The One Number That Pays the Wholesaler
In a wholesale deal, you never buy the house. You control it with a contract, then hand that contract to an end buyer — usually a cash investor — for a fee. That fee is the assignment fee, and it's the entire reason wholesaling works as a business model.
Get it right and you're paid for finding and packaging a deal without ever holding title. Get it wrong — price it blind, hide it clumsily, or fail to protect it in writing — and you either scare off buyers or watch your payday evaporate at the closing table. This guide covers what an assignment fee actually is, how to size one, how to disclose and secure it, and how the IRS treats the money when it lands.
What Is an Assignment Fee?
An assignment fee is the amount a wholesaler charges to transfer, or "assign," their rights under a purchase contract to a new buyer. When you sign a purchase agreement with a seller, you hold equitable interest — a legal right to buy that property under the agreed terms. Assigning the contract sells that right to someone else, who then closes with the seller in your place.
If you put a house under contract at $180,000 and assign that contract to an investor for $190,000, your assignment fee is $10,000. You never own the property; you're paid for the contract and the value you created by finding a below-market deal. The mechanics of getting that transfer signed are covered in our guide to assigning a wholesale contract step by step.
How Assignment Fees Actually Work in a Deal
A clean assignment deal moves through a predictable sequence:
1. You control the property
2. You find the end buyer
3. You sign the assignment agreement
4. The title company pays you at closing
When the spread is too large to disclose comfortably, or a seller's contract or lender bars assignments, wholesalers use a double closing instead — two back-to-back transactions where you briefly take title. The trade-offs are laid out in our breakdown of double closing vs. assignment of contract.
How Much Should You Charge?
There is no fixed or "standard" assignment fee. What you can charge is bounded by one thing: how much genuine equity you've handed the end buyer. An investor buys on the numbers — after-repair value, repair budget, and the margin they need. If your assigned price still leaves them a healthy spread, they'll pay you well. If your fee eats into their profit, they'll pass no matter how attached you are to the number.
That's why fee-setting starts with the buyer's math, not yours. Work backward from the end buyer's maximum allowable offer (MAO), which itself depends on a defensible ARV calculation. The space between your seller contract price and the buyer's MAO is the room your fee has to live in.
Worked Example (Hypothetical Assumptions)
The figures below are illustrative, not market data. Every deal is different — run your own numbers.
- ARV (after-repair value): $300,000
- Repairs the end buyer must fund: $45,000
- Buyer's target: 70% rule MAO = ($300,000 × 0.70) − $45,000 = $165,000
- Your contract price with the seller: $150,000
Disclosing and Protecting Your Fee
Two failure modes kill assignment fees: a buyer who balks when they see the spread, and a legal misstep that voids the deal. Both are avoidable.
Protect the fee in writing with these standards:
Non-refundable deposit
Written assignment agreement
If the spread is large enough that disclosure feels awkward, that's a signal to consider a double closing rather than to hide the number. And walk away from deals where the fee only survives if everyone ignores the buyer's margin — chasing an oversized fee is one of the classic wholesale deal killers.
How Assignment Fees Are Taxed
This is where new wholesalers get surprised. Assignment fee income is generally ordinary income, not a capital gain. Because active wholesalers are typically treated as real estate "dealers" — people in the business of buying and selling property rights — their profits are ordinary income and usually subject to self-employment tax, reported on Schedule C. This differs from the capital-gains treatment a long-term investor might get on property held for investment. (Sources: IRS, Topic No. 409 Capital Gains and Losses; IRS Publication 334, Tax Guide for Small Business; IRS Schedule C instructions.)
This article is educational and not tax or legal advice; confirm your specific situation with a licensed CPA and attorney.
Quick Reference
Assignment Fee Cheat Sheet
- Definition: the fee you charge to transfer your purchase contract to an end buyer
- Formula: End Buyer Price − Your Contract Price = Assignment Fee
- Ceiling: bounded by the buyer's MAO minus your contract price
- Protect it: written assignment agreement + non-refundable deposit
- Disclose it: transparency is safer and sometimes legally required — check your state
- Tax it: generally ordinary income + self-employment tax (Schedule C) — reserve for it
The Bottom Line
The assignment fee is the wholesaler's entire paycheck, and it rewards discipline. Size it from the end buyer's numbers, not your effort. Leave the buyer enough margin that they come back. Put the fee in writing, secure it with a deposit, disclose it in line with your state's rules, and set aside the tax before you spend a dollar of it.
Do those things consistently and the assignment fee stops being a nerve-wracking negotiation and becomes a predictable, repeatable outcome of sourcing good deals. If you're still building the front end of that machine, start with how to start wholesaling real estate.
