Do commercial lenders actually fund an assigned contract, or is that a myth I've been repeating

The person who told you the bank lends on contract price only is closest to right, and the usual practice is that the assignment fee sits outside the loan amount and comes from your equity. Lenders generally size to the lesser of appraised value or the purchase price shown on the contract with the seller, and an assignment fee paid to a third party is not a seller proceed. Some lenders will let the fee show as a line on the settlement statement and count it in your total project cost, which matters for how they compute your equity contribution, but that is a lender-by-lender policy and you need it confirmed in writing by the credit officer, not the relationship person.

Run your numbers on that basis. 1.4m purchase, 65 percent of 1.4m is 910k of debt, so 490k down plus 85k fee plus title, appraisal, environmental, and legal. On a three-tenant industrial flex you are likely looking at a Phase I environmental at 2.5 to 4k and possibly a Phase II if the prior use was anything with solvents or fueling, which can be 15k and up and takes weeks. That timeline is what kills assigned commercial deals more often than the fee treatment does.

Paying the fee at assignment signing rather than at closing puts you in the position of an unsecured creditor of the wholesaler if the deal dies. If the seller's title turns out to be defective or your bank declines, you're chasing that 85k. A non-refundable portion at signing is negotiable, the whole fee is not something I'd hand over. Ask for the wholesaler's contract with the seller and confirm the assignment right and the closing date are what you've been told, because your bank will ask for the same documents.