what is an assignment deal

Real Estate Contracts

What is an assignment contract.

Assignment contracts are a vehicle used by real estate investors to transfer one party’s rights and obligations under an existing real estate contract to another party. Assignment contracts don’t involve transferring or selling the property directly like a purchase agreement. Instead, the buyer under the original purchase agreement (the assignor) assigns their rights and obligations under the purchase agreement to the assignee, sometimes for a profit. The assignee then becomes the buyer under the original real estate contract.

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When Is an Assignment Contract Used?

In one scenario, a type of real estate investor called a wholesaler contracts with the current owner(s) of a distressed property that may be unsellable to average homebuyers. The wholesaler creates a purchase agreement with that owner to buy their property. The wholesaler then finds an end buyer who wants to take possession of the property. The assignment contract is then created to transfer the wholesaler’s rights and obligations under the original purchase agreement to the end buyer.  

Elements of an Assignment Contract

Writing a comprehensive assignment contract is a vital part of several real estate investing strategies. If you’re new to creating these kinds of contracts, be sure to get some legal advice before moving forward. Once you have a solid assignment contract template in place,  transactions using this contracting tool will run more smoothly. 

* The information provided on this site does not, and is not intended to, constitute legal, financial, tax, or real estate advice. Please consult your expert for advice in those areas. All content is for general informational purposes only and is not intended to provide a complete description of the subject matter. Although Blueprint provides information it believes to be accurate, Blueprint makes no representations or warranties about the accuracy or completeness of the information contained on this site. Specific processes will vary based on applicable law. The title and closing process will be handled by a third-party attorney to the extent required by law. Product offerings vary by jurisdiction and are not available or solicited in any state where we are not licensed.

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what is an assignment deal

What Is An Assignment Of Contract In Real Estate?

what is an assignment deal

An assignment of contract is when one party (the “assignor”) has a contract to which they have certain obligations, and transfers those contractual rights to another party (known as the “assignee”).

In real estate, assigning contracts is an effective strategy to achieve an extremely high return on investment (ROI) for as little capital and risk as possible.

Click below and jump to your section of choice on the  assignment of contract :

• What Is An Assignment In Real Estate?

• How Does Assignment Of Contract Work?

• Is It Legal To Assign A Real Estate Contract?

• Why Use A Real Estate Assignment Contract?

• What Is An Assignment Fee In Real Estate?

• Who Buys Real Estate Contracts?

• How To Assign A Contract In Real Estate?

• How Do Real Estate Wholesalers Get Paid?

• What Is An Assignment Clause In Real Estate?

• What Is Assignment Of Contract?

• Assignment Of Contract Template

• Assignment of Contract vs. Double Closing

• Assignment Of Contract: Pros & Cons

• Common Misconceptions About Assigning Real Estate Contracts


What Is An Assignment In Real Estate?

An assignment of contract in real estate is when the original party who has a piece of real estate transfers their contractual obligations to that of a new party.

assignment of contract facts


How Does Assignment Of Contract Work?

The assignment of contract is one of the easiest exit strategies in all of real estate investing. With this being said, there are a number of steps to ensure a profitable and efficient contract assignment for your learning. Below are 6 simple steps on how to assign a real estate contract:

Is It Legal To Assign A Real Estate Contract?

Yes, it is legal to assign real estate contracts. However, there are situations when assignments will not be enforced, such as:

  Solution: Get written consent from all parties.

Solution: Modify the contract with the permission of all involved parties. If the parties involved are okay with it, then you can modify the contract from being non-assignable to assignable.

Solution: Close on the property and sell it after the restriction is over. Back out of the property if you have the appropriate contingencies. 

All in all, it is legal to assign real estate contracts . In fact, all contracts are assignable by default, unless specifically stated otherwise within the agreement.

As with anything having to do with contracts, it is extremely important to read the contract you will be signing with any seller of a property.

It’s recommended you use a real estate attorney to review the agreement you plan on using for your real estate deals to make sure it is worded correctly.

Why Use A Real Estate Assignment Contract?

The biggest reason to use a real estate assignment contract is: you can profit from a piece of real estate by solely transferring your contract rights.

This process is called “wholesaling,” and is a great way to flip real estate while lowering your risk and using as little money as possible .

Many people see the house flipping shows  where investors buy, fix, & sell houses. This entire process can take months, and even longer than a year to effectively renovate and resell a property. 

Additionally, when you buy a property there is always risk that comes with it. Most real estate investors raise money and invest other people’s money into their real estate deals in order to work on multiple projects at one time. When a fix & flipper borrows this capital, there is usually an interest rate along with it.

What this means is, every day a fix & flipper has a house that they have bought and are renovating is another day that they will pay more interest on the money they’ve borrowed.

When a real estate assignment contract is used where the goal is to wholesale    (“assignment of contract”) the property, then you virtually eliminate any risk. This is because you are assigning all contractual obligations to the new buyer of the property.

What Is An Assignment Fee In Real Estate?

An assignment fee is the compensation an assignor receives for selling the equitable interest in a real estate contract to another buyer (“the assignee”). This is also known as a “wholesale fee.”

Who Buys Real Estate Contracts?

Real Estate Investors, such as fix & flippers , typically buy real estate contracts from wholesalers so they can have properties to renovate and resell.

Download FREE Wholesale Real Estate Contracts (PDF)!

How To Assign A Contract In Real Estate?

Once you have a property under contract, then it is time to locate a buyer for the real estate contract. Make sure the first thing you do is ask for an earnest cash deposit to ensure that your earnest money will be paid upfront. This clause protects you from any breach of contract between you and the assignee. 

