicating your selection, insert a number of business days that the parties will have to re-negotiate the terms of the contract if an unsatisfactory appraisal does occur.
• Termination – Enter the number of days that it will take to return the buyer’s earnest money deposit in the event that the agreement is terminated.

Step 10  – Governing Law – This portion of the form just simply requests that the user provide the name of the state where the sale is taking place and whose laws govern any local real estate transactions.

Step 11 – Offer Expiration – Set a date & time from the effective date of the contract in which the receiving party has to accept the agreement and sign it. If the time limit is exceeded, the offer will expire and is no longer valid.

Step 12 – Disclosures and Additional Terms & Conditions – The final two (2) sections regarding the terms of the contract request that you cover the following areas of the agreement:

• Checking the primary box stating that there are no addendums or disclosures attached to the contract.
• Checking the secondary box confirming that there are indeed addendums and disclosures attached to the contract.
• If the lead-based paint disclosure is attached, check the box certifying this fact.
• Write-in any additional disclosures or addendums and check the corresponding box to confirm its inclusion.
• Additional Terms & Conditions – If there are any additional terms & conditions that are not present within the content of the purchase agreement that you would like to include, then write them into the available space provided (for example, the rent-back clause contained within the screenshot below).

Step 13  – Signatures – The final portion of the agreement requires all participating parties to supply the following:

• Seller’s Signature & Date
• Seller’s Signature & Date (if there is a second owner of the home)
• Buyer’s Signature & Date
• Buyer’s Signature & Date (if there is another purchaser involved in the sale)
• Agent’s Signature & Date (if there is a listing agent involved)
• Agent’s Signature & Date (if there is a buyer’s agent involved)

Once all the above fields have been executed, the document will become a binding purchase agreement that is enforceable by law.

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As new real estate agent rule goes into effect, will buyers and sellers see impact?

New rules for the residential real estate market mean that starting Saturday, anyone in the market to buy or sell a home will encounter unfamiliar processes, and possibly a bit of confusion.  

The “practice changes” stem from a 2023 legal decision over the way real estate agents were compensated.   

Traditionally, when a home was sold, a commission of roughly 5% to 6% was paid by the seller and divided between the agents for the buyer and the seller. That structure helped keep commissions higher than they would otherwise be, the lawsuit alleged. It also meant a seller had to pay the agent representing the other side of the deal, a practice many observers thought was inappropriate.  

“So much of the industry doesn’t make sense from a common sense point of view,” said Stephen Brobeck, a senior fellow with the Consumer Federation of America, who’s been advocating for realtor commission changes for decades. “The key argument was it’s just not fair for sellers to pay both the listing agent and the buyer’s agent.” 

Now, a seller will need to decide whether, and how much, to pay a buyer’s broker. Whatever the decision, that information can no longer be included in what’s known as the “multiple listing service” or MLS, the official real estate data service used by local realtor associations.  

Whatever the seller decides about compensation may, however, be communicated personally by phone or text, or advertised by social media, a sign on the lawn, or other informal means.  

Buyers, meanwhile, will be required to sign an agreement with their own broker before starting to view homes. The buyer and the agent must agree, and put in writing, how much the agent can expect to receive from the buyer. 

There's some latitude on what exactly that means. A recent explanation of the rules from the National Association of Realtors says it must be "objective (e.g., $0, X flat fee, X percent, X hourly rate) – and not open-ended (e.g., cannot be 'buyer broker compensation shall be whatever the amount the seller is offering to the buyer')."

“Any time we have the opportunity to have a conversation with the consumer about the value that we bring to the transaction, the services that we’ll be able to give to them in what is likely one of the largest financial transactions of their lives, and that we expect to get paid for it which is entirely negotiable, that’s a good thing,” said National Association of Realtors President Kevin Sears.

The group is a powerful Washington lobby with more than 1.5 million member agents – about 85% of the real estate agents in the country.  

“The more the consumer is educated and empowered, the more conversations we have with consumers, the better off everyone will be,” Sears said.

