In the current real estate market, the ideal of a cooperative assignment is becoming more and more popular. In such an arrangement, a middle man comes in to affect what the home seller could not himself. Very often, it is used when a middleman gets a seller to agree to a lease purchase agreement and places a tenant buyer.
If there are serious prospective buyers for a property, then the owner has no need for a Cooperative Assignment process, but if not, then such a process may offer them a tolerable alternative to continuing to lose money. The vital component for the seller is that the property has a fixed mortgage rate, as it is much more difficult to lease out property when the monthly payment is subject to change.
Once a distressed home seller is found that is willing to accept a lease option that covers the PITI (principle, interest, taxes and insurance), thereby securing the seller’s financial position, the person organizing the Cooperative Assignment then tracks down an appropriate renter that is looking to purchase a property through a lease option. The pool of candidates is much larger than those that qualify to buy the home outright, especially in the current climate where the bank’s lending standards have significantly tightened. The great thing about a lease option for the buyer is simply that they get to live in the prospective home for a number of years prior to actually buying it, a number of years in which they can improve their financial position and be prepared to purchase once the option becomes due.
For the person organizing the Cooperative Assignment, most of the fees for the service are collected from the renter/buyers. Further, if the renter/buyers need some help with the upfront fees, this can be lent at a high rate of interest by the person organizing the Cooperative Assignment. The exact mechanics of the process, the fees charged, and the profit made depends entirely on how the organizer chooses to organize the arrangements. In some cases the organizer may serve as a fee-based third party consultant, while in other cases the organizer may become a principal in the arrangement organizing the entire matter as a “Sandwich Lease Option” (where the organizer serves as the official leaser with control of the lease option and then subleases the unit to the renters). The number of ways that a Cooperative Assignment can be organized is solely limited by the organizer’s imagination and the willingness of the other principals to go along with the proposed agreement.