An assignment fee (“wholesale fee”) is then agreed upon between you and the buyer. You will then need to execute an Assignment of Real Estate Purchase and Sale agreement between you and the buyer. 

As the assignor you are assigning all of your duties and obligations that you agreed upon in the original purchase and sale agreement with the seller of the property. This means that the buyer must purchase the property at the original agreed upon price between you and the seller as stated in the original contract.

Just because the assignor of the contract is not the one purchasing the property that doesn’t mean there isn’t additional work to be completed to ensure the deal gets closed. Once a buyer is found to sell the contract to, it is time to make sure the buyer follows through and closes on the deal. 

This makes it important to have a great title company  or real estate attorney to handle the closing. Whether you use a title company or attorney is dependent upon which state you are in. Some states have title companies handle the closing, and some states have attorneys handle it.

How Do Real Estate Wholesalers Get Paid?

Real estate wholesalers get paid when a successful assignment of contract takes place. Their terms of getting paid are to be stated in the Assignment of Real Estate Purchase and Sale Agreement.

Important: Everything is negotiable and no payment terms are set in stone unless agreed upon and signed in writing.

As a real estate wholesaler, you can get a deposit when the Assignment of Real Estate Purchase and Sale Agreement is signed. Then, when the transaction closes the wholesaler can receive the rest of the profit.

For example, if you are looking to get a $20,000 wholesale fee for a house, then you may take a 50% deposit of $10,000 when the contract is assigned. Then, receive the remaining 50% of $10,000 when the property closes.

What Is An Assignment Clause In Real Estate?

A real estate assignment clause is a legally binding service that offers a contracting party the right to assign responsibility or transfer ownership to another contracting party of choice. Some contracts have a real estate contract assignment clause built into them.  Below is an example:

“Assignment of Contract: The parties to this Contract mutually agree that it is binding upon them, their heirs, executors, administrators, personal representatives, successors and assigns. All parties agree that this Contract is assignable to any party for a profit.”  

It is also a common practice for the original buyer of a contract to put “and/or assigns” next to their name. In addition to the real estate assignment clause, “and/or assigns” will make it even more clear that the contract may be assigned.

What Is Assignment Of Contract?

The real estate assignment contract is also known as the assignment of purchase and sale agreement. This is a separate legal document to the original contract.

The real estate assignment contract has the terms of the assignment, such as to who is the assignor/assignee, when the payment is taking place, and closing terms.

Assignment of Contract Template

Here is an example of an assignment of a contract below:

assignment of contract form

Here's another example of a real estate assignment contract PDF by The Judicial Title Insurance Company.

Assignment of Contract vs. Double Closing

Beginner investors always tend to wonder whether a seller will have an issue with an assignment of rights taking place. It depends on the seller and your correspondence with them. If you communicate clearly, then this is typically not an issue.

This is because the seller has signed a legal and binding contract making them obligated to fulfill the terms of the contract. You have every right to perform an assignment of contract when everything has been done legally.

The majority of sellers you encounter will not have an issue with the assignment and having another party close on the transaction. Sellers’ are usually most concerned that 2 things take place:

Communicate clearly with the seller and fulfill the contract obligations, and you shouldn’t have an issue with assigning a real estate contract.

Double closing can take place when the seller has an issue with the assignment of contract.

Double closing is when you close on the property (meaning you actually buy it), and then resell the property to the end buyer that you would have assigned the contract to originally.

The process of a double close is typically performed as soon as possible to reduce the risk to the wholesaler. If funds are needed to close on a property for this reason, then transactional funding  is a great resource to use for any investor.

Transactional funding lenders lend real estate investors short term capital for double closing transactions.


Assignment Of Contract: Pros & Cons

Assignment contracts can be profitable and well structured, but with anything there can be some obstacles you may face when closing on a home. Always remember to research before doing anything and pick the best option for you in this process. Below we will unpack some pros and cons of assignment contracts:

Advantages Of Assignment Contracts

Disadvantages Of Assignment Contracts

Common Misconceptions About Assigning Real Estate Contracts

In general, there are a lot of misconceptions about assigning real estate contracts and wholesaling real estate.

There’s a good chance you will encounter agents, brokers , attorneys, and others with little contract law or property law experience leading them to think that assigning real estate contracts is illegal.

Why would these real estate professionals think it’s illegal?

Because they are unfamiliar with the concept and think you are an unlicensed individual acting as an agent.

It’s important to understand that you are the principal buyer of the transaction and you are selling the equitable interest in the contract to another buyer. You are not selling the actual property itself for a commission like a real estate agent does.

It’s wise to be cognizant that you will most likely come across people who think that an assignment of contract is illegal. In these situations you’ll have to educate them on how real estate assignment contracts work.

This is another reason why you want to have a great real estate attorney on your team who can explain the legality of assigning and wholesaling to anyone you’re working with.


Final Thoughts On The Assignment of Contract

Utilizing an assignment of contract is a profitable real estate investment exit strategy. If you don’t want to buy, fix, and flip property, then you can always just wholesale it once it’s under contract by an assignment.

Assigning real estate contracts requires little to no capital, takes much less time to complete than other investment strategies, and is a great way to profit quickly from your deals. 

what is an assignment deal

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What Is an Assignment of Contract?

What happens when rights and duties under a contract are handed off to a third party.