Many elements of the new practices are familiar to many real estate agents, buyers, and sellers. Many states have long required buyers to sign a broker agreement before starting the process. The rise of alternative brokerage models, such as Redfin, means many homeowners are aware they have options beyond the typical method of paying 3% to a listing agent and 3% to a buyer’s agent.  

But questions about what the changes will mean in practice are stymying agents across the country. What happens if a buyer has the money to compensate her broker up to a certain amount, but falls in love with a home that would cost more than the commission would work out to? On the flip side, what happens if it turns out that the seller of a particular home is also willing to compensate a buyer’s broker?  

Many real estate agents say a process that was meant to bring transparency is just creating more confusion.

“Now a buyer’s agent has to reach out to every listing they’re going to show to figure out what the commission is,” said Aaron Farmer, owner of Texas Discount Realty in Austin.  

In Austin, where a booming pandemic market turned sharply , leading to unsold inventory piling up, Farmer thinks it’s only natural that sellers will want to compensate buyer’s brokers, as a deal sweetener. That may not be the case everywhere, however, and Farmer also worries egos may get in the way of smart business decisions in some transactions.  

Andi DeFelice, owner of Savannah, Georgia-based Exclusive Buyer’s Realty, thinks first-time buyers stand to lose the most from the rule changes. Many who are already strapped for cash may have trouble also coming up with the money for the commission, forcing them to negotiate on their own, she thinks.  

"Don’t force our clients into a situation where they have no representation in the biggest transaction in their lives,” DeFelice said. “If you’ve never done it before, it’s not easy. There are so many steps to buying a house. Do you know a good termite inspector, a good insurance agent, a good lender? There are so many aspects to the transaction.” 

DeFelice says she’s confident the industry will move past what she calls the “hiccup” of the Saturday deadline and adapt relatively quickly, but others expect bigger changes ahead. 

“For consumers, things are not going to change much in the immediate future,” Brobeck told USA TODAY. "But it’s like a dam that’s springing a leak. I’m fairly confident that within five years the industry will look quite different.” 

Farmer, of Texas Discount Realty, agreed.

"I'm already seeing a lot of people saying, 'I’m going to get out of the industry, I don’t want to deal with the changes,'" he said. "The way I’ve always looked at it is if there’s fewer agents, it helps the industry. You could drop commission rates that way and do more volume."

Andrea Riquier covers the housing market.

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Q: I received a letter from a homeowner regarding a Deed and Seller's Assignment of Real Estate Contract.

My, now deceased, parents were involved with land development in the 1960's. I recently received a letter from a homeowner regarding a Deed and Seller's Assignment of Real Estate Contract that was not fulfilled. There is a balance on the contract and the home owners would like to get it resolved. My question is, what is my obligation (if any) and what should my next steps be?

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A: Generally in a case like this it may be helpful to determine the status of the agreement and resolve the unpaid balance. Once that is complete, the executors of your parents' estates could sign a fulfillment deed to resolve any ownership issues. To get legal advice for your particular situation, you may wish to consult a Washington real estate attorney who can evaluate your case and assist you in resolving this matter.

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Feds Crack Down on Illicit Use of All-Cash Real Estate Deals for Money Laundering

The U.S. Treasury Department has issued a new rule that aims to prevent nefarious actors from using residential real estate deals for money laundering.

The final rule issued on Wednesday will require real estate professionals to report the true identity of all-cash homebuyers who use shell companies or other legal entities to purchase residential property in the U.S. While those buyers can remain publicly anonymous, the rule requires the disclosure of their identity to the Financial Crimes Enforcement Network.

The purpose of the new rule is to prevent illicit actors such as drug cartels, international criminals, or sanctioned foreign oligarchs from laundering money through the housing market using anonymous transactions. Similar reporting rules already apply to banks and other mortgage lenders.

“The Treasury Department has been hard at work to disrupt attempts to use the United States to hide and launder ill-gotten gains,” said Treasury Secretary Janet L. Yellen in a statement. The new requirements will “close critical loopholes in the U.S. financial system that bad actors use to facilitate serious crimes like corruption, narcotrafficking, and fraud.”

