Wholesale Assignment Contracts: Complete Guide to [Real Estate Wholesaling for Beginners](/blog/wholesaling-real-estate-guide)

Real estate wholesaling—finding discounted properties and assigning the purchase contract to end buyers for a fee—offers one of the lowest-barrier entry points to [real estate investing](/blog/brrrr-strategy-guide). At the heart of this strategy is the wholesale assignment contract. Understanding how these contracts work, what clauses to include, and how to protect yourself legally is essential for successful wholesaling.

This comprehensive guide covers everything you need to know about wholesale assignment contracts, from the basic structure to advanced protective clauses, legal considerations, and common pitfalls to avoid.

What Is Real Estate Wholesaling?

Wholesaling is a three-party transaction:

The Traditional Wholesale Process

Step 1: Wholesaler finds motivated seller

• Distressed property owner needs to sell quickly
• Below-market value opportunity
• Seller motivated by foreclosure, divorce, probate, etc.

Step 2: Wholesaler gets property under contract

• Executes purchase agreement with seller
• Low earnest money deposit ($500-$5,000)
• Extended closing period (30-60+ days)
• Contract includes assignment rights

Step 3: Wholesaler finds end buyer

• Real estate investor looking for deals
• Fix-and-flip investor or landlord
• Buyer willing to pay more than wholesaler's contract price

Step 4: Wholesaler assigns contract to buyer

• Executes assignment contract
• End buyer assumes all contract obligations
• Wholesaler receives assignment fee at closing
• Wholesaler exits transaction

Result: Wholesaler profits without ever owning the property.

The Purchase Contract: First Step in Wholesaling

Before assigning anything, you need a contract with the seller.

Key Components of Wholesale Purchase Agreement

Property Details:

• Legal description
• Property address
• Included personal property
• "As-is" condition clause

Purchase Price:

• Contract price with seller
• All-cash or financed
• Typically 30-50% below ARV (After Repair Value)

Earnest Money Deposit:

• Typically $500-$5,000
• Shows good faith
• At-risk if you default (unless contingencies apply)
• Held in escrow

Closing Date:

• 30-60 days typical
• Gives time to find buyer
• Can include extension clauses

[Inspection Contingency](/blog/contingencies-explained):

• Right to inspect property
• Ability to cancel if unsatisfied
• Protects wholesaler from bad deals
• Typically 10-21 days

Financing Contingency (optional):

• If contract allows financed purchase
• Most wholesale deals are cash

Assignment Clause (CRITICAL):

• "Buyer may assign this contract to another party"
• Or: "Buyer, or assigns, or designee"
• Without this, you can't assign the contract

Title Contingency:

• Seller must provide clear title
• Protects against liens or title issues

The Assignment Contract: Where You Profit

Once you have an end buyer, you execute an assignment contract.

Components of Assignment of Contract

Header:

• "Assignment of Purchase and Sale Agreement"
• Date
• Names: Assignor (you) and Assignee (end buyer)

Recitals:

• Reference to original purchase contract
• Property address
• Original contract date and parties

Assignment Language:

• "Assignor hereby assigns all rights, title, and interest in the Purchase Agreement to Assignee"
• Assignee agrees to assume all obligations

Assignment Fee:

• Your profit (typically $5,000-$20,000)
• Due at closing or before
• Non-refundable once paid

Assignee Acknowledgment:

• Buyer accepts property "as-is"
• Buyer has inspected or waived inspection
• Buyer acknowledges contract terms

Assignor Warranties:

• You have right to assign
• Contract is in full force and effect
• No defaults or violations

Release Clause:

• You are released from obligations upon assignment
• Assignee assumes all responsibilities
• Protects you from future liability

Closing Details:

• Expected closing date
• Title company information
• How assignment fee is paid

Signatures:

• Assignor (wholesaler)
• Assignee (end buyer)
• Date

Critical: Seller Notification

Do you need seller consent to assign?