An assignment of contract occurs when one party to an existing contract (the "assignor") hands off the contract's obligations and benefits to another party (the "assignee"). Ideally, the assignor wants the assignee to step into his shoes and assume all of his contractual obligations and rights. In order to do that, the other party to the contract must be properly notified. Read on to learn how assignments work, including how to keep an assignment option out of your contract.

How Assignments Work

How an assignment of contract plays out depends on many factors, especially the language of the contract. Some contracts may contain a clause prohibiting assignment; other contracts may require the other party to consent to the assignment.

Here's an example of a basic assignment of a contract: Tom contracts with a dairy to deliver a bottle of half-and-half to Tom's house every day. The dairy assigns Tom's contract to another dairy, and--provided Tom is notified of the change and continues to get his daily half-and-half--his contract is now with the new dairy.

An assignment doesn't always relieve the assignor of liability. Some contracts may include a guarantee that, regardless of an assignment, the original parties (or one of them) guarantees performance (that is, that the assignee will fulfill the terms of the contract ).

When Assignments Will Not Be Enforced

An assignment of a contract will not be enforced in the following situations.

The contract prohibits assignment. Contract language, typically referred to as an anti-assignment clause, can prohibit (and "void") any assignments. We provide a sample, below.

The assignment materially alters what's expected under the contract. If the assignment affects the performance due under the contract, decreases the value or return anticipated, or increases the risks for the other party to the contract (the party who is not assigning contractual rights), courts are unlikely to enforce the arrangement. For instance, if Tom's local, organic dairy assigned the contract to a factory farm dairy, this would be considered a material alteration.

The assignment violates the law or public policy. Some laws limit or prohibit assignments. For example, many states prohibit the assignment of future wages by an employee, and the federal government prohibits the assignment of certain claims against the government. Other assignments, though not prohibited by a statute, may violate public policy. For example, personal injury claims cannot be assigned because doing so may encourage litigation.

Delegation or Assignment?

In some cases, a party may not wish to assign the contract but only to get somebody else to fulfill its duties. Obviously, not all duties can be delegated--for example, some personal services are usually not delegated because they are so specific in nature. For example, if you hired Ted Nugent to perform at your event, he could not arbitrarily delegate his performing duties to Lady Gaga. To prohibit one party from delegating the responsibilities of the contract, the parties should include specific language to that effect in the agreement. For example, an anti-assignment clause might state, "Neither party shall assign or delegate its rights."

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what is an assignment deal

Real Estate Investing Strategies

How To Navigate The Real Estate Assignment Contract

what is an assignment deal

What is assignment of contract?

Assignment of contract vs double close

How to assign a contract

Assignment of contract pros and cons

Even the most left-brained, technical real estate practitioners may find themselves overwhelmed by the legal forms that have become synonymous with the investing industry. The assignment of contract strategy, in particular, has developed a confusing reputation for those unfamiliar with the concept of wholesaling. At the very least, there’s a good chance the “assignment of contract real estate” exit strategy sounds more like a foreign language to new investors than a viable means to an end.

A real estate assignment contract isn’t as complicated as many make it out to be, nor is it something to shy away from because of a lack of understanding. Instead, new investors need to learn how to assign a real estate contract as this particular exit strategy represents one of the best ways to break into the industry.

In this article, we will break down the elements of a real estate assignment contract, or a real estate wholesale contract, and provide strategies for how it can help investors further their careers. [ Thinking about investing in real estate? Register to attend a FREE online real estate class and learn how to get started investing in real estate. ]

What Is A Real Estate Assignment Contract?

A real estate assignment contract is a wholesale strategy used by real estate investors to facilitate the sale of a property between an owner and an end buyer. As its name suggests, contract assignment strategies will witness a subject property owner sign a contract with an investor that gives them the rights to buy the home. That’s an important distinction to make, as the contract only gives the investor the right to buy the home; they don’t actually follow through on a purchase. Once under contract, however, the investor retains the sole right to buy the home. That means they may then sell their rights to buy the house to another buyer. Therefore, when a wholesaler executes a contact assignment, they aren’t selling a house but rather their rights to buy a house. The end buyer will pay the wholesale a small assignment fee and buy the house from the original buyer.

The real estate assignment contract strategy is only as strong as the contracts used in the agreement. The language used in the respective contract is of the utmost importance and should clearly define what the investors and sellers expect out of the deal.

There are a couple of caveats to keep in mind when considering using sales contracts for real estate:

Contract prohibitions: Make sure the contract you have with the property seller does not have prohibitions for future assignments. This can create serious issues down the road. Make sure the contract is drafted by a lawyer that specializes in real estate assignment contract law.

Property-specific prohibitions: HUD homes (property obtained by the Department of Housing and Urban Development), real estate owned or REOs (foreclosed-upon property), and listed properties are not open to assignment contracts. REO properties, for example, have a 90-day period before being allowed to be resold.

assignment fee

What Is An Assignment Fee In Real Estate?

An assignment fee in real estate is the money a wholesaler can expect to receive from an end buyer when they sell them their rights to buy the subject property. In other words, the assignment fee serves as the monetary compensation awarded to the wholesaler for connecting the original seller with the end buyer.

Again, any contract used to disclose a wholesale deal should be completely transparent, and including the assignment fee is no exception. The terms of how an investor will be paid upon assigning a contract should, nonetheless, be spelled out in the contract itself.

The standard assignment fee is $5,000. However, every deal is different. Buyers differ on their needs and criteria for spending their money (e.g., rehabbing vs. buy-and-hold buyers). As with any negotiations , proper information is vital. Take the time to find out how much the property would realistically cost before and after repairs. Then, add your preferred assignment fee on top of it.

