How to Assign a Real Estate Contract: Step-by-Step Guide
Assigning a contract is the core transaction in wholesaling. You get a property under contract with the seller, then assign your contractual rights to a buyer for a fee. The buyer closes directly with the seller, and you collect your assignment fee at closing. No renovation, no ownership, no risk of holding the property.
This guide walks through each step of the assignment process, from initial contract to collecting your fee.
What is a contract assignment
A contract assignment is a legal transfer of your rights and obligations under a purchase agreement to another party (your buyer). When you assign a contract, you are not selling the property. You are selling your position in the contract. The buyer steps into your shoes and completes the purchase on the original terms.
Assignment is legal in all 50 states unless the contract specifically prohibits it. Most standard purchase agreements do not prohibit assignment, but some MLS listing agreements and bank-owned (REO) contracts do. Always check the language of your contract.
Step 1: Get the property under contract
The process starts with a purchase and sale agreement between you and the seller. This is a standard real estate contract with a few important elements for wholesaling:
- Assignability clause: Your contract should include language that explicitly permits assignment. Common language: "Buyer may assign this contract to a third party without the consent of the Seller." Some wholesalers use "and/or assigns" after their name on the buyer line.
- Inspection period: Include an inspection or feasibility period that gives you time to find a buyer before you are obligated to close. A 14-30 day period is standard.
- Earnest money: Keep earnest money reasonable for your market. $500-$2,000 is typical for wholesale deals. The earnest money is at risk if you do not close and do not have a valid contingency to cancel.
See our wholesale contracts guide for detailed contract language and state-specific considerations.
Step 2: Open escrow with a title company
Once the purchase agreement is signed, send it to your title company (or closing attorney in attorney-closing states). Choose a title company that is experienced with assignments and investor transactions. Not all title companies handle assignments, and working with one that does not can create complications at closing.
The title company will order a title search to verify clear title, identify any liens or encumbrances, and prepare for closing.
Step 3: Find your buyer
While escrow is open, market the deal to your buyer list. Send a deal blast with property details, photos, ARV analysis, repair estimates, and your asking price (purchase price plus assignment fee).
Your asking price to buyers = contract price + assignment fee. If your contract price is $120K and you want a $10K assignment fee, you market the deal at $130K to buyers. The buyer pays $130K total: $120K goes to the seller, $10K goes to you.
Step 4: Execute the assignment agreement
When a buyer agrees to take the deal, you sign an Assignment of Contract agreement. This is a separate document from the original purchase agreement. It includes:
- Identification of the original contract: Reference the purchase agreement by date, parties, and property address
- Assignment fee: The amount the buyer pays you for the assignment
- Buyer's earnest money: The new buyer typically deposits their own earnest money (often larger than yours) with the title company
- Closing date: Must be on or before the closing date in the original contract
- Assignor representations: You represent that you have the right to assign the contract and that the contract is in good standing
Step 5: Submit assignment to title company
Send the signed assignment agreement to your title company. They will update the closing file to reflect the new buyer and prepare the HUD-1 or closing disclosure to show the assignment fee as a line item. The assignment fee is typically paid from the buyer's funds at closing.
Step 6: Your buyer completes due diligence
Your buyer will want to verify the deal before closing: inspect the property, review the title commitment, confirm their financing (if using hard money), and verify the numbers. Be responsive during this phase. Provide any information your buyer requests promptly. Delays or unanswered questions can cause buyers to back out.
Step 7: Close and collect your fee
At closing, the title company handles everything. The buyer's funds are distributed: purchase price to the seller, assignment fee to you, closing costs to the respective parties. You receive your assignment fee either by wire transfer or check from the title company, typically on the day of closing or within 1-2 business days.
Common assignment pitfalls
Contract prohibits assignment
If you accidentally sign a contract that prohibits assignment, you cannot assign it. Your options are to close on the property yourself (and immediately resell via double close) or to get the seller to agree to an addendum permitting assignment. Always read the contract language before signing.
Seller sees the assignment fee and gets upset
In a standard assignment, the seller and buyer both see the assignment fee on the closing disclosure. Some sellers become upset when they see you are making $10K (or more) without doing any work on the property. Manage this by being transparent about your role from the beginning, or use a double close if you prefer to keep the numbers private. See our guide on double closings for details.
Buyer backs out before closing
If your buyer backs out and you cannot find a replacement buyer before the closing deadline, you may lose your earnest money. Mitigate this risk by having multiple interested buyers, using a strong inspection contingency, and keeping your earnest money deposit reasonable.
Title issues delay or kill the deal
Liens, unpaid taxes, boundary disputes, or missing heirs can delay closing or make it impossible. This is why step 2 (title search) is critical. If the title company identifies issues, address them immediately or exercise your contract contingencies to exit the deal.
Assignment vs. double close
| Factor | Assignment | Double Close |
|---|---|---|
| Closing costs | One closing | Two closings (higher costs) |
| Fee visibility | All parties see the fee | Fee is private |
| Speed | Faster (one transaction) | Slightly slower (two transactions) |
| Complexity | Simpler | More complex, needs transactional funding |
| Best for | Most deals, transparent fees | Large spreads where fee visibility is a concern |
State-specific considerations
Some states have specific requirements or restrictions on contract assignments:
- Illinois: Requires disclosure that you intend to assign the contract
- Oklahoma: Recent legislation requires a real estate license for certain wholesaling activities
- Ohio: Some counties have additional disclosure requirements
Check our wholesaling legal guide for your state's specific rules, or consult with a local real estate attorney.
Related guides
- Wholesale Contracts Explained
- How to Double Close Deals
- How to Price a Wholesale Deal
- Wholesaling Legal Guide
- Finding Investor-Friendly Title Companies