Assignment (Contract Assignment)
Transferring the rights in a purchase contract to another buyer for a fee. The wholesaler's most common exit: assign the contract to an end buyer, who closes directly with the seller and pays an assignment fee.
An assignment is the transfer of a party's rights and obligations under a purchase contract to someone else. In real estate wholesaling it's the most common way to profit from a deal: a wholesaler puts a property under contract, then assigns that contract to an end buyer, who steps into the wholesaler's shoes and closes directly with the seller.
How an assignment works
- The wholesaler (assignor) signs a purchase contract with the seller — usually with an "and/or assigns" clause or explicit assignment rights.
- The wholesaler finds an end buyer (assignee) willing to pay more than the contract price.
- The two sign an assignment agreement, transferring the contract for an assignment fee (the spread).
- The end buyer closes the original contract directly with the seller and pays the agreed price; the wholesaler collects the assignment fee at closing.
The wholesaler never takes title — they only ever held contractual rights, which they sold.
Assignment vs. double close
| Assignment | Double close | |
|---|---|---|
| Wholesaler takes title? | No | Yes (briefly) |
| Closing costs | One set | Two sets |
| Fee visible to parties? | Yes (on the settlement statement) | No (private) |
| Funding needed | None | Transactional funding |
| Best when | Fee is modest, all parties agree | Fee is large or lender won't accept an assignment |
Assignment is cheaper and simpler — no transactional funding, one closing — which is why it's the default when the assignment fee is reasonable and everyone is comfortable seeing it.
The assignment fee
The assignment fee is the wholesaler's profit — the difference between the contract price with the seller and the price the end buyer pays. On the closing statement it appears as a separate line. When the fee is large enough that disclosing it might upset the seller or end buyer, wholesalers often switch to a double close to keep the spread private.
Legal and practical notes
- Contract must be assignable. Some contracts (and many bank-owned/REO and new-construction deals) prohibit assignment. Read the contract.
- Disclosure and licensing. Assignment is legal in most states with proper disclosure, but a growing number regulate or restrict wholesaling. Confirm your state's rules and disclose your role. This is general information, not legal advice.
- Earnest money. Your earnest money and a clear inspection/due-diligence contingency protect you if you can't place the contract with an end buyer.
Frequently asked questions
What is an assignment fee?
It's the wholesaler's profit on an assignment — the difference between the price in the contract with the seller and the price the end buyer agrees to pay. The end buyer closes the original contract with the seller, and the wholesaler collects the assignment fee at closing, where it appears as a line item.
Is assigning a real estate contract legal?
In most states, yes, with proper disclosure and an assignable contract — but a growing number of states regulate or restrict wholesaling and may require a license. Always read the contract for an assignment clause and confirm your state's rules. This is general information, not legal advice.
When should I double close instead of assigning?
When the spread is large enough that you'd rather keep it private, or when the end buyer's lender won't accept an assigned contract. A double close hides the fee across two separate closings but costs two sets of closing costs and usually requires transactional funding. Assignment is cheaper and simpler when the fee is modest.