Traditionally, investors will receive a deposit when they sign the Assignment of Real Estate Purchase and Sale Agreement . The rest of the assignment fee will be paid out upon the deal closing.

Assignment Contract Vs Double Close

The real estate assignment contract strategy is just one of the two methods investors may use to wholesale a deal. In addition to assigning contracts, investors may also choose to double close. While both strategies are essentially variations of a wholesale deal, several differences must be noted.

A double closing, otherwise known as a back-to-back closing, will have investors actually purchase the home. However, instead of holding onto it, they will immediately sell the asset without rehabbing it. Double closings aren’t as traditional as fast as contract assignment, but they can be in the right situation. Double closings can also take as long as a few weeks. In the end, double closings aren’t all that different from a traditional buy and sell; they transpire over a meeter of weeks instead of months.

Assignment real estate strategies are usually the first option investors will want to consider, as they are slightly easier and less involved. That said, real estate assignment contract methods aren’t necessarily better; they are just different. The wholesale strategy an investor chooses is entirely dependent on their situation. For example, if a buyer cannot line up funding fast enough, they may need to initiate a double closing because they don’t have the capital to pay the acquisition costs and assignment fee. Meanwhile, select institutional lenders incorporate language against lending money in an assignment of contract scenario. Therefore, any subsequent wholesale will need to be an assignment of contract.

Double closings and contract assignments are simply two means of obtaining the same end. Neither is better than the other; they are meant to be used in different scenarios.

Flipping Real Estate Contracts

Those unfamiliar with the real estate contract assignment concept may know it as something else: flipping real estate contracts; if for nothing else, the two are one-in-the-same. Flipping real estate contracts is simply another way to refer to assigning a contract.

Is An Assignment Of Contract Legal?

Yes, an assignment of contract is legal when executed correctly. Wholesalers must follow local laws regulating the language of contracts, as some jurisdictions have more regulations than others. It is also becoming increasingly common to assign contracts to a legal entity or LLC rather than an individual, to prevent objections from the bank. Note that you will need written consent from all parties listed on the contract, and there cannot be any clauses present that violate the law. If you have any questions about the specific language to include in a contract, it’s always a good idea to consult a qualified real estate attorney.

When Will Assignments Not Be Enforced?

In certain cases, an assignment of contract will not be enforced. Most notably, if the contract violates the law or any local regulations it cannot be enforced. This is why it is always encouraged to understand real estate laws and policy as soon as you enter the industry. Further, working with a qualified attorney when crafting contracts can be beneficial.

It may seem obvious, but assignment contracts will not be enforced if the language is used incorrectly. If the language in a contract contradicts itself, or if the contract is not legally binding it cannot be enforced. Essentially if there is any anti-assignment language, this can void the contract. Finally, if the assignment violates what is included under the contract, for example by devaluing the item, the contract will likely not be enforced.

How To Assign A Real Estate Contract

A wholesaling investment strategy that utilizes assignment contracts has many advantages, one of them being a low barrier-to-entry for investors. However, despite its inherent profitability, there are a lot of investors that underestimate the process. While probably the easiest exit strategy in all of real estate investing, there are a number of steps that must be taken to ensure a timely and profitable contract assignment, not the least of which include:

Find the right property

Acquire a real estate contract template

Submit the contract

Assign the contract

Collect the fee

1. Find The Right Property

You need to prune your leads, whether from newspaper ads, online marketing, or direct mail marketing. Remember, you aren’t just looking for any seller: you need a motivated seller who will sell their property at a price that works with your investing strategy.

The difference between a regular seller and a motivated seller is the latter’s sense of urgency. A motivated seller wants their property sold now. Pick a seller who wants to be rid of their property in the quickest time possible. It could be because they’re moving out of state, or they want to buy another house in a different area ASAP. Or, they don’t want to live in that house anymore for personal reasons. The key is to know their motivation for selling and determine if that intent is enough to sell immediately.

With a better idea of who to buy from, wholesalers will have an easier time exercising one of several marketing strategies:

Direct Mail

Real Estate Meetings

Local Marketing

2. Acquire A Real Estate Contract Template

Real estate assignment contract templates are readily available online. Although it’s tempting to go the DIY route, it’s generally advisable to let a lawyer see it first. This way, you will have the comfort of knowing you are doing it right, and that you have counsel in case of any legal problems along the way.

One of the things proper wholesale real estate contracts add is the phrase “and/or assigns” next to your name. This clause will give you the authority to sell the property or assign the property to another buyer.

You do need to disclose this to the seller and explain the clause if needed. Assure them that they will still get the amount you both agreed upon, but it gives you deal flexibility down the road.

3. Submit The Contract

Depending on your state’s laws, you need to submit your real estate assignment contract to a title company, or a closing attorney, for a title search. These are independent parties that look into the history of a property, seeing that there are no liens attached to the title. They then sign off on the validity of the contract.

4. Assign The Contract

Finding your buyer, similar to finding a seller, requires proper segmentation. When searching for buyers, investors should exercise several avenues, including online marketing, listing websites, or networking groups. In the real estate industry, this process is called building a buyer’s list, and it is a crucial step to finding success in assigning contracts.

Once you have found a buyer (hopefully from your ever-growing buyer’s list), ensure your contract includes language that covers earnest money to be paid upfront. This grants you protection against a possible breach of contract. This also assures you that you will profit, whether the transaction closes or not, as earnest money is non-refundable. How much it is depends on you, as long as it is properly justified.

