Assignment fee

An assignment fee is what an end buyer pays to take over a purchase contract from the party who signed it.

It is the wholesaler's income, and it is simply the spread between what the property was contracted for and what someone else will pay.

How it is paid#

Usually at closing, funded by the end buyer, and shown on the settlement statement.

The end buyer's total cost is the contract price plus the fee, and they should be evaluating the deal on that total rather than on the contract price.

What determines the size#

Nothing standard. The fee is whatever gap exists between the contracted price and the end buyer's willingness to pay.

A large fee generally means the property was contracted well below what it was worth — which says something about the seller's situation, and is worth thinking about rather than only celebrating.

A small fee means the wholesaler contracted close to market and has little room.

Transparency#

Worth arguing for on practical grounds rather than moral ones.

An assignment fee shown on the settlement statement is an ordinary transaction cost that everyone can see. The same money routed around the closing, in a deal nobody disclosed, is the arrangement that attracts complaints, regulatory attention and occasionally litigation.

Sellers who discover at closing that their buyer is being paid to step aside have learned something material at the point of least leverage, and that discovery is the source of most wholesaling disputes.

For the end buyer#

Three things to establish before agreeing.

The total cost. Contract price plus fee, against your own valuation.

What you are actually acquiring. The contract, with its terms, deadlines and contingencies — including whatever inspection period remains, which may be very little.

Whether the seller knows. Not for etiquette. A seller who feels misled at the closing table can make a transaction considerably harder to complete.

For the seller#

If a fee appears on the settlement statement that you were not expecting, ask about it before signing.

It does not necessarily mean anything improper happened. It does mean your buyer contracted at a price someone else was prepared to beat, which is information about your own sale — and it is better raised at the table than afterwards.

Two closings instead of an assignment#

Where a wholesaler does not want the fee visible, the alternative is a double closing — buying the property and reselling it the same day in two separate transactions.

That costs two sets of closing costs and requires funding for the first purchase, even if only for hours. Transactional funding exists for exactly this and charges accordingly.

It is a legitimate structure and it is more expensive than an assignment. Where someone chooses it, the reason is usually that the spread is large enough that they would rather absorb two sets of costs than show it.

That is a commercial decision rather than a wrong one — but a seller wondering why their buyer is reselling the same afternoon is asking a reasonable question.