A separate final rule that the Treasury Department also issued on Wednesday adds certain investment advisers to the list of financial professionals who are required to notify FinCEN about suspicious transactions.

The new reporting rule for all-cash real estate deals will take effect on Dec. 1, 2025, while the new rule for investment advisers kicks in on Jan. 1, 2026.

“These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors,” said Yellen.

All-cash real estate deals are on the rise

A growing share of residential real estate deals in the U.S. is being conducted in cash, although there is likely nothing nefarious or illegal about the vast majority of them.

In January, 32% of home sales were conducted in cash, the highest share in nearly a decade, according to the National Association of Realtors® .

Amid higher mortgage rates, many homebuyers with the means to do so have turned to cash deals to avoid paying punishing interest on home loans.

Migration patterns after the COVID-19 pandemic also likely spurred more cash sales: Families moving away from higher-priced states such as California and New York often netted such high profits from the sale of their old house that they were able to buy a new house in a lower-priced area outright.

Realtor.com® Chief Economist Danielle Hale says that record-high equity levels have enabled the surge in cash deals, especially for buyers who are downsizing to a smaller home or lower-cost market.

“Another reason all-cash deals are more common is that  investors are purchasing a record high share of real estate ,” she says. Investors, who are nearly twice as likely as other homebuyers to use cash, are buying fewer homes than they did a few years ago, but account for a higher share of all real estate deals as total transactions have slumped to historic lows.

The purpose of the new Treasury reporting rule isn’t to discourage or penalize cash deals for homes, but rather to bring transparency by requiring disclosure of the buyer’s true identity.

That’s because cash real estate deals have long been known as a potential vehicle for money launderers or other illicit actors. Criminals or foreign entities otherwise barred from the U.S. financial system have been known to use illicit funds to purchase homes, and use them to generate seemingly legitimate funds through rental income or flipping.

Other schemes involve the purchase of lavish homes in the U.S. as a form of bribery, with the true source of funds and beneficial owner cloaked in secrecy.

In one recent case, the Justice Department seized a mansion in the upscale Holmby Hills section of Los Angeles that prosecutors say was purchased for the family of a former Armenian government minister as a bribe.

(Realtor.com)

The 11-bedroom chateau-style mansion was purchased in 2011 for $14.4 million by a trust benefiting the sons of Gagik Khachatryan .

The sons claimed the purchase was financed by loans from an Armenian businessman. Prosecutors say the loans, repeatedly extended without repayment, were a concealed bribe to Khachatryan, who was at the time in charge of taxes and customs in Armenia.

Last month, the DOJ finalized a civil forfeiture settlement that gives the U.S. possession of the mansion. The property is currently listed for $39.7 million .

How the new rule will work

Under the new rule, one of the real estate professionals involved in an all-cash home sale to a shell company or trust will have to file a report with FinCEN naming the beneficial owner behind the legal entity buying the home.

The closing agent, an independent third party who facilitates many closings, is the primary person tasked with making the report. If there is no closing agent, the reporting duty falls to a “cascading” list of professionals involved in the title transfer process, but only one report needs to be filed for each transaction.

Those reports must contain certain information about the buyer, the seller, the property in question, and the total amount of the sale. FinCEN does not require the reports for certain common, low-risk title transfers, such as those that stem from death, divorce, bankruptcy, or transfer into a trust for estate planning.

A similar rule has applied since 2016 to cash deals above a certain threshold in Miami and Manhattan, which are popular markets for wealthy foreign buyers. Several other major cities have also been added under so-called geographic targeting orders since then.

The new regulation applies to transactions nationwide. The Treasury Department, after receiving feedback from the real estate industry, somewhat relaxed its final rule, allowing the reporting person to reasonably rely on information about the buyer provided by other parties, so long as they aren’t privy to facts that call that information into question.

The American Land Title Association, an industry group representing title insurers, said that it was still reviewing the new rule, but that “it appears the agency incorporated several important industry recommendations to streamline the regulation and reduce some of the burden on real estate professionals.”

