Is the assignment fee on a commercial deal negotiated as a dollar amount or a percentage?

Question

I've been reading commercial assignment agreements lately, mostly because the paperwork holds my attention better than the buildings do. On residential everything I see is a flat dollar number, 10k, 15k, whatever. On commercial I've seen a couple of examples where the fee reads as a percentage of the purchase price, and one where it was a percentage of the spread between contract price and an agreed value.

That last one confuses me. Who agrees the value? If the buyer and I disagree about what the building is worth, the fee itself becomes an argument. Is the percentage version actually used or was that just a template someone posted online?

raj_mehta14 · Answer

I'm mostly in notes and paper and confused about half of it, but the value-based version sounds like it borrows from how a broker's incentive fee works rather than how an assignment works. A fee that floats on a number nobody has fixed yet seems like a lawsuit waiting for a slow week.

stephen_ok9 · Answer

Flat dollar is what I'd want to see as the capital side of the table. If I'm signing an assignment I want one number on the settlement statement that my lender can look at and my accountant can code. A percentage of price is fine too since price is fixed at signing, so that's still a knowable dollar figure. The spread version means my closing cost changes based on an appraisal I haven't ordered yet, and I'd walk.

aliyah_b · Answer

@meridian that's a useful distinction I hadn't made. Percentage of a fixed price is just a dollar amount with extra steps. Percentage of a spread is an open question. Warrant, was the spread example an actual assignment or was it a joint venture where the wholesaler stayed in the deal? Because a profit split on a JV would read like that and it wouldn't be an assignment at all.

Is the assignment fee on a commercial deal negotiated as a dollar amount or a percentage?

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