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First, "Investor A" finds a great real estate deal with a lot of equity. Typically, Investor A will have spent a significant amount of time, money and expertise to find deal, negotiate term and get property under contract. By putting property under contract, Investor A now has control of property, and equity in property.
(For this example, imagine that Investor A has found a property worth $200,000 and has set a purchase price of $115,000 and he also knows that there are $15,000 in repairs, which leaves an equity position of $70,000).
Second, "Investor A" finds another party, "Investor B". Investor B recognizes that contract that Investor A has established is worth $70,000 in equity, and so he strikes a deal with Investor A to turn deal over to Investor B in exchange for some amount of cash (we'll use value of $12,000 in this example).
So Investor A is giving up $70,000 in "potential" profit in exchange for $12,000 in current profit. And Investor A is paying $12,000 because he believes he can make more than that on deal, since there's a full $70,000 of equity.
This deal between Investor A and Investor B is called an "Assignment", because Investor A is assigning contract to Investor B.
Third, Investor B does his "due diligence" to confirm that deal is as good as he thinks it is.
Finally, Investor B closes purchase of property, and Investor "A" receives assignment fee from Investor B.
This is, obviously, a simplification of process. But this is essentially how it works - not so difficult, is it?
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