Assignment of Contract in Real Estate: How It Works

You've got a property under contract at $120,000. You found a cash buyer willing to pay $135,000. That $15,000 difference is yours at closing. You never take ownership of the property. You never deal with repairs, tenants, or mortgages.

That's the power of an assignment of contract. And it's the legal mechanism that makes wholesaling work.

But getting the details wrong can cost you the deal or worse, land you in legal trouble. In this guide, I'm going to break down exactly how assignments work, what contract language you need, how to set your fee, and when a double close makes more sense.

What Is an Assignment of Contract in Real Estate?

An assignment of contract is a legal transfer. You (the assignor) transfer your rights and obligations under a purchase agreement to a new buyer (the assignee) for a fee. The assignee steps into your shoes and closes directly with the seller.

Three parties are involved:

• Seller. The property owner who signed the original purchase agreement with you.
• Assignor (you). The original contract holder who's transferring the contract.
• Assignee (end buyer). The person who takes over the contract and actually buys the property.

Why Wholesalers Use Assignments

Assignments are the simplest way to wholesale. One closing, minimal costs, and you collect your fee at the closing table. You don't need money to buy the property because you never actually buy it.

For a full breakdown of the wholesaling process, check out our guide on how to wholesale real estate.

How to Assign a Real Estate Contract Step by Step

Step 1: Get the Property Under Contract with an Assignable Agreement

Everything starts with the purchase and sale agreement. Your contract needs to include assignment language. The simplest approach is adding "and/or assigns" after your name in the buyer section.

Example: "Jason Macht and/or assigns" as the purchaser.

This one phrase gives you the legal right to transfer the contract to another buyer. Without it, you're stuck.

Other things to include:

• Inspection contingency period (10-14 days). This is your exit if the numbers don't work.
• Low earnest money deposit. On off-market wholesale deals, $100 to $500 is typical. Compare that to the standard 1-3% of purchase price on traditional transactions.
• Reasonable closing window. 30 days gives you enough time to find a buyer without making the seller nervous.

Step 2: Find an End Buyer (Assignee)

Once you've locked the property under contract, you need a cash buyer. Speed matters here. Your contract has an expiration date.

Where to find buyers:

• Your existing cash buyer list
• County recorder records showing recent cash transactions
• PropStream to identify active cash buyers in the area
• Local REIA meetings and investor Facebook groups
• Title company referrals

Cash buyers close in 7 to 14 days. That's the whole reason they're valuable. No bank approvals, no appraisals, no waiting.

Building your pipeline with consistent direct mail through REmail means you always have deals in motion. More deals in your pipeline means more options for your buyers and more leverage when negotiating fees.

Step 3: Execute the Assignment Agreement

The assignment agreement is a separate document from the purchase contract. It spells out:

• The original purchase agreement being assigned
• Your name (assignor) and the buyer's name (assignee)
• The assignment fee amount
• When and how the fee gets paid
• The assignee's acknowledgment of all terms in the original contract

Keep it clean and simple. Your real estate attorney can draft one that works in your state.

Step 4: Collect Your Assignment Fee at Closing

Your assignment fee is paid through the title company or closing attorney at the time of closing. It comes out of the proceeds just like any other closing cost.

The assignee closes directly with the seller using the terms of your original contract. You show up to collect your check. That's it.

Key Clauses in an Assignable Contract

The "And/Or Assigns" Language

This is the non-negotiable clause. If your contract doesn't include assignment language, you can't assign it. Some investors put the clause in the buyer name field. Others add a separate assignment clause in the addendum section.

A sample clause:

"Buyer shall have the right to assign this Agreement to a third party without the consent of Seller, provided that Buyer remains liable for the performance of this Agreement unless otherwise agreed in writing."

Inspection and Contingency Periods

Your inspection contingency is your safety net. If the property has issues you didn't expect, or if you can't find a buyer, this clause lets you walk away with your earnest money.

Standard is 10 to 14 days. Some investors push for 21 days to give themselves more time.

Earnest Money Considerations

Keep your earnest money deposit low. On off-market deals where you're negotiating directly with the seller, $100 to $500 is perfectly normal. Some investors go as low as $10.

The lower your deposit, the less you have at risk if the deal falls through. Just know that a very low deposit can sometimes make a seller less confident in your seriousness.

Assignment Fees: How Much Should You Charge?

Typical Assignment Fee Ranges

The typical range is $5,000 to $20,000 per deal. Your market matters a lot. Higher property values generally mean higher assignment fees.

