April 5, 2026

Assignment of Contract: Complete Guide for Wholesalers

Assignment of contract is the legal mechanism that makes wholesale real estate possible. When you assign a contract, you transfer your rights and obligations under a purchase agreement to a third party (your end buyer) in exchange for an assignment fee. You never take title to the property. Instead, your buyer steps into your shoes and closes directly with the seller. This guide covers how assignment works, when to use it, legal considerations by state, and step-by-step execution.

How assignment of contract works

The process follows a straightforward sequence:

Sign the purchase contract. You sign a standard purchase agreement with the seller. The contract should either explicitly permit assignment or not prohibit it (most standard contracts are assignable unless they state otherwise).
Find your buyer. Market the deal to your cash buyer list. Provide the property details, your asking price (contract price plus your assignment fee), and allow the buyer to inspect the property.
Execute the assignment agreement. Once your buyer agrees, both of you sign an assignment addendum or separate assignment agreement. This document transfers your contractual rights to the buyer and specifies your assignment fee.
Collect earnest money. Your buyer provides earnest money, typically deposited with the title company. This provides security that the buyer will close.
Close. The buyer closes directly with the seller. The title company handles the settlement, paying the seller the contract price and paying you the assignment fee from the buyer's funds. One closing, one set of closing costs.

The assignment agreement

The assignment agreement is a separate document from the original purchase contract. It should include the names of all parties (you as assignor, your buyer as assignee), reference to the original contract (date, property address, parties), the assignment fee amount, the payment terms (typically paid at closing from buyer's funds through the title company), and a statement that the assignee assumes all rights and obligations under the original contract.

Many wholesalers use a simple one-page assignment addendum that attaches to the original contract. Others use a standalone assignment agreement with more detailed terms including liability protections, representations, and dispute resolution provisions. Consult with a real estate attorney in your state to ensure your assignment agreement complies with local requirements.

Assignment fees: how much to charge

Assignment fees vary dramatically based on the deal. The primary factors are the spread between your contract price and what a buyer will pay, the market you are operating in, and the type of deal.

Typical assignment fee ranges:
Entry-level homes ($100K-$200K): $5,000-$15,000
Mid-range homes ($200K-$400K): $10,000-$25,000
Higher-value deals ($400K+): $15,000-$50,000+
Average across all markets: $8,000-$15,000

Your fee needs to leave enough profit for your buyer. If you are selling to a flipper, use the 70% ARV rule to determine the maximum price a buyer will pay, then work backward to set your contract price and assignment fee. If the buyer cannot make money, the deal will not close.

When assignment works (and when it does not)

Assignment is the simplest and most cost-effective exit strategy for wholesalers. It works best for straightforward deals with moderate assignment fees where all parties are cooperative. However, there are situations where assignment is not ideal:

Non-assignable contracts. REO (bank-owned) properties, HUD homes, and some MLS contracts include anti-assignment clauses. In these cases, consider a double close or novation instead.
Large assignment fees. When your fee exceeds $20,000-$30,000, it becomes visible on the closing statement (HUD-1). Some sellers and buyers become uncomfortable when they see a large assignment fee. A double close keeps the fee private.
Financed buyers. Most assignment deals require a cash buyer because lenders typically will not fund a purchase where the contract is being assigned. Double close is the alternative when your buyer needs financing.

Legal considerations by state

Contract assignment is legal in all 50 states, but several states have specific disclosure or licensing requirements that affect how you operate:

Illinois. Requires disclosure that you intend to assign the contract. The assignor must disclose their interest and the assignment fee to all parties.
Ohio. Recent legislation requires wholesalers to disclose their equitable interest and that they are assigning the contract, not selling their own property.
Oklahoma. Wholesaling regulations require disclosure that you are not the property owner and intend to assign the contract.
Texas. No specific anti-wholesaling laws, but disclosure of equitable interest is best practice when marketing property you do not own.

The trend across states is toward more disclosure, not less. Regardless of your state's current requirements, being transparent about your role in the transaction protects you legally and builds trust with all parties.

Marketing your assigned contracts

Finding a buyer quickly is critical because your purchase contract has a closing deadline. Effective disposition strategies include blasting the deal to your buyer list via email, posting in local real estate investor groups, connecting with other wholesalers who may have a buyer (JV or co-wholesale), and using deal marketing platforms to reach a wider audience.

Your deal marketing should include the property address, photos, contract price plus your fee (the total the buyer pays), ARV with supporting comps, estimated repairs, projected profit for the buyer, and the closing deadline.

Protecting yourself in assignment deals

Include an assignment clause in the original contract. The safest approach is to add "and/or assigns" after your name on the purchase contract, or include a specific clause that permits assignment.
Collect non-refundable earnest money from your buyer. This protects you if the buyer backs out. Typically $2,000-$5,000 non-refundable after a short inspection period.
Use a title company you trust. Not all title companies are comfortable with assignment closings. Find one that has handled them before and understands the process.
Keep a backup buyer. Always have a second buyer ready in case your primary buyer falls through.