Guide
Wholesale assignment fee
Team RE Underwrite Lab
Where the fee sits
An assignment fee is the amount a wholesaler hopes to collect for assigning the purchase contract. In the formula on this site, the end buyer's all-in ceiling is the max allowable offer. The contract with the seller is that ceiling minus the fee, so the buyer can pay the fee and still land on the ceiling.
Assigning a contract, or marketing a house you do not own, may require a license in your state. That is a question for an attorney. The arithmetic below does not answer it.
Assigning contracts or marketing properties you do not own may require a real estate license in your state. Colorado and other states regulate wholesaling and assignment. This is not legal advice; consult a real estate attorney or licensed broker before you assign a contract.
Formula
Max allowable offer = ARV × rule percent − rehab − the end buyer's closing costs. Contract price = max allowable offer − assignment fee. Wholesale profit = assignment fee − the wholesaler's own costs.
The plain 70% sentence people quote does not name the fee. The wholesale calculator does, so the fee is not forgotten when someone reads a contract price.
Example
Illustrative example. ARV is $347,000, rehab is $52,000, and the rule is 65%. Sixty-five percent of $347,000 is $225,550. Minus $52,000 of rehab is $173,550. Minus the end buyer's closing costs of $6,800, the max allowable offer is $166,750. These figures are made up. They are not a contract this company assigned.
An assignment fee of $12,500 makes the contract price $154,250. If the wholesaler's own costs are $750, wholesale profit in this formula is $11,750. That profit exists only if the fee is actually collected. The page does not find a buyer.
Common pitfalls
Putting the assignment fee on top of the max allowable offer, instead of inside it, asks the end buyer to pay more than the rule you set. The contract price has to drop by the fee if the buyer's ceiling stays put.
Calling the end buyer's resale spread your profit mixes two people. Your figure in this formula is the fee minus your costs. Their figure still has to survive rehab, holding, and selling costs.
Steps
Start from the max allowable offer
On this site that offer is ARV times the rule percent, minus rehab, minus the end buyer's closing costs.
Subtract the assignment fee
Contract price with the seller is the max allowable offer minus the fee you intend to collect.
Subtract your own costs from the fee
What remains is wholesale profit in this formula. It is not the end buyer's resale profit.
Questions
Is the assignment fee the same as earnest money?
No. Earnest money is a deposit on the contract. The fee is what you hope to collect for the assignment. They can both exist, and this page does not track a deposit.
Why is the sample rule 65% instead of 70%?
So this example is not a copy of the 70% article. The calculator accepts the percent you type. Sixty-five is not a recommendation.
What if the seller will not take the contract price?
Then the fee, the rehab, the rule percent, or the deal has to move. The formula does not make the seller agree.
Do my marketing costs come out of the fee?
In this formula, yes. Wholesale profit is the fee minus costs you type, such as marketing you will not get back.
Does a larger fee make the deal safer?
No. A larger fee lowers the contract price the seller must accept, or it pushes the buyer over the ceiling. It is not a cushion by itself.
Example only. Not financial, investment, legal, tax, lending, or appraisal advice.
Estimates only. Not financial, legal, tax, or investment advice. RE Underwrite Lab calculators and PDF reports provide educational estimates based on the numbers you enter. Actual purchase costs, rents, expenses, financing terms, taxes, insurance, vacancy, rehab costs, refinance eligibility, and returns vary by property, market, lender, and local law (including short-term rental rules). We do not guarantee any outcome, profit, cash flow, or appraisal. Some content and tools may be generated or assisted by artificial intelligence and can contain errors. Always verify assumptions with licensed professionals and your own due diligence before making decisions.