Assignment Contract

An assignment contract is the tool behind most wholesale deals: instead of buying a property yourself, you get it under contract at a favorable price, then sell your contractual right to purchase it to another buyer — typically a flipper or landlord — for an assignment fee. You never take title. You are selling the paper, not the house.

How an Assignment Contract Actually Works

1. You put the property under contract with the seller, using a purchase agreement that explicitly allows assignment (look for "and/or assigns" language next to the buyer's name).
2. You market the contract to your buyer list — flippers, landlords, or other investors looking for that type of property.
3. You and your end buyer sign an Assignment of Contract, which transfers your rights and obligations under the original purchase agreement to them in exchange for your assignment fee.
4. At closing, the end buyer brings the funds to purchase directly from the original seller; your assignment fee is typically paid out of that closing.

What Belongs in the Assignment Agreement

• The parties: assignor (you), assignee (your buyer), and reference to the original seller and property.
• The assignment fee amount and how/when it's paid — usually at closing, through the title company or closing attorney.
• Confirmation that the assignee accepts all terms, contingencies, and deadlines from the original purchase agreement.
• What happens if the assignee fails to close — your recourse, and whether you remain on the hook to the original seller.

Assignable vs. Non-Assignable Contracts

Not every purchase agreement can be assigned. Some sellers, agents, or standard state forms restrict assignment or prohibit it outright — this is common with bank-owned (REO) and some new-construction contracts. If assignability isn't explicitly addressed, don't assume it's allowed; get it in writing, or use a double close instead (buying and reselling in two back-to-back closings) when the seller won't permit assignment.

Where Wholesalers Get Into Trouble

• Assigning without disclosure — many sellers, and some states, expect or require you to disclose that you may assign the contract for a fee. Not disclosing this has caused real legal and reputational problems for wholesalers.
• No performance from the assignee — if your buyer can't close, you may still be obligated to the seller. Have a backup buyer or an exit plan before your closing deadline.
• Skipping legal review — assignment and wholesaling regulations vary significantly by state and, in some places, are actively changing; a real estate attorney licensed in your state should review your contract templates.
• Vague fee terms — an assignment fee that isn't clearly documented invites disputes with your end buyer at the closing table.

Wholesaling rules differ enough by state — and are evolving in enough places — that this article can't substitute for local legal advice. If assignment contracts are a regular part of your business, get your paperwork reviewed by a real estate attorney in your state.