5. Collect The Fee

Your profit from a deal of this kind comes from both your assignment fee, as well as the difference between the agreed-upon value and how much you sell it to the buyer. If you and the seller decide you will buy the property for $75,000 and sell it for $80,000 to the buyer, you profit $5,000. The deal is closed once the buyer pays the full $80,000.

real estate assignment contract

Assignment of Contract Pros

For many investors, the most attractive benefit of an assignment of contract is the ability to profit without ever purchasing a property. This is often what attracts people to start wholesaling, as it allows many to learn the ropes of real estate with relatively low stakes. An assignment fee can either be determined as a percentage of the purchase price or as a set amount determined by the wholesaler. A standard fee is around $5,000 per contract.

The profit potential is not the only positive associated with an assignment of contract. Investors also benefit from not being added to the title chain, which can greatly reduce the costs and timeline associated with a deal. This benefit can even transfer to the seller and end buyer, as they get to avoid paying a real estate agent fee by opting for an assignment of contract. Compared to a double close (another popular wholesaling strategy), investors can avoid two sets of closing costs. All of these pros can positively impact an investor’s bottom line, making this a highly desirable exit strategy.

Assignment of Contract Cons

Although there are numerous perks to an assignment of contract, there are a few downsides to be aware of before searching for your first wholesale deal. Namely, working with buyers and sellers who may not be familiar with wholesaling can be challenging. Investors need to be prepared to familiarize newcomers with the process and be ready to answer any questions. Occasionally, sellers will purposely not accept an assignment of contract situation. Investors should occasionally expect this, as to not get discouraged.

Another obstacle wholesalers may face when working with an assignment of contract is in cases where the end buyer wants to back out. This can happen if the buyer is not comfortable paying the assignment fee, or if they don’t have owner’s rights until the contract is fully assigned. The best way to protect yourself from situations like this is to form a reliable buyer’s list and be upfront with all of the information. It is always recommended to develop a solid contract as well.

Know that not all properties can be wholesaled, for example HUD houses. In these cases, there are often anti-assigned clauses preventing wholesalers from getting involved. Make sure you know how to identify these properties so you don’t waste your time. Keep in mind that while there are cons to this real estate exit strategy, the right preparation can help investors avoid any big challenges.

Assignment of Contract Template

If you decide to pursue a career wholesaling real estate, then you’ll want the tools that will make your life as easy as possible. The good news is that there are plenty of real estate tools and templates at your disposal so that you don’t have to reinvent the wheel! For instance, here is an assignment of contract template that you can use when you strike your first deal.

As with any part of the real estate investing trade, no single aspect will lead to success. However, understanding how a real estate assignment of contract works is vital for this business. When you comprehend the many layers of how contracts are assigned—and how wholesaling works from beginning to end—you’ll be a more informed, educated, and successful investor.

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Table of Contents

REtipster does not provide legal advice. The information in this article can be impacted by many unique variables. Always consult with a qualified legal professional before taking action.

In real estate terms, an assignment of contract is a way to profit from a real estate transaction without ever becoming the owner of the property.

The assignment method is a standard tool in a real estate wholesaler’s kit and lowers the barrier to entry for a real estate investor because it does not require the wholesaler to use much (or any) of their own money to profit from a deal.

Contract assignment is a common wholesaling strategy where the seller and the wholesaler (i.e. – middleman) sign an agreement giving the wholesaler the sole right to buy a property at a specified price, within a certain period of time.

The wholesaler then finds another buyer and assigns the contract to him or her. The wholesaler isn’t selling the property to the end buyer because the wholesaler never takes title to the property during the process. The wholesaler is simply selling the contract , which gives the end buyer the right to buy the property in accordance with the original purchase agreement.

In doing this, the wholesaler can earn an assignment fee for putting the deal together.

Some states require a real estate wholesaler to be a licensed real estate agent, and the assignment strategy can’t be used for HUD homes and REOs.

The process for assigning a contract follows some common steps.

Find the Right Property

This is where the heavy lifting happens—investors use many different marketing tactics to find leads and identify properties that work with their investing strategy. Typically, for wholesaling to work, a wholesaler needs a motivated seller who wants to unload the property as soon as possible. That sense of urgency works to the wholesaler’s advantage in negotiating a price that will be attractive to buyers and cover their assignment fee.

RELATED: What is “Driving for Dollars” and How Does It Work?

Get a Purchase Agreement Signed

Once a motivated seller has agreed to sell their property at a discounted price, they will sign a purchase agreement with the wholesaler. The purchase agreement needs to contain language that clearly allows the buyer to assign their rights in the agreement to a third party . Most standard purchase agreements do not include this language by default, so if the buyer plans to sell/assign the contract, they need to make sure this language is included (note: talk with an attorney to make sure the language included and explained correctly).

RELATED: Wholesaling Made Simple! A Comprehensive Guide to Assigning Contracts

Communicate, Communicate, Communicate

From the very beginning, it’s important for a wholesaler to communicate with their seller about their intent to assign the contract. Many sellers are not familiar with the assignment process, so if the role of the buyer is going to change along the way, the seller needs to be aware of this at or before the time they sign the original purchase agreement .

Find an End Buyer

This is the other half of a wholesaler’s job – marketing to find buyers. Once a buyer has been found, the wholesaler can assign the contract to the new party and work with both the original seller and the end buyer to schedule a closing date.

The assignment is done through a simple “Assignment Agreement” and it allows the new buyer to step into the wholesaler’s shoes as the buyer in the original contract.

