What is a wholesaling assignment contract and how does it work?
A wholesaling assignment contract is a one-to-three-page document that transfers a wholesaler's equitable interest in a purchase agreement to an end buyer — typically a cash investor or rehabber. It does not convey title. The wholesaler (assignor) signs a purchase agreement with a seller, then signs a separate assignment agreement with a buyer. At closing, the buyer steps into the wholesaler's position, pays the original purchase price to the seller, and pays the assignment fee — typically $3,000 to $15,000 on single-family deals, though it varies — directly to the wholesaler, either at closing or upon execution of the assignment.
The critical prerequisite is that the original purchase agreement must not prohibit assignment. Most investor-friendly contracts include language like 'Buyer may assign this contract without seller approval.' Standard MLS-based contracts — NAR forms and most state realtor association forms — often restrict or require seller consent for assignment. If assignment is prohibited and a wholesaler attempts one anyway, the transaction can be unwound and the earnest money forfeited. Always check the assignment clause before signing the purchase agreement, not after finding a buyer.
An assignment contract transfers the wholesaler's contractual rights to a buyer — it does not transfer the property, so the original purchase agreement must explicitly allow assignment.
What six elements must an assignment agreement contain?
A stripped-down assignment agreement that holds up needs six things: (1) full legal names of assignor and assignee, (2) a reference to the original purchase agreement by date and property address, (3) the property address itself, (4) the assignment fee and currency, (5) payment terms — when and how the fee is paid — and (6) dated signatures from both parties. Courts have voided assignment agreements that referenced a property only by informal nickname or that left the assignee as 'TBD,' because a contract requires identifiable parties and consideration at the time of signing.
