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Everything You Need to Know About an Assignment Fee in Real Estate

Jerry Norton

Jul 17, 2024

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Wholesaling real estate can be full of questions, including how to find properties to wholesale, how to wholesale a property step by step, and, most importantly, how to get paid for your efforts.

After all, how much income you can receive from it will dictate whether or not you decide to utilize this strategy.

Wholesaling is an "unconventional" real estate strategy full of benefits, and that includes getting paid.

But, since wholesaling isn't purchasing the property, how do you receive compensation?

That's where an assignment fee comes in.

In this article, I'll break down everything you need to know about an assignment fee, including how much you can expect from one today.

What is an Assignment Fee in Real Estate?

An assignment fee is a fee paid by the buyer (or assignee) to the seller, or assignor, for the privilege of stepping into the assignor's shoes and assuming their position in a real estate deal.

The purpose of an assignment fee is to compensate you as the assignor for your time, effort, and investment in securing the initial purchase contract.

Before we dive deeper in to an assignment fee, including how much it can be, let's make sure we are on the same page with wholesaling real estate.

A Refresher on Wholesaling Real Estate: What Is It?

Wholesaling real estate is when an investor, like yourself, enters into a contract with a homeowner. No, you don't buy the property; instead, you market that property to other potential buyers.

Once a new buyer is found, you as a wholesaler will assign their rights under the contract to the new buyer.

Make sense?

That’s what makes wholesaling, as I said earlier, "unconventional": you’re not buying and selling the property; you’re acting as a middleman, selling the contract and bringing together a seller and a buyer.

How Much is An Assignment Fee?

The truth is that assignment fees can vary from state to state. I've even seen assignment fees even change from property to property. The two most common forms of an assignment fee are fixed rate and percentage.

Let's take a closer look at both next.

Fixed Rate

In this method, a wholesaler can be paid an assignment fee at a fixed rate of $5,000.

For new wholesalers or those doing their first wholesale deal, this may not create a huge profit, but it can take off the pressure of a negotiation on the front end.

So, regardless of what the price is sold for, you can expect this payment.

Percentage

In this method, an assignment fee can be 5-10% of the purchase price.

So, if you wholesale a property for 250,000, then your assignment fee will be $25,000.

Or, if you wholesale a property for $100,000, your assignment fee will be $10,000.

Negotiated Rate

While I've seen the fixed rate and percentage methods for assignment fees, don't be surprised if you find yourself in a completely negotiated rate.

The Bottom Line: Assignment Fee in Real Estate

There you have it: an assignment fee in real estate. It's how you as a wholesaler get paid from each deal, and best of all, your pay isn't stuck at a specific number; depending upon the property and the property owner, you will likely be able to negotiate a rate that's worth your time.

If you're a new or even experienced wholesaler looking for more wholesaling resources, I highly recommend these: