What is an Assignment in Real Estate?
Assignment in real estate refers to the transfer of a buyer's rights and obligations under a purchase contract to a third party. The original buyer (the assignor) signs over their contractual interest to a new buyer (the assignee), who then steps into the contract and closes with the seller. The assignor receives an assignment fee for the transfer.
Assignment is the primary transaction structure used in wholesale real estate. The wholesaler signs a purchase contract with a motivated seller, then assigns that contract to an end buyer (typically a cash investor) for a fee. The wholesaler never takes title to the property. The deed transfers directly from the seller to the end buyer at closing.
How assignment works
The process involves two documents: the original purchase contract between the wholesaler and seller (the A-B contract), and the assignment agreement between the wholesaler and end buyer (the B-C assignment). At closing, the title company pays the seller the original contract price, pays the wholesaler their assignment fee, and transfers the deed to the end buyer in a single transaction.
For assignment to be possible, the purchase contract must include an assignment clause granting the buyer the right to assign. Without this clause, many contracts default to non-assignable. Standard assignment clause language: "Buyer shall have the right to assign this contract to a third party without the consent of Seller."
Assignment fees
The assignment fee is the difference between the contract price and the assignment price. If you have a contract at $130,000 and assign to a buyer at $142,000, your fee is $12,000. There is no legal cap on assignment fees, though practical market dynamics and buyer expectations limit what you can charge. Typical fees range from $5,000 to $15,000 for mid-market residential deals.
Assignment vs. double close
The key difference: in an assignment, your fee is visible to both the seller and buyer on the closing documents. In a double close, two separate transactions occur and neither party sees the other's price. Wholesalers typically use assignment for fees under $15,000 to $20,000 and double close for larger fees where privacy is preferred.