Depends on original contract:

If contract says "subject to seller approval":

• You MUST get seller's written consent
• Seller can refuse assignment
• Add seller signature line to assignment contract

If contract allows assignment without approval:

• Notification is courtesy but not required legally
• Best practice: Inform seller anyway
• Avoids surprises and maintains relationships

If contract is silent on assignment:

• Generally assignable unless prohibited
• State law varies
• Safer to include assignment language upfront

Types of Assignment Structures

1. Standard Assignment

How it works:

• You assign contract to end buyer
• End buyer closes with seller
• You receive assignment fee at closing
• Your name may appear on HUD-1/settlement statement

Pros:

• Simple and straightforward
• Lowest legal risk
• Transparent

Cons:

• Seller sees your fee
• Buyer sees your fee
• May create negotiation issues

2. Double Close (Simultaneous Close)

How it works:

• You actually close on property (A-B transaction)
• Immediately resell to end buyer (B-C transaction)
• Two separate closings on same day
• Both closings funded simultaneously

Pros:

• Fee not disclosed to seller or buyer
• Works when assignment prohibited
• Cleaner for all parties

Cons:

• More expensive (two sets of closing costs)
• May require transactional funding
• More complex coordination

3. Assignment Plus Co-Wholesaling

How it works:

• You bring the deal
• Partner brings the buyer
• Split assignment fee

Example:

• You contract at $100,000
• Partner finds buyer at $120,000
• $20,000 fee split 50/50 = $10,000 each

Pros:

• Expands buyer network
• Faster deals
• Learn from experienced partners

Cons:

• Split profits
• Must trust partner
• Need co-wholesaling agreement

Sample Assignment Contract Template

ASSIGNMENT OF PURCHASE AND SALE AGREEMENT

This Assignment Agreement ("Assignment") is made this _____ day of __________, 2026, by and between:

ASSIGNOR: [Your Name/Company], with address at [Your Address]

ASSIGNEE: [End Buyer Name/Company], with address at [Buyer Address]

RECITALS:

WHEREAS, Assignor entered into a Purchase and Sale Agreement ("Agreement") dated __________, 2026, with [Seller Name] ("Seller") for the purchase of real property located at [Property Address], legally described as [Legal Description] (the "Property");

WHEREAS, Assignee desires to purchase Assignor's rights under the Agreement;

NOW, THEREFORE, in consideration of the mutual covenants and for good and valuable consideration, receipt of which is hereby acknowledged, the parties agree as follows:

1. ASSIGNMENT
Assignor hereby assigns, transfers, and conveys to Assignee all of Assignor's rights, title, and interest in the Agreement, together with all obligations thereunder.

2. ASSUMPTION
Assignee hereby accepts the assignment and assumes all obligations and liabilities of Assignor under the Agreement from the date hereof.

3. ASSIGNMENT FEE
Assignee shall pay Assignor an assignment fee of $__________ ("Assignment Fee"). The Assignment Fee shall be paid:
[ ] At the execution of this Assignment
[ ] At closing via settlement statement
[ ] Other: __________________

4. REPRESENTATIONS AND WARRANTIES

Assignor represents and warrants:
(a) Assignor has full right and authority to assign the Agreement
(b) The Agreement is in full force and effect with no defaults
(c) Assignor has made no changes to the Agreement without Assignee's knowledge
(d) All information provided about the Property is accurate to Assignor's knowledge

Assignee represents and warrants:
(a) Assignee has inspected the Property or waives inspection
(b) Assignee accepts Property in "as-is, where-is" condition
(c) Assignee has adequate funds or financing to close
(d) Assignee understands all terms of the original Agreement

5. RELEASE
Upon payment of Assignment Fee and completion of assignment, Assignor shall be released from all further obligations under the Agreement, and Assignee shall assume all such obligations.

6. CLOSING
The parties agree to close this transaction on or before __________, 2026, or as otherwise provided in the Agreement. Closing shall occur at [Title Company Name and Address].