While this document technically replaces the wholesaler with the new end buyer, the wholesaler doesn’t get paid until the deal is closed.

Most assignment contracts include language for a nonrefundable deposit from the end buyer, which protects the wholesaler in case the buyer backs out. Although it’s possible to download assignment contract templates online, this is one situation where most experts recommend having your contracts reviewed by an attorney. The assignment wording has to be precise and in accordance with your state laws; having an attorney review your contract protects you against any issues down the road.

Close the Transaction, Assign the Contract & Collect the Assignment Fee

Wholesalers get paid once the end buyer closes the deal. The assignment fee can be a flat amount, a percentage of the purchase price or the difference between the original purchase price and the end buyer’s purchase price.

With an assignment transaction, the end buyer will see precisely how much the wholesaler is getting paid because the end buyer has to sign the closing statement (which states the purchase price from the seller) and the Assignment Agreement (which clearly states the assignment fee being paid to the wholesaler).

If the assignment fee is a reasonable amount relative to the purchase price, most serious investors won’t have any qualms about paying this. If, however, the assignment fee is very large relative to the original purchase price (e.g. – if the original seller agreed to sell their property for $10,000, the wholesaler is collecting an assignment fee of $20,000, and the property is worth $50,000), some end buyers may take issue with this.

In cases where the wholesaler has a substantially higher profit margin, a double closing or a traditional closing is a safer way to close a wholesale transaction. When there are two separate closings taking place, the seller and buyer are not able to see the numbers and overall profit margin being made by the wholesaler between the two transactions.

According to UpCounsel, most contract assignments are done for about $5,000, although depending on the property and the market, it could be higher or lower.

Assigning contracts is a way to lower the barrier to entry for many new real estate investors; because they don’t need to put up their own money to buy a property or assume any risk in financing a deal.

The wholesaler isn’t part of the title chain, which streamlines the process and avoids the hassle of closing two times. Compared to the double-close strategy, assignment contracts require less paperwork and are usually less costly (because there is only one closing occurring, rather than two separate transactions).

On the downside, the wholesaler has to sell the property as-is, because they don’t own it at any point and they cannot make repairs or renovations to make the property look more attractive to a potential buyer. Financing may be much more difficult for the end buyer because many mortgage lenders won’t work with assigned contracts. Purchase Agreements also have expiration dates, which means the wholesaler has a limited window of time to find an end buyer and get the deal done.

Being successful with assignment contracts usually comes down to excellent marketing, networking, and communication between all parties involved. It’s all about developing strategies to find the right properties and having a solid network of investors you can assign them to quickly.

It’s also critical to be aware of any applicable laws in the jurisdiction where the wholesaler is working and holding any licenses required for these kinds of real estate transactions.

Related terms

Double closing, wholesaling (real estate wholesaling), transactional funding.

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Assignment Agreement Definition: Everything You Need to Know

The assignment agreement definition is a part of the common law that is in charge of transferring the rights of an individual or party to another. 3 min read

The assignment agreement definition is a portion of the common law that is in charge of transferring the rights of an individual or party to another person or party. The assignment agreement is often seen in real estate but can occur in other contexts as well. An assignment is just the contractual transfer of benefits that will accrue or have accrued. Obligations don't transfer with the benefits of an assignment. The assignor will always keep the obligations.

Security Agreement

A part of contract law that is responsible for financial transactions is a security agreement. These are also called a secured transaction and include a grantor that promises collateral to the grantee. In contract law, the security agreement doesn't cover actual real estate or land. Instead, this agreement covers stock, vehicle, livestock, or another type of personal property. In a security agreement, in the case where a grantee already has the collateral, the grantor can verbally acquire the transaction.

However, it's preferred to have a security agreement that is written down instead of having a verbal agreement, just in case there's a disagreement among the parties. Both a security agreement and an assignment may apply to a variety of property rights.

Example of Using Assignment and Security Agreements in Property Rights

As an example, the agreements may cover the promise to use stocks as collateral or to transfer the rights of stock investments. It may also be possible for the agreements to include properties that are less tangible. The agreements may apply to creative rights, such as film production or written works. If it is a case of creative rights, any benefits often include future revenue that may be earned from the distribution or sale of said works.

How Can an Attorney Help You?

You may want to hire an attorney to help you draft a security agreement and legal assignment. There are other services that you might want to use that don't cost as much but will still help you draft your contracts. The following are ways to save money while drafting a contract:

Unless your background includes knowing particular legal knowledge about security agreements and assignments, you'll want to talk to an attorney before you use any contract forms that are self-generated. Both security agreements and assignments are complicated areas of contract law.

Lease Assignment Definitions

An agent is someone who is licensed by the state where a property is established to aid in real-estate transactions such as leases , assignments, and property sales. An agent is usually either an attorney, sales agent, or real estate broker. The tenant from the initial lease is the assignor, and he transfers his whole interest to another person. The assignee obtains the lease interest from the assignor or original tenant and will become the new tenant.

Consideration is what the assignor gets from the assignee for transferring the lease interest to the assignee. The consideration is often a certain amount of money. Interests that other people hold are encumbrances, and they can affect the title and possibly the possession and use of the property by the assignee and the assignor.

If the property in question is a residential unit that's above a commercial property, the lease is considered to be a residential one, even though the property is in a commercial building. The governing law is that of the jurisdiction in which the property is located, no matter what jurisdiction the landlord, assignee, and assignor reside in. The assignee is allowed to receive a copy of the master lease. The assignor can either give the assignee a copy directly or include the copy with the lease assignment.

If the assignor isn't liable for the assignee's conduct, the landlord will need to go after the assignee if he or she causes property damage. However, if the assignor has liability for the conduct of the assignee, the landlord may then ask for compensation from both the assignee and assignor should the assignee cause any damage to the property.

If you need help with an assignment agreement definition, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Assignment of Contract

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What is an Assignment of Contract?

An assignment of contract is a legal term that describes the process that occurs when an existing contract assignee wishes to transfer their contractual obligations to another party. When an assignment of contract happens, the original party is relieved of their contractual duties, and their role is replaced by the approved incoming party.

How Does Assignment of Contract Work?

An assignment of contract is simpler than you might think.

The process starts with an existing contract party who wishes to transfer their contractual obligations to a new party.

When this occurs, the existing contract party must first confirm that an assignment of contract is permissible under the legally binding agreement. Some contracts prohibit assignments of contract altogether, and some require the other parties of the agreement to agree to the transfer.

In other cases, some contracts allow an assignment of contract without any formal notification to other contract parties. If this is the case, once the existing contract party decides to reassign his duties, he must create a “Letter of Assignment” to notify any other contract signers of the change.

The Letter of Assignment must include details about who is to take over the contractual obligations of the exiting party and when the transfer will take place. It must also be signed by both the incoming and outgoing parties.

Check out this article to learn more about how assigning a contract works.

Contract Assignment Examples

Contract assignments are great tools for contract parties to use when they wish to transfer their commitments to a third party. Here are some examples of contract assignments to help you better understand them:

Anna signs a contract with a local trash company that entitles her to have her trash picked up twice a week. A year later, the trash company transferred her contract to a new trash service provider. This contract assignment effectively makes Anna’s contract now with the new service provider.

Hasina enters a contract with a national phone company for cell phone service. The company goes into bankruptcy and needs to close its doors but decides to transfer all current contracts to another provider who agrees to honor the same rates and level of service. The contract assignment is completed, and Hasina now has a contract with the new phone company as a result.

Here is an article where you can find out more about contract assignments.

what is an assignment deal

Assignment of Contract in Real Estate

Assignment of contract is also used in real estate to make money without going the well-known routes of buying and flipping houses. When real estate LLC investors use an assignment of contract, they can make money off properties without ever actually buying them by instead opting to transfer real estate contracts.

This process is called real estate wholesaling.

Real Estate Wholesaling

Real estate wholesaling consists of locating deals on houses that you don’t plan to buy but instead plan to enter a contract to reassign the house to another buyer and pocket the profit.

The process is simple: real estate wholesalers negotiate purchase contracts with sellers. Then, they present these contracts to buyers who pay them an assignment fee for transferring the contract.

This process works because a real estate purchase agreement does not come with the obligation to buy a property. Instead, it sets forth certain purchasing parameters that must be fulfilled by the buyer of the property. In a nutshell, whoever signs the purchase contract has the right to buy the property, but those rights can usually be transferred by means of an assignment of contract.

This means that as long as the buyer who’s involved in the assignment of contract agrees with the purchasing terms, they can legally take over the contract.

But how do real estate wholesalers find these properties?

It is easier than you might think. Here are a few examples of ways that wholesalers find cheap houses to turn a profit on:

The key to finding the perfect home for an assignment of contract is to locate sellers that are looking to get rid of their properties quickly. This might be a family who is looking to relocate for a job opportunity or someone who needs to make repairs on a home but can’t afford it. Either way, the quicker the wholesaler can close the deal, the better.

Once a property is located, wholesalers immediately go to work getting the details ironed out about how the sale will work. Transparency is key when it comes to wholesaling. This means that when a wholesaler intends to use an assignment of contract to transfer the rights to buy to another person, they are always upfront about during the preliminary phases of the sale.

In addition to this practice just being good business, it makes sure the process goes as smoothly as possible later down the line. Wholesalers are clear in their intent and make sure buyers know that the contract could be transferred to another buyer before the closing date arrives.

After their offer is accepted and warranties are determined, wholesalers move to complete a title search . Title searches ensure that sellers have the right to enter into a purchase agreement on the property. They do this by searching for any outstanding tax payments, liens , or other roadblocks that could prevent the sale from going through.

Wholesalers also often work with experienced real estate lawyers who ensure that all of the legal paperwork is forthcoming and will stand up in court. Lawyers can also assist in the contract negotiation process if needed but often don’t come in until the final stages.

If the title search comes back clear and the real estate lawyer gives the green light, the wholesaler will immediately move to locate an entity to transfer the rights to buy.

One of the most attractive advantages of real estate wholesaling is that very little money is needed to get started. The process of finding a seller, negotiating a price, and performing a title search is an extremely cheap process that almost anyone can do.

On the other hand, it is not always a positive experience. It can be hard for wholesalers to find sellers who will agree to sell their homes for less than the market value. Even when they do, there is always a chance that the transferred buyer will back out of the sale, which leaves wholesalers obligated to either purchase the property themselves or scramble to find a new person to complete an assignment of contract with.

Learn more about assignment of contract in real estate by checking out this article .

Who Handles Assignment of Contract?

The best person to handle an assignment of contract is an attorney. Since these are detailed legal documents that deal with thousands of dollars, it is never a bad idea to have a professional on your side. If you need help with an assignment of contract or signing a business contract, post a project on ContractsCounsel. There, you can connect with attorneys who know everything there is to know about assignment of contract amendment and can walk you through the whole process.