However, the group added that the new regulation could increase costs for the businesses involved in real estate transactions by up to a half-billion dollars annually.

“We share the goal of protecting the U.S. real estate market from money laundering and intend to work collaboratively with FinCEN, as we have effectively for the past eight years, to reduce the cost of this regulation and impact on our small businesses—estimated at more than $500 million annually—while providing law enforcement with the information necessary to do their jobs,” said ALTA in a statement to Realtor.com .

Keith Griffith is a journalist at Realtor.com. He covers the housing market and real estate trends.

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Division of Finance and Administration

Physical Address: Administration Building Room 209 C

Mailing Address: 875 Perimeter Drive MS 3162 Moscow, ID 83844-3162

Phone: 208-885-6468

Fax: 208-885-5504

Email: [email protected]

Real Estate

The Real Estate Office coordinates all real estate transactions for University of Idaho, including acquisitions, disposals, easements, leases and licenses affecting the ownership and use of real property. The office provides advice on achieving desired real estate outcomes for university programs and generally handles transaction negotiation and compliance with institutional approval policies. Reporting to the Division Operations Officer, the office coordinates with all colleges and units within the university to ensure that both program and institutional objectives are met in the most effective manner. The real estate office does not manage university lands or facilities.

University of Idaho Real Estate Officer is Gerard Billington.

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PUBLIC NOTICE OF INTENT TO SELL REAL PROPERTY

The Board of Regents of the University of Idaho proposes to dispose of the following approximately 6.11 acres of surplus real property located in Jerome County, Idaho.

Lots 12, 13, 14, 15 and 17 all in Block 1 of Crossroads Point Business Center PUD Phase 1, Jerome County, Idaho, as shown on the recorded plat thereof, recorded June 29, 2006, as Instrument Number 2063855, Jerome County records.

Any questions regarding this notice may be directed to Gerard Billington at 208-885-6468 or [email protected] , or by regular mail to Gerard Billington, University of Idaho, Real Estate Office, 875 Perimeter Dr. MS 3162, Moscow ID 83844-3162.

The disposal of this property and any related terms are subject to direct or delegated approval by the Board of Regents of the University of Idaho.

The Board of Regents of the University of Idaho proposes to dispose of the following approximately 166.22 acres of surplus real property located in Kootenai County, Idaho:

The East half of the Northeast Quarter and the East half of the Southeast Quarter of Section 32, Township 48 North, Range 1 East, Boise Meridian, Kootenai County, Idaho.

Any questions regarding this notice may be directed to Gerard Billington at 208-885-6468 or [email protected]  or by regular mail to Gerard Billington, University of Idaho, Real Estate Office, 875 Perimeter Dr. MS 3162, Moscow ID 83844-3162.

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Justice Department Sues RealPage for Algorithmic Pricing Scheme that Harms Millions of American Renters

The Justice Department, together with the Attorneys General of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee, and Washington, filed a civil antitrust lawsuit today against RealPage Inc. for its unlawful scheme to decrease competition among landlords in apartment pricing and to monopolize the market for commercial revenue management software that landlords use to price apartments. RealPage’s alleged conduct deprives renters of the benefits of competition on apartment leasing terms and harms millions of Americans. The lawsuit was filed today in the U.S. District Court for the Middle District of North Carolina and alleges that RealPage violated Sections 1 and 2 of the Sherman Act.

The complaint  alleges that RealPage contracts with competing landlords who agree to share with RealPage nonpublic, competitively sensitive information about their apartment rental rates and other lease terms to train and run RealPage’s algorithmic pricing software. This software then generates recommendations, including on apartment rental pricing and other terms, for participating landlords based on their and their rivals’ competitively sensitive information. The complaint further alleges that in a free market, these landlords would otherwise be competing independently to attract renters based on pricing, discounts, concessions, lease terms, and other dimensions of apartment leasing. RealPage also uses this scheme and its substantial data trove to maintain a monopoly in the market for commercial revenue management software. The complaint seeks to end RealPage’s illegal conduct and restore competition for the benefit of renters in states across the country.

“Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law,” said Attorney General Merrick B. Garland. “We allege that RealPage’s pricing algorithm enables landlords to share confidential, competitively sensitive information and align their rents. Using software as the sharing mechanism does not immunize this scheme from Sherman Act liability, and the Justice Department will continue to aggressively enforce the antitrust laws and protect the American people from those who violate them.”

“Today’s complaint against RealPage illustrates our corporate enforcement strategy in action. We identify the most serious wrongdoers, whether individuals or companies, and focus our full energy on holding them accountable,” said Deputy Attorney General Lisa Monaco. “By feeding sensitive data into a sophisticated algorithm powered by artificial intelligence, RealPage has found a modern way to violate a century-old law through systematic coordination of rental housing prices — undermining competition and fairness for consumers in the process. Training a machine to break the law is still breaking the law. Today’s action makes clear that we will use all our legal tools to ensure accountability for technology-fueled anticompetitive conduct.” 

“RealPage’s egregious, anticompetitive conduct allows landlords to undermine fair pricing and limit housing options while stifling necessary competition,” said Acting Associate Attorney General Benjamin C. Mizer. “The Department remains committed to rooting out illegal schemes and practices aimed at empowering corporate interests at the expense of consumers.” 

“As Americans struggle to afford housing, RealPage is making it easier for landlords to coordinate to increase rents,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “Today, we filed an antitrust suit against RealPage to make housing more affordable for millions of people across the country. Competition – not RealPage – should determine what Americans pay to rent their homes.”

The complaint cites internal documents and sworn testimony from RealPage and commercial landlords that make plain RealPage’s and landlords’ objective to maximize rental pricing and profitability at the expense of renters. For example:

• RealPage acknowledged that its software is aimed at maximizing prices for landlords, referring to its products as “driving every possible opportunity to increase price,” “avoid[ing] the race to the bottom in down markets,” and “a rising tide raises all ships.”
• A RealPage executive observed that its products help landlords avoid competing on the merits, noting that “there is greater good in everybody succeeding versus essentially trying to compete against one another in a way that actually keeps the entire industry down.”
• A RealPage executive explained to a landlord that using competitor data can help identify situations where the landlord “may have a $50 increase instead of a $10 increase for the day.”
• Another landlord commented about RealPage’s product, “I always liked this product because your algorithm uses proprietary data from other subscribers to suggest rents and term. That’s classic price fixing…”

The complaint alleges that RealPage’s agreements and conduct harm the competitive process in local rental markets for multi-family dwellings across the United States. Armed with competing landlords’ data, RealPage also encourages loyalty to the algorithm’s recommendations through, among other measures, “auto accept” functionality and pricing advisors who monitor landlords’ compliance. As a result, RealPage’s software tends to maximize price increases, minimize price decreases, and maximize landlords’ pricing power. RealPage also trained landlords to limit concessions (e.g., free month(s) of rent) and other discounts to renters. The complaint also cites internal documents from RealPage and landlords touting the fact that landlords have responded by reducing renter concessions.

The complaint separately alleges that RealPage has unlawfully maintained its monopoly over commercial revenue management software for multi-family dwellings in the United States, in which RealPage commands approximately 80% market share. Landlords agree to share their competitively sensitive data with RealPage in return for pricing recommendations and decisions that are the result of combining and analyzing competitors’ sensitive data. This creates a self-reinforcing feedback loop that strengthens RealPage’s grip on the market and makes it harder for honest businesses to compete on the merits.

RealPage Inc., is a property management software company headquartered in Richardson, Texas.

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Postsecondary students in Canada face a tight housing market. Some developers see that as an opportunity

Common room in l'Ardoise, a 205-apartment building in Québec City that opened in 2023. All Utile buildings have one common room where students can go to study or socialize. Utile

About a year ago, Utile, a Montreal-based non-profit that develops and operates student rental housing, began leasing up its most recent project – a 205-bed apartment dubbed l’Ardoise (The Slate), just a few minutes’ walk from Quebec City’s Laval University campus.