7. DEFAULT
If Assignee fails to close, Assignee shall forfeit the Assignment Fee (if paid) and Assignor may retain all rights to proceed under the Agreement or reassign to another party.

8. GOVERNING LAW
This Assignment shall be governed by the laws of the State of __________.

9. ENTIRE AGREEMENT
This Assignment constitutes the entire agreement and supersedes all prior negotiations and agreements.

10. SIGNATURES

ASSIGNOR:
________________________________
[Your Name]
Date: __________

ASSIGNEE:
________________________________
[Buyer Name]
Date: __________

[Optional if required:]
SELLER ACKNOWLEDGMENT:
Seller acknowledges and consents to this Assignment.

________________________________
[Seller Name]
Date: __________

Essential Protective Clauses

1. Inspection Contingency in Original Contract

Why it matters:

• Gives you exit if property is worse than expected
• Protects earnest money deposit
• Standard: 10-21 day inspection period

Language: "Buyer shall have 14 days from contract acceptance to inspect the Property. If Buyer is not satisfied for any reason, Buyer may cancel this contract and receive full refund of earnest money."

2. "And/Or Assigns" Language

Add to original purchase contract:

Instead of: "Buyer: John Smith" Use: "Buyer: John Smith and/or assigns"

Alternative: "Buyer reserves the right to assign this contract to a third party without seller's consent."

Why it's critical: Establishes your right to assign upfront.

3. Extended Closing Period

Typical wholesale contracts: 30-60 days

Why you need time:

• Find qualified buyer
• Buyer arranges financing or funds
• Coordinate title work
• Address any title issues

Include extension option: "Buyer may extend closing date by 15 days with written notice to Seller 5 days before scheduled closing."

4. Non-Refundable Assignment Fee

In assignment contract:

"Assignment Fee is non-refundable once paid, regardless of whether closing occurs, unless Assignor breaches representations and warranties herein."

Protects you if buyer backs out after you've been paid.

5. Release of Liability Clause

Essential protection:

"Upon execution of this Assignment and payment of Assignment Fee, Assignor is released from all obligations, liabilities, and responsibilities under the Purchase Agreement, which are assumed entirely by Assignee."

Why it matters: Limits your liability if buyer defaults.

6. "As-Is" Acknowledgment

In assignment contract:

"Assignee acknowledges that Property is being purchased in 'as-is, where-is' condition with all faults. Assignee has completed their own due diligence or has waived the right to inspect."

Prevents buyer from coming back claiming you misrepresented property.

7. Default Provisions

Specify what happens if buyer doesn't close:

• Keep assignment fee
• Right to reassign to another buyer
• Liquidated damages clause
• Specific performance rights

Legal Considerations and Compliance

Licensing Requirements

Critical question: Do you need a real estate license to wholesale?

Answer: Varies by state.

Generally:

• One-time assignment: Usually okay without license
• Regular wholesaling business: May require license
• Marketing property as listing: Definitely requires license

Check your state laws:

• Some states (Illinois, others) are strict
• Working with attorney recommended
• Join local REIA for guidance

Anti-Assignment Clauses

Some seller contracts prohibit assignment:

"This contract may not be assigned without seller's written consent"

Your options:

1. Negotiate removal of clause
2. Get seller to consent when you find buyer
3. Use double-close instead
4. Walk away from deal

Never assign when prohibited—it's breach of contract.

Disclosure Requirements

What must you disclose?

To Seller:

• That you're a wholesaler (in some states)
• Your intent to assign (best practice)
• That you're making a profit (ethical but not always legally required)

To Buyer:

• Any known property defects
• Your role as assignor
• Terms of original contract

Failure to disclose can lead to lawsuits.