Factors That Affect Your Fee

• Spread between contract price and ARV. More spread means more room for your fee.
• Buyer demand. When multiple buyers want the deal, you can negotiate a higher fee.
• Property condition. Lighter rehabs leave more room for everyone's profit.
• Market competition. Less competition among wholesalers in your area means stronger positions.

Disclosing Your Fee

Here's where it gets tricky. When you assign a contract, both the seller and buyer can see your fee. It's right there in the assignment agreement.

This is fine when your fee is reasonable. But if you're making $20,000 on a $100,000 property, the seller might feel like they got ripped off. The buyer might feel like they're overpaying.

A good rule of thumb: keep your fee at or below 50% of the end buyer's projected profit. If the buyer expects to make $30,000 on the flip, a $15,000 fee is fair. Everyone wins.

When your fee is large enough to cause issues, that's when you consider a double close instead.

Assignment vs. Double Close

When to Assign

• Your fee is reasonable and you're comfortable disclosing it
• You want the simplest, fastest closing
• You want to avoid additional closing costs

When to Double Close

• Your fee is large and disclosing it might kill the deal
• The seller or buyer might object to the spread
• You want complete privacy on your profit

Cost Comparison

Double closings cost more but protect your margins on big deals. Just make sure your title company handles double closings. Not all of them do.

Is Assignment of Contract Legal?

Contract assignment is legal in most states. It's a standard legal concept that applies well beyond real estate.

But here's what you need to watch for:

States with restrictions on wholesale assignments:

• Illinois requires a license for more than one wholesale transaction per year
• South Carolina has effectively banned unlicensed wholesaling
• Oklahoma requires a license to publicly market equitable interest
• Kentucky redefined brokerage to include marketing equitable interest
• Nebraska requires a license for publicly marketing equitable interest
• Maryland now requires specific disclosures from wholesale buyers

At least 6 states have enacted or proposed legislation specifically addressing wholesale assignments. This number is growing.

Contracts that typically prohibit assignment:

• Bank-owned (REO) properties
• HUD homes
• Fannie Mae and Freddie Mac properties
• Any contract with a non-assignment clause

Always verify with the title company before signing. Some title companies won't facilitate assignments at all.

Protecting Yourself

Get a real estate attorney. That's not optional advice. An attorney reviews your contracts, makes sure your assignment clause is enforceable in your state, and handles any issues at closing.

The cost of an attorney is nothing compared to the cost of a deal gone wrong.

Common Mistakes When Assigning Contracts

Using Non-Assignable Contracts

If the contract doesn't have "and/or assigns" language or includes a non-assignment clause, you can't assign it. Always check before you sign. And if you're using a standard contract template, make sure it's been reviewed by your attorney.

Not Disclosing the Assignment to the Seller

Some wholesalers try to hide the assignment from the seller. This is a bad idea. Most states require some level of disclosure, and failing to disclose can create legal liability. Be upfront about what you're doing.

Overpricing the Assignment Fee

If your fee doesn't leave enough room for the buyer to profit, the deal dies. Run your comps conservatively and price your fee so that everyone at the table makes money. Read our guide on real estate comps to make sure your numbers are solid.

Skipping Title Verification

Always run a title search before locking a contract. You don't want to find out at closing that there's a $40,000 lien on the property. Title issues kill deals and waste everyone's time.

FAQ

What is an assignment of contract in real estate?

An assignment is a legal transfer of your rights under a purchase agreement to a new buyer for a fee. You never take title to the property. The new buyer closes directly with the seller.

Is it legal to assign a real estate contract?

Yes, in most states. But some states restrict it, and some contracts prohibit it. Bank-owned properties and HUD homes typically can't be assigned. Check your state laws and contract terms.

How much is a typical assignment fee?

The national average is $13,000. Typical range is $5,000 to $20,000. Higher-value properties and less competitive markets can push fees above $20,000.

What is the difference between an assignment and a double close?

An assignment transfers the contract for a fee at one closing. A double close involves two separate transactions where you briefly take title. Double closings cost $3,000 to $5,000 more but keep your profit private.

Can any contract be assigned?

No. The contract must allow assignment. REO properties, HUD homes, and contracts with non-assignment clauses can't be assigned. Always include "and/or assigns" language in your purchase agreements and verify with the title company.

Get Your Contracts Right

Assignment of contract is the core skill of wholesaling. Get the contract language right, price your fee fairly, and know when to double close instead. Those three things will keep your deals moving and your buyers coming back.

Need a steady stream of deals to assign? Start your direct mail campaign with REmail and build the pipeline that keeps your wholesaling business running.

That's all I got. Till next time.