What Is an Assignment of Contract in Real Estate?
If you've spent any time around wholesale real estate, you've heard the term assignment of contract. It's the mechanism that makes wholesaling possible — and understanding it deeply is essential whether you're a wholesaler looking to assign deals or an investor looking to buy them.
Assignment of Contract: Simple Definition
An assignment of contract is when one party (the assignor) transfers their rights and obligations under an existing contract to a third party (the assignee).
In wholesale real estate, this works like this:
- Wholesaler (assignor) gets a property under contract with a seller at a below-market price
- Wholesaler finds an end buyer (assignee) and assigns the contract to them for a fee
- End buyer assumes all the rights in the original purchase contract and closes with the seller
- Wholesaler collects an assignment fee at closing — typically $5,000 to $25,000+ depending on the deal
The wholesaler never actually purchases the property. They're being paid for their time, marketing, and negotiation skills — not for putting capital at risk.
How the Assignment Process Works Step by Step
Step 1: Get the Property Under Contract
The wholesaler identifies a motivated seller and negotiates a purchase price significantly below market value. The contract should explicitly state "and/or assigns" after the buyer's name to make clear the buyer's rights can be transferred.
Step 2: Conduct Due Diligence
Before marketing the deal, the wholesaler should:
- Walk the property
- Estimate repair costs
- Pull comparable sales (comps) to determine ARV
- Verify title is clear (no major liens)
- Confirm the seller actually has the right to sell
Step 3: Market to Your Buyer List
Experienced wholesalers have a list of cash buyers and investors ready to act quickly. They send the deal with key numbers: price, ARV, estimated repairs, photos, and address.
Step 4: Execute the Assignment Agreement
Once an investor is interested, both parties sign an Assignment of Contract Agreement that specifies:
- The original contract being assigned
- The assignment fee amount
- Whether the fee is paid at closing or upfront (at closing is standard)
- Any conditions
Step 5: Close
The title company or closing attorney handles the transaction. The original seller receives their agreed purchase price. The end buyer takes title. The wholesaler receives their assignment fee from the closing proceeds — often via a separate line item on the HUD-1 or settlement statement.
Assignment Fee: How Much Can You Make?
Assignment fees vary widely:
- Entry-level deals: $3,000-$8,000
- Mid-range deals: $8,000-$20,000
- Larger/complex deals: $20,000-$50,000+
The fee is negotiated between the wholesaler and the end buyer. There's no legal cap in most states, though some states (like Illinois) have recently enacted regulations.
Assignment vs. Double Close: When to Use Which
Use an Assignment when:
- Your fee is reasonable and won't alarm the original seller
- The buyer doesn't object to seeing the assignment fee
- Speed is the priority
Use a Double Close when:
- Your assignment fee is very large and you don't want the seller to see it
- The buyer or seller prefers a clean chain of title
- You want more privacy around the transaction details
Is Assignment of Contract Legal?
Yes — assignment of contracts is legal in all 50 states. However:
- Some states require wholesalers to disclose they are assigning the contract
- A few states require a real estate license if you're regularly assigning contracts
- Always use a real estate attorney to draft your contracts in your state
Assignment of Contract for Buyers: What to Check
If you're an investor buying an assigned deal, verify:
- The original contract — What's the price? Are there contingencies? What's the closing timeline?
- The assignment fee — Is it disclosed on the settlement statement?
- Title — Has title been searched? Are there any liens?
- Property condition — Did you walk it? Do your own inspection.
- ARV — Pull your own comps. Don't rely solely on the wholesaler's numbers.
Find Assignment Deals on GrowCo
GrowCo lists assignment contracts from wholesale real estate professionals across Texas, Florida, and New York. Every listing includes AI-powered investor analysis with ARV estimates, repair breakdowns, and comparable sales.