Earnest Money Protection

Strategies to protect your deposit:

1. Strong inspection contingency (can cancel for any reason)
2. Low deposit amount ($500-$1,000)
3. Financing contingency (if applicable)
4. Title contingency
5. Due diligence period

If you must cancel:

• Do so within contingency period
• Follow contract cancellation procedures
• Get release in writing
• Document reason for cancellation

Common Mistakes and How to Avoid Them

1. Forgetting Assignment Language in Original Contract

Mistake: Contract doesn't say "and/or assigns"

Consequence: Seller can refuse assignment

Solution:

• Always include assignment language
• Have attorney review your contracts
• Use consistent templates

2. Over-Promising to Seller

Mistake: "I'll close in 14 days for sure!"

Consequence: Can't find buyer, must close yourself or lose deposit

Solution:

• Conservative timelines (45-60 days)
• Include extension options
• Set expectations: "I work with investors who will close"

3. Not Vetting End Buyers

Mistake: Assigning to buyer who can't perform

Consequence: Deal falls apart, you lose credibility and fee

Solution:

• Require proof of funds
• Check buyer's track record
• Get pre-qualification letters
• Non-refundable deposit from buyer

4. Inadequate Property Research

Mistake: Assigning property you haven't properly analyzed

Consequence: Buyer backs out, reputation damaged

Solution:

• Always inspect property personally
• Pull comparable sales
• Estimate repair costs accurately
• Use contractors for bids
• Check title for liens

5. Unclear Assignment Fee Arrangement

Mistake: Verbal agreement on fee, no written contract

Consequence: Buyer refuses to pay or disputes amount

Solution:

• Written assignment contract always
• Clear payment terms (before or at closing)
• Non-refundable language
• Signed by all parties

6. Not Having Exit Strategy

Mistake: Can't find buyer, stuck in contract

Consequence: Forced to close or lose deposit

Solution:

• Build buyers list before making offers
• Multiple exit strategies (assign, double-close, keep as rental)
• Strong inspection contingency
• Network constantly

7. Ignoring Tax Implications

Mistake: Not planning for taxes on assignment fees

Consequence: Surprise tax bill, penalties

Solution:

• Set aside 25-35% for taxes
• Make quarterly estimated payments
• Track all business expenses
• Hire accountant familiar with wholesaling

Building Your Wholesale Business Systems

Create Standardized Contracts

Work with [real estate attorney](/blog/how-to-build-real-estate-team) to develop:

• Purchase agreement template (your state)
• Assignment contract template
• Proof of funds letter template
• Authorization to release information
• Marketing materials disclosure

Benefits:

• Faster deal flow
• Fewer legal issues
• Professional appearance

Develop Buyers List

Before your first deal, build relationships with:

• Local fix-and-flip investors
• Landlords seeking rentals
• House flippers at REIA meetings
• Other wholesalers (co-wholesale opportunities)

Qualify buyers:

• Proof of funds
• What areas/price range
• Preferred property type
• How quickly can they close
• Track record

Marketing and Lead Generation

Find motivated sellers through:

• Direct mail campaigns
• [Driving for dollars](/blog/driving-for-dollars-guide)
• Bandit signs (where legal)
• Online marketing (Facebook, Google)
• Networking with attorneys, probate
• MLS (REO, short sales)
• Foreclosure lists

More deals = more assignment opportunities

Track Your Numbers

Key metrics:

• Offers made per deal
• Contracts signed per offer
• Successful assignments per contract
• Average assignment fee
• Time from contract to assignment
• Buyer conversion rate

Improve what you measure.

Tax Implications of Wholesaling

How Assignment Fees Are Taxed

Assignment fees are ordinary income:

• Taxed at your regular income tax rate
• Subject to self-employment tax (15.3%)
• No capital gains treatment

Example: $15,000 assignment fee

• Federal income tax (24% bracket): $3,600
• Self-employment tax (15.3%): $2,295
• State tax (varies): $750-$1,500
• Total tax: $6,645-$7,395 (44-49%)

Set aside 35-40% of each fee for taxes.