It was an otherwise ordinary event, but for the fact that the seven-storey building was completed in just two years. “A speedy delivery,” muses Utile CEO Laurent Levesque, explaining that Utile was able to seize an opportunity to acquire a fully permitted development site from a condo builder that had changed its mind. “We were able to get to concrete very, very quickly.”

Founded about a decade ago as a student housing service, Utile has emerged as a major player in the so-called “purpose-built student accommodation” (PBSA) market, having completed four projects with 1,500 units in the past four years. It has another 600 units in the pipeline, and the next one breaks ground later this fall, Mr. Levesque says. The entire portfolio is now valued at more than $500-million.

A group of idealistic graduate students established Utile in 2012, and the non-profit made its first big breakthrough a few years later by persuading the Concordia University students’ association to commit $1.8 -million in equity to its first development project, an 80-unit building in Montreal. The cash, equivalent to about 10 per cent of the total cost, was sufficient to kick-start the kind of initiative not normally associated with student associations.

Today, Mr. Levesque says, Utile has plenty of momentum, but the appetite for its non-profit units – which typically rent for about 10 to 30 per cent below market rents – far exceeds the organization’s portfolio. “The demand for this category and this price point is so massive,” he admits. “We shut down applications after we’ve had 10 applicants for every available unit.” The situation, Mr. Levesque adds, is “terrible.” “It’s one of the reasons we’ve accelerated our growth.”

Utile's latest project, named La Canopée, in Trois-Rivières. It contains 179 apartments and its first tenants moved in in June this year. Studios are rented at $629 per month, services included (electricity, hot water, heating, internet, fridge and oven). Utile

Canada’s student housing market represents one of the dodgiest aspects of the national housing affordability crisis. In many big cities, postsecondary students tend to find housing in student ghettos and overcrowded condos or poorly maintained rooming houses, paying exploitative rents for bedrooms that turn over at the end of every academic year. The influx of international students in recent years made a tight market that much more precarious.

“Students themselves can often live in very dangerous, precarious housing situations because they get taken advantage of,” says Mark Richardson, technical lead for Housing Now, a housing advocacy group in Toronto. “We have students living in their vehicles in Canada, depending on where you are. We certainly have students who are being put into basements. You often find that a three-bedroom apartment might have five or six students living in it.”

While there’s nothing new about rundown student housing – just ask any Queen’s University graduate – the ratcheting up of rents in the past few years has not only shone a spotlight on this grim corner of the market but also drawn attention to Canada’s curiously limited PBSA sector.

“We’re quite underdeveloped,” says Ryan Tran , vice-president of CBRE Canada’s alternative assets group. He says there are currently enough purpose-built beds – about 155,000 in all – to house about 10 per cent of postsecondary students in Canada. That ratio is “very, very low compared to other countries,” Mr. Tran adds. “In the U.K., you have that number upwards of 60 per cent. It shows how far behind we are.”

In fact, according to CBRE’s research, student housing is a fast-growing asset class in many countries, thanks to nearly 100-per-cent occupancy rates, high rental rates and the mandatory bundling of meal plans. The industry has also attracted unwelcome criticism in recent years for both its aggressive pricing strategies and some notoriously bunkerlike projects filled with windowless bedrooms.

In Canada in recent years, some builders and REITs have stepped into the breach, either by acquiring and transforming hotels or developing their own projects, such as the four-phase, 910-unit Quad complex at York University, the first two of which are now open. Forum REIIF, a Toronto asset manager founded in 1996 by real estate veteran Richard Abboud , acquired all four projects in 2021 and 2022 as part of its growing portfolio of PBSAs.

The business models vary significantly, and include various forms of public-private partnerships. Some are built on university or college campus lands (e.g., University of Guelph) while others are situated off-site but nearby. Most offer amenities – gyms, meal plans, retail – and tend to rent suites, with four or five bedrooms sharing common areas, like kitchens.

Utile, says Mr. Levesque, has taken a somewhat different approach, eschewing services in order to keep its rents low, and also in recognition of the fact that tuition fees typically include access to high-quality sports facilities.

