Your assignment fee is the difference between what you have the property under contract for and what your buyer pays you for the rights to that contract. Charge too little and you work for almost nothing. Charge too much and your buyers pass on a deal that would otherwise have closed.
Instead of aiming for a number you read online, work backward from the buyer's profit.
Start With the Buyer's Math
An investor buying a flip usually works from the after-repair value (ARV) and subtracts costs until they reach the most they can pay. A common framework looks like this:
- ARV of the finished property.
- Minus the repair costs.
- Minus holding and closing costs, including financing if they use it.
- Minus the profit the buyer needs to make the deal worthwhile.
- The result is the most the buyer can pay for the property, which is your contract price plus your fee.
Many investors use some version of a percentage rule, such as paying no more than a set share of ARV minus repairs. The percentage varies by buyer, market, and risk, so ask your buyers what they use instead of assuming. If you want to go deeper on the inputs, see how to analyze a wholesale deal and how to calculate ARV.
Your fee comes out of the room between the seller's price and the buyer's maximum. If that room is thin, no fee will make the deal work. The best way to protect your fee is to buy right in the first place.
What Drives the Size of the Fee
- Spread in the deal. A larger gap between the seller's price and what buyers will pay supports a larger fee.
- Price point of the market. Fees in a lower-priced market are often smaller in dollars than in an expensive one, simply because the numbers are smaller.
- Quality of the information. A deal with solid comps, clear photos, and a trustworthy repair estimate lets buyers act with confidence, and they will pay more for certainty.
- Competition among buyers. A hot deal with several interested buyers can support a higher fee than one that needs convincing.
- Your relationship with the buyer. Buyers who trust you will accept a fair fee. Buyers who don't will push back on everything.
Should You Be Open About It?
Rules differ here. Some states have requirements about how wholesalers must disclose their interest in a property and when licensing is needed, and those requirements are changing. Talk with a local real estate attorney about what you need to disclose and in what form. Whatever the law requires, being honest with sellers and buyers protects your reputation, and wholesaling is a business built on repeat relationships. See also is wholesaling real estate legal?
Assignment or Double Close?
How you structure the sale affects how your fee appears to each party. In an assignment, the buyer typically sees your fee on the assignment paperwork. In a double close, you buy and then resell, and each transaction shows only its own price. Each method has costs and trade-offs, covered in double close vs. assignment.
Pricing Mistakes to Avoid
- Picking a number first, then forcing the deal to fit it.
- Ignoring repair uncertainty. If you haven't seen the inside, build in a cushion before you decide what the buyer can pay.
- Holding out for a high fee while the contract's deadlines tick down.
- Skipping the buyer conversation. Ask buyers what makes a deal work for them.
A Practical Way to Decide
Work out the buyer's maximum price using realistic repairs. Subtract your contract price. That is the room you have. Then decide how much of it to keep, leaving enough for the buyer to feel they are getting a good deal. A buyer who makes money on your deal will come back for the next one, and that matters more over a career than squeezing out an extra bit on one assignment.