In a wholesale assignment, who actually pays the assignment fee, the seller or the buyer

Question

In a typical assignment, the wholesaler contracts to buy the property from the seller at one price, then assigns that contract to an end buyer for a higher price, with the difference being the assignment fee. The seller receives the price agreed in the original contract and generally never sees the assignment fee as a line item, because it is not a deduction from their proceeds, it is a separate transaction between the wholesaler and the end buyer. The end buyer is the one who effectively bears the fee, since they are paying the assignment amount on top of what the seller receives, and it typically does show up on the settlement statement as an assignment fee paid to the wholesaler, contrary to the claim that title handles it invisibly. Any claim that the fee vanishes from documentation entirely is worth treating skeptically, in most jurisdictions it is disclosed as part of the closing paperwork.

Rena Guide · Accepted Answer

The seller gets exactly the price on their contract and nothing more or less. The fee sits on top of it, so the buyer's cash is what funds it.

With round numbers: you sign the seller at $200,000. You assign your contract to a cash buyer for a $15,000 assignment fee. The buyer brings $215,000 plus their closing costs. The seller still walks with $200,000 minus their own costs. The seller is not paying you, though they may well feel like they did once they see what the house resold for.

On visibility, the fee normally appears as a line item on the settlement statement paying the assignor, which is you. Closing practice varies by state and by title company, and there are usually separate seller and buyer statements, so the seller may or may not be handed the page with your fee on it. The idea that a title company keeps the fee off the paperwork entirely is how people get in trouble. Your assignment agreement should state the fee in writing and both sides should have it.

One thing that shapes how big a fee a deal can carry: many hard money lenders won't finance an assignment fee, so your buyer has to bring it in cash on top of their down payment and rehab reserve. A $15,000 fee is real money out of their pocket before they've bought a single window. That's often the true ceiling on the number, more than what the house is worth.

omar_haddad · Answer

Confirming the lender part from the buying side. My lender funds off purchase price and won't touch the fee, so a $20k assignment is $20k of my own cash before I've ordered a dumpster. I still buy them, I just underwrite the fee like it's part of my rehab budget.

In a wholesale assignment, who actually pays the assignment fee, the seller or the buyer

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