The trick with PBSA projects is finding developable land near campuses. Broker Derek Lobo, CEO of SVN Rock Advisors, which represents student housing providers, says location is the “No. 1 factor” in determining viability.

Transit access, walkability and safety are key considerations. Yet every developer is looking for those qualities, so in large markets, real estate costs can be onerous. “In all our projects so far, we’ve bought the land from private owners,” says Mr. Levesque. “But land is expensive and it’s even more challenging to find free land in big markets.”

While the handful of developers building PBSAs in Canada seem bullish about the future for this asset class, the sector’s growth isn’t as watertight as the high-level trends might indicate. In 2022, Toronto Metropolitan University, for instance, cancelled a 600-bed residence project – a move that Mr. Richardson describes as “a public policy failure.” (TMU will still build classrooms, offices and research facilities on the site – a parking lot at Jarvis and Yonge streets – but the plans for the residence component were iced.)

The University of Toronto, meanwhile, has had a big housing/office project – known as The Gateway, to be situated at Bloor Street and Spadina Avenue and developed by Westbank Corp. – on its books for years, with no evidence of movement to date. “It’s still in the works,” says Mr. Tran.

It remains to be seen how the federal government’s move to limit international students will impact investment in this sector, although the Liberals have tweaked Ottawa’s big housing investment fund to allow funds to flow into student housing. Meanwhile, the Ontario government, in one of its latest set of land use planning reforms, has exempted postsecondary institutions from the development application process – a move that could also accelerate the construction of new residences.

But for Utile’s Mr. Levesque, the point is not to create attractive new investment vehicles for asset managers but rather to add some sanity and quality of life to the student housing world by adding non-profit models to the mix. He says that while Utile hasn’t yet ventured beyond Quebec’s borders, the group has fielded inquiries from across the country.

“What we see when we look at students, and the data on students’ housing situation, is that they are on the front lines of the housing crisis,” says Mr. Levesque. “If we want to secure Canada’s ability to educate its population and house postsecondary students for future generations, we need to have a sufficient stock of different asset classes and different types of offerings for students. But we also need to have at least a portion of that housing stock that’s affordable and remains affordable.”

Major players in the PBSA sector

While hundreds of small players operate in the private student housing market, including those who lease out carved-up and permanently rented houses in student ghettos, there are only a handful of large firms, most of whom have been in this market for under a decade. Some build PBSAs from scratch while others acquire and convert hotels or other multi-unit sites.

The Marq (Toronto): Thirteen properties in London, Ont., Waterloo, Ont., Calgary and Montreal, with furnished rooms, shared amenities. Operator for Centurion Asset Management , which is a diversified real estate and financing REIT.

Campus Suites (Toronto): The company claims to operate 17,000 units of student housing across North America, including properties owned by Forum REIIF. Campus Suites also provides development consulting services, commercial and retail leasing and property management.

Forum REIIF (Toronto): Seven PBSA projects, including the sprawling four-phase Quad residences at York University, comprising almost 2,500 beds. Forum builds and buys other multiunit rentals but the PBSAs account for about two-thirds of the value of the firm’s $630-million portfolio .

Utile (Montreal): Thirteen properties developed and operated on a non-profit model, almost 2,100 beds; rentals only to students, but no amenities, services, et cetera.

Knightstone Capital Management (Toronto): Six properties in Ontario with more than 5,100 beds, operated either by universities or outsourced to subsidiary Canadian Campus Communities. Some with dining hall service or ground floor retail.

Alignvest (Toronto): Seventeen properties with more than 6,600 beds in Ontario, Quebec and Alberta, mainly off-campus but typically within a 10- to 15-minute walk and affiliated with specific postsecondary institutions; on-site amenities, parking, suites with up to five bedrooms. Alignvest’s student housing REIT last November acquired , with a financing partner, the historic Stewart Building, on College Street west of University, and has plans to redevelop the site with student housing.

Campus Developments (Toronto): Two projects serving Carleton University, with a total of 827 units and 1,410 beds (phase one completed in 2021, phase two, 2026); fully furnished, on-site amenity and commercial spaces.

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