Assignment of Contract

What Is an Assignment of Contract?

An assignment of contract is a legal transfer where the original buyer (the assignor) sells their position in a purchase agreement to a new buyer (the assignee). The assignee steps into the original buyer's shoes, assuming all rights and obligations under the contract — including the right to purchase the property at the agreed-upon price and terms. The original buyer receives an assignment fee for transferring this right. The seller's position does not change; they still sell the property on the same terms to whoever shows up at closing. Assignment is the simplest and most capital-efficient way to profit from real estate without owning property.

Assignment as the Core of Wholesaling

Real estate wholesaling is built on the assignment of contract. The process works like this: the wholesaler identifies a motivated seller and negotiates a purchase contract at a below-market price. The wholesaler then markets the contract to their buyer list — typically fix-and-flip investors or landlords looking for discounted properties. When a buyer agrees to purchase the contract rights, the wholesaler assigns the contract for a fee. At closing, the end buyer pays the original purchase price plus the assignment fee, the seller receives their agreed-upon price, and the wholesaler collects their fee. The wholesaler never owns the property, never arranges financing, and risks only the earnest money deposit.

Typical Assignment Fees

Assignment fees vary widely depending on the deal size, market, and the spread between the contract price and the property's actual value. For residential properties, assignment fees typically range from $5,000 to $20,000, with $10,000 being a common target for experienced wholesalers. On larger commercial or multi-family deals, assignment fees can reach $50,000 or more. The fee is justified by the value the wholesaler provides: finding the deal, negotiating with the seller, and delivering an off-market opportunity to the end buyer. The end buyer is willing to pay the fee because the total cost (purchase price plus assignment fee) is still below what they would pay for a comparable property on the open market.

The "And/Or Assigns" Clause

For a contract to be assignable, it must not prohibit assignment. Most standard real estate purchase contracts do not address assignment at all, which generally means assignment is permitted by default. However, savvy wholesalers include explicit "and/or assigns" language in the buyer field — for example, "John Smith and/or assigns" as the buyer name. This makes the right to assign unambiguous. Some sellers and their agents may resist this language, recognizing it as a sign of wholesaling activity. In those cases, the wholesaler can use their LLC name as the buyer and assign the LLC's interest, or opt for a double close instead of an assignment.

Disclosure Requirements

Disclosure requirements for contract assignments vary by state and are evolving. Some states require the wholesaler to disclose to the seller that they intend to assign the contract. Others require disclosure of the assignment fee amount. A growing number of states are implementing regulations requiring wholesalers to hold a real estate license or at least register with the state. Regardless of legal requirements, transparency tends to produce better outcomes. Many experienced wholesalers disclose their role upfront, explaining to the seller that they may assign the contract and that the assignment does not change the seller's terms. Honesty builds trust and reduces the risk of legal challenges.

When Assignment Does Not Work

Assignment has limitations. Some purchase contracts explicitly prohibit assignment — particularly bank-owned (REO) properties, HUD homes, and properties sold through listing agents who include non-assignment clauses. When assignment is not possible, the alternative is a double close: the wholesaler actually purchases the property and immediately resells it to the end buyer in two separate transactions. Assignment also becomes impractical when the assignment fee is very large relative to the purchase price, because the end buyer may balk at the visible markup on the closing statement. In those situations, a double close hides the profit margin from both the seller and the end buyer.