The Assignment Contract, Explained
The two page document your whole fee rides on. What each clause does, where beginners get burned, and a free template to start from.
Wholesaling runs on two documents: the purchase agreement between you and the seller, and the assignment agreement that sells your position in that contract to your cash buyer. The assignment is where your fee lives, so it pays to actually understand it.
Free template: we publish our assignment contract as a free PDF. It is a starting point, not legal advice; have a local real estate attorney or title company review anything you sign. State rules differ, and an hour of attorney time is the cheapest insurance in this business.
How the assignment mechanically works
- You sign a purchase agreement with the seller at, say, $95,000. The buyer named is "you and/or assigns," which is the phrase that makes the contract transferable.
- You sign an assignment agreement with your cash buyer: they step into your position and pay you an assignment fee, say $10,000.
- Both documents go to an investor friendly title company. At closing the buyer brings $105,000, the seller receives their $95,000, and the title company cuts you the difference.
The clauses that protect you
- "And/or assigns" in the buyer field of the purchase agreement. Without it, some sellers (and most banks on REO deals) can block the assignment.
- Inspection contingency: your exit if the rehab turns out worse than estimated. Seven to ten days is standard; it is the window where you verify the numbers with your buyer's walkthrough.
- Earnest money as your only stated risk: keep it modest ($100 to $1,000) and held by the title company, never handed to the seller directly.
- Non refundable assignment deposit FROM your buyer: collect part of the fee when they sign the assignment. A buyer with money in walks to closing; a buyer with nothing in walks away Friday afternoon.
- Disclosure language: a sentence in the purchase agreement acknowledging you are an investor who may assign for profit. It defuses the closing table surprise, and in several states some form of disclosure is legally required.
Assignment vs double close
Assignment is simpler and cheaper (one closing, your fee visible on the settlement statement). A double close (you actually buy and resell minutes apart, usually funded by transactional lending) costs a second set of closing costs but keeps your fee private. The usual rule: assign when the fee is normal, double close when the fee is large enough to blow up the deal if the parties see it.
Where beginners get burned
- Assigning a deal that was never a deal. No contract clause rescues a bad number. Buyers re run your math, so get the rehab and MAO right before you sign anything.
- Marketing houses with no contract signed. That is the pattern regulators actually punish. Contract first, always.
- Letting the buyer go direct. Your signed purchase agreement is your protection; it is why the seller cannot simply sell to your buyer around you. Guard the address until the assignment deposit clears.
Frequently asked questions
Is a wholesale assignment contract legal?
Yes. Contract rights are generally assignable, and selling your position in a purchase agreement is legal in every state. Several states regulate the surrounding activity (disclosure requirements, limits on marketing property you have not contracted, or license requirements past a deal count), so check your state's current rules and use a real signed contract before marketing anything.
How much earnest money does a wholesaler put down?
Commonly $100 to $1,000, held in escrow with the title company. It should be an amount you can afford to lose if you exit outside your contingency window, and small enough that a dead deal is a lesson rather than a disaster. Your buyer's assignment deposit to you should be larger than your earnest money at risk.
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