Assignment Fees: Your Profit in Wholesaling

At the heart of real estate wholesaling is a simple concept: you connect motivated sellers with ready-to-act buyers.

But how do you, the wholesaler, get paid for the work you put in? That’s where assignment fees come in.

In this article, Navia will explain:

• What an assignment fee is

• How it works step-by-step

• Common misconceptions about assignment fees

• Why understanding this concept is crucial for building a sustainable business

By the end, you’ll have a clear picture of how wholesalers earn money — and how to do it ethically and legally.

What is an Assignment Fee?

An assignment fee is your payment for bringing a deal together.

Here’s how it works:

• You sign a purchase agreement with a motivated seller at an agreed-upon price.

• Instead of buying the property yourself, you assign your rights in that agreement to a buyer — usually a real estate investor or house flipper.

• The buyer pays a slightly higher total price, and the difference between what you agreed to with the seller and what the buyer pays becomes your assignment fee.

Think of it like a finder’s fee, but for connecting people in real estate.It’s a reward for identifying a great opportunity and bringing the right parties together.

Why Assignment Fees Matter

Your assignment fee is what makes wholesaling possible. It’s:

• Your profit: the direct income you earn for your efforts.

• Your incentive: a motivator to consistently find and negotiate great deals.

• Your value marker: a reflection of the quality and viability of the deals you bring to the table.

When done right, assignment fees create a win-win-win situation:

• The seller gets a fast, reliable solution.

• The buyer gets an investment property at a fair price.

• You get compensated for facilitating the entire transaction.

The Assignment Process, Step-by-Step

Here’s a simple breakdown of how the assignment fee works within a wholesale deal:

Step 1: Negotiate with the Seller

• You meet with the seller, understand their situation, and agree on a purchase price.

• This price should work for them while also leaving room for a future investor to see value.

Step 2: Sign the Purchase Agreement

• Once terms are agreed upon, you sign a purchase agreement giving you exclusive rights to buy the property at that price.

• This contract is now the foundation of the deal.

Step 3: Assign the Contract to a Buyer

• Instead of buying the property yourself, you assign your rights in the contract to a buyer.

• The buyer steps into your place and moves forward with purchasing the property directly from the seller.

Step 4: Closing

• At closing, the title company or closing attorney handles all funds.

• Your assignment fee is paid out of the transaction and disbursed to you.

Navia’s Tip:“The beauty of assignment fees is that it's likely you never have to take ownership of the property yourself. This keeps your costs low and your process streamlined.”

Assignment Fee Example

Here’s a simplified example to make it easy to visualize:

• You agree to buy a property from the seller for $100,000.

• You assign the contract to a buyer for $105,000.

• The $5,000 difference is your assignment fee — your profit for making the deal happen.

Important note:The exact numbers will vary from deal to deal, and assignment fees can be larger or smaller depending on the property, location, and negotiation.

Common Misconceptions About Assignment Fees

1. “Assignment fees are hidden or sneaky.”

False.When done correctly, assignment fees are fully transparent and disclosed to all parties.

The seller knows you are not the end buyer, and the buyer knows they are paying an assignment fee.Everyone understands their role and agrees to the terms before closing.

2. “Wholesalers don’t deserve to get paid.”

Wholesalers provide real value:

• Finding and negotiating deals takes time, effort, and skill.

• Many sellers don’t know how to reach investors directly.

• Investors appreciate having deals brought to them ready to go.

The assignment fee is simply your compensation for solving problems and connecting people.

3. “Assignment fees are illegal.”

Wholesaling — and assignment fees — are legal in most states, as long as you:

• Use proper contracts and documentation.

• Disclose your role clearly to all parties.

• Follow state-specific laws and closing practices.

How REInavigate Simplifies Assignment Fees

For new wholesalers, the assignment fee process can feel intimidating at first. Questions like:

• “What if I mess up the paperwork?”

• “What if the seller or buyer doesn’t understand?”

• “How do I explain my role without confusing anyone?”

REInavigate eliminates that stress by:

• Providing clear, state-compliant contracts you can trust.

• Offering step-by-step guidance on how to explain assignment fees to sellers and buyers.

• Connecting you with professional closing partners who understand wholesaling.

With our support, assignment fees become straightforward, predictable, and professional.

Tips for Explaining Assignment Fees to Sellers and Buyers

1. Be upfront and honest.

   • Tell the seller, “I work with investors, and my role is to connect you with the right buyer quickly and simply.”

2. Focus on the value you provide.

   • Explain how your involvement saves them time and stress.

3. Keep it simple.

   • Avoid overcomplicating the explanation. Most sellers care about speed and certainty, not the technical details.

Navia’s Reminder:“Clarity builds trust. When everyone understands the process, transactions go smoothly.”

Final Thoughts

Assignment fees are the engine that powers your wholesaling business.

By mastering this concept, you’ll:

• Understand exactly how you get paid.

• Build trust through transparency.

• Create win-win solutions for sellers, buyers, and yourself.

At REInavigate, we make sure you never have to guess. With clear guidance, proper documentation, and ongoing support, assignment fees become a natural part of a smooth, repeatable process.

Ready to simplify your wholesaling journey? Let Navia guide you step-by-step, from your first conversation to collecting your first assignment fee.