Deductible Business Expenses

Reduce taxable income with:

• Marketing costs (direct mail, websites, ads)
• Earnest money deposits (if lost)
• Mileage for property viewing
• Home office expenses
• Professional fees (attorney, accountant)
• Education and training
• Software and tools
• Business entity costs
• Phone and internet

Track everything meticulously.

Business Entity Considerations

Should you form LLC or corporation?

LLC Benefits:

• Liability protection
• Professional appearance
• Easier to open business bank account
• Tax flexibility

Cons:

• Setup and annual fees
• More complex accounting
• May need separate license

Consult with CPA and attorney.

Related Articles

• [1031 Exchange Boot Explained: What Triggers Taxes and How to Avoid It](/blog/1031-exchange-boot-explained)
• 1031 Exchange For Beginners
• Best Cities For Cash Flow 2026
• [Best Cities For Rental Income 2026](/blog/best-cities-for-rental-income-2026)
• [How to Identify the Best Neighborhoods for Rental Property Investment (Data-Driven Approach)](/blog/best-neighborhoods-for-rental-investment)

FAQ: Wholesale Assignment Contracts

Is wholesaling legal in all states?

Yes, but regulated differently. Most states allow it, but some require real estate licenses for regular wholesaling activity. Check your state's laws or consult a real estate attorney. Never market a property you don't have under contract—that typically requires a license.

How much should I charge as an assignment fee?

Typical range: $5,000-$20,000 per deal. Factors: your market, property value, difficulty finding the deal, amount of work involved. Start with $5,000-$10,000 as beginner. As you gain experience and reputation, increase fees. Aim for at least $5,000 to make your time worthwhile.

Do I need a real estate license to wholesale?

Depends on your state and activity level. Generally, occasional assignments without marketing the property publicly don't require a license. Regular business activity, marketing properties you don't own, or acting as an agent/broker requires licensing. Consult a local real estate attorney.

Can the seller refuse my assignment?

Yes, if the contract requires seller approval or prohibits assignment. This is why including "and/or assigns" language in your original purchase agreement is critical. If contract is silent on assignment, it's usually allowed, but seller consent is safer and maintains relationships.

What if my buyer backs out after I assign the contract?

If you've executed an assignment contract with non-refundable assignment fee already paid, you keep the fee. If fee was to be paid at closing and buyer backs out, you can: (1) reassign to another buyer, (2) close yourself if able, (3) cancel under contingencies if possible. Always have backup buyers.

How do I find properties to wholesale?

Direct mail to distressed sellers, driving for dollars, bandit signs (where legal), online marketing, networking with attorneys/probate, foreclosure lists, MLS (REOs and short sales), referrals from other investors. Key: find motivated sellers who need quick sales and are willing to discount.

What happens if I can't find a buyer before closing?

Options: (1) use inspection contingency to cancel and get deposit back, (2) negotiate extension with seller, (3) close on property yourself (requires financing), (4) partner with another wholesaler who has buyers, (5) lose deposit if you default. Always have exit strategies.

Conclusion: Master the Assignment Contract, Master Wholesaling

The wholesale assignment contract is your profit vehicle in real estate wholesaling. Understanding how to structure these agreements, include protective clauses, and comply with legal requirements separates successful wholesalers from those who struggle.

Keys to success:

• Always include "and/or assigns" in purchase contracts
• Use written assignment agreements with clear terms
• Protect yourself with strong contingencies
• Build a qualified buyers list before making offers
• Understand your state's legal requirements
• Track expenses and plan for taxes
• Create systems and templates

Wholesaling offers incredible opportunities for beginners to generate income without capital or credit—but only if you master the contracts that make it possible.

Ready to start wholesaling? Make sure you have the legal foundation first. Consult with a real estate attorney in your state to create compliant, protective contracts. Then start marketing, building your buyers list, and making offers.

Your first $10,000 assignment fee is waiting—go find it.

Want to build wealth through real estate but need financing for your next strategy? HonestCasa offers DSCR loans for rental property investors ready to scale beyond wholesaling. Check your rate today.