Assignment fee capped at a percentage vs priced off the buyer's spread
I've been running rehab scopes for years and land is new to me, so I'm looking at fee structure from the outside. Two operators I talk to price assignments completely differently.
One of them sets a hard rule: never more than 20 percent of the contract price on the fee, no matter what the exit looks like. His argument is that a fee that dwarfs the purchase number invites the seller to walk when they see the settlement statement, and in states where the assignment amount shows on the closing docs the seller sees it. He's had two blow up that way and now he'd rather do four clean deals than one loud one.
The other prices purely off what the end buyer will pay. If a builder needs a specific corner parcel for a five lot subdivision and the parcel is under contract at 30k, he'll ask 25k on the assignment because the builder's numbers still work at 55k. He says a percentage cap is arbitrary and hands money to the buyer for no reason.
What sits underneath this is whether you think the seller relationship survives to closing. On land, the seller is often absentee and disengaged, which argues the loud fee rarely gets noticed. But a disengaged seller who suddenly engages at the table is exactly the one who kills a deal on principle.
I don't have a view yet. Curious what people who do this weekly actually do, and whether the double close is just the answer to the whole question.
How should a land assignment fee be set?
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