If you've ever bought a wholesale deal or looked at off-market properties, you've encountered the term "assignment fee." Understanding how it works — and whether you're paying a fair one — is critical knowledge for any real estate investor.
What Is an Assignment Fee?
An assignment fee is the profit a wholesaler earns for finding a deal, negotiating a below-market purchase contract, and assigning those contract rights to you, the buyer. It's not a commission (no licensed agent required), and it's not a markup of the property price — it's compensation for sourcing the deal.
In plain terms: the wholesaler has a contract to buy a property for $X. They sell you the right to buy that property for $Y. The assignment fee is Y minus X.
How Is It Calculated?
The formula is straightforward:
Example: A wholesaler gets a property under contract for $75,000. They assign the contract to you for $95,000. The assignment fee is $20,000. You're buying the right to close on that property at $95,000 — you don't renegotiate the original seller contract.
What's a Typical Assignment Fee?
Assignment fees vary widely based on deal size, ARV, and market conditions. General ranges:
- •$5,000 – $15,000: Common on smaller deals in secondary markets, lower-value properties
- •$15,000 – $30,000: Typical range for solid single-family deals in most markets
- •$30,000 – $50,000+: Found on higher-ARV properties, multi-family deals, or markets with extreme demand
There's no legal cap on assignment fees in most states, though extremely high fees relative to deal value can indicate the wholesaler took too large a spread at the buyer's expense.
What Drives Fees Higher or Lower?
- •ARV spread — A larger gap between contract price and ARV leaves room for a bigger fee while still making the deal work for the buyer.
- •Repair costs — Lower repair costs mean the buyer's margin is stronger, which may justify a higher fee.
- •Market competition — Hot markets with few off-market deals allow wholesalers to charge more. Saturated markets compress fees.
- •Deal quality — Properties with clean title, clear comps, and accessible showings command higher fees.
- •Buyer demand — If multiple buyers are competing for the same deal, the wholesaler can increase the assignment price.
How to Evaluate Whether a Deal Is Worth It
As a buyer, your job is to run the numbers independently. Don't take the wholesaler's ARV or repair estimate at face value — verify them yourself before agreeing to purchase. Use this quick framework:
- •Pull your own comps within a 0.5-mile radius, same bed/bath, sold in the last 90 days
- •Walk the property and get a contractor estimate on repairs before agreeing to the assignment
- •Check that your target profit margin is preserved: ARV − Repairs − Your Profit = Max Price You Should Pay
- •If the assignment fee eats into your margin below your minimum threshold, walk away or negotiate
The Bottom Line
Assignment fees are a legitimate cost of doing business in wholesale real estate. A fair fee compensates the wholesaler for finding a deal that genuinely works for you. A deal where the numbers pencil out — even after the fee — is a good deal. One where the fee was padded at your expense is not. Know your numbers, verify independently, and you'll always know which is which.