Meet some of our Lawyers

Jonathan K. on ContractsCounsel

Jonathan K.

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma. Jonathan's primary practice areas are business law, contracts and agreements, business litigation including breach of contract disputes and commercial claims, and outside general counsel services. Jonathan is considered an "America First" attorney by several of his clients, and has a reputation for aggressively defending their interests and rights both inside and outside the courtroom. Prior to founding Liberty Legal Solutions, LLC, Jonathan worked with a civil litigation law firm in Edmond, Oklahoma, where he obtained experience in a variety of practice areas. Jonathan has also worked with regional creditor rights law firms where he has assisted them in starting their branch operations in Oklahoma. Jonathan earned his B.A. in Government & International Politics from George Mason University in 2002 and earned his Juris Doctor from Oklahoma City University in 2006. Jonathan is married to his wife Jennifer. When not helping clients, Jonathan enjoys reading, Republican politics, spending time with family, traveling, and working on his "Freedom Friday" blog.

Adalbert M. on ContractsCounsel

Adalbert M.

I am a solo-practitioner and founder of The CYA LAW FIRM, PLLC, in Port Saint Lucie, Florida. I am a transactional lawyer, focusing on Asset Protection, Estate Planning, and Business Law. I am fluent in Spanish and English.

Karl D. S. on ContractsCounsel

Karl D. Shehu, has a multidisciplinary practice encompassing small business law, estate and legacy planning, real estate law, and litigation. Attorney Shehu has assisted families, physicians, professionals, and people of faith provide for their loved ones by crafting individualized estate and legacy plans. Protecting families and safeguarding families is his passion. Attorney Shehu routinely represents lenders, buyers, sellers, and businesses in real estate transactions, researching and resolving title defects, escrowing funds, and drafting lending documents. To date, Attorney Shehu has closed a real estate deal in every town in Connecticut. As a litigator, Attorney Shehu has proven willing to engage in contentious court battles to obtain results for his clients. While practicing at DLA Piper, LLP, in Boston, Attorney Shehu represented the world’s largest pharmaceutical companies in multidistrict litigations filed throughout the United States. He has been a passionate advocate for immigrants and the seriously injured, frequently advising against lowball settlement offers. He is willing to try every case to verdict, and he meticulously prepares every case for trial. Attorney Shehu began his legal career as a consumer lawyer, utilizing fee-shifting statutes to force unscrupulous businesses to pay the legal fees of aggrieved consumers. For example, in Access Therapies v. Mendoza, 1:13-cv-01317 (S.D. Ind. 2014), Attorney Shehu utilized unique interpretations of the Trafficking Victims Protection Act, Truth-in-Lending Act, and Racketeer Influenced and Corrupt Organizations Act (RICO) to obtain a favorable result for his immigrant client. Attorney Shehu is a Waterbury, Connecticut native. He attended Our Lady of Mount Carmel grammar school, The Loomis Chaffee School, and Chase Collegiate School before earning degrees from Boston College, the University of Oxford’s Said Business School in England, and Pepperdine University School of Law. At Oxford, Karl was voted president of his class. Outside of his law practice, Attorney Shehu has worked to improve the world around him by participating in numerous charitable endeavors. He is a former candidate for the Connecticut Senate and a parishioner of St. Patrick Parish and Oratory in Waterbury. In addition, Attorney Shehu has written extensively on the Twenty-fifth Amendment and law firm retention by multinational firms.

Christina S. on ContractsCounsel

Christina S.

I am an attorney who has been practicing for over a decade, experienced in multiple areas of law, both from a litigation and more procedural side. The great thing about my practice is that it has trained me to deal with so many different types of problems and to find solutions in a variety of legal scenarios that are almost never similar.

Ryenne S. on ContractsCounsel

My name is Ryenne Shaw and I help business owners build businesses that operate as assets instead of liabilities, increase in value over time and build wealth. My areas of expertise include corporate formation and business structure, contract law, employment/labor law, business risk and compliance and intellectual property. I also serve as outside general counsel to several businesses across various industries nationally. I spent most of my early legal career assisting C.E.O.s, General Counsel, and in-house legal counsel of both large and smaller corporations in minimizing liability, protecting business assets and maximizing profits. While working with many of these entities, I realized that smaller entities are often underserved. I saw that smaller business owners weren’t receiving the same level of legal support larger corporations relied upon to grow and sustain. I knew this was a major contributor to the ceiling that most small businesses hit before they’ve even scratched the surface of their potential. And I knew at that moment that all of this lack of knowledge and support was creating a huge wealth gap. After over ten years of legal experience, I started my law firm to provide the legal support small to mid-sized business owners and entrepreneurs need to grow and protect their brands, businesses, and assets. I have a passion for helping small to mid-sized businesses and startups grow into wealth-building assets by leveraging the same legal strategies large corporations have used for years to create real wealth. I enjoy connecting with my clients, learning about their visions and identifying ways to protect and maximize the reach, value and impact of their businesses. I am a strong legal writer with extensive litigation experience, including both federal and state (and administratively), which brings another element to every contract I prepare and the overall counsel and value I provide. Some of my recent projects include: - Negotiating & Drafting Commercial Lease Agreements - Drafting Trademark Licensing Agreements - Drafting Ambassador and Influencer Agreements - Drafting Collaboration Agreements - Drafting Service Agreements for service-providers, coaches and consultants - Drafting Master Service Agreements and SOWs - Drafting Terms of Service and Privacy Policies - Preparing policies and procedures for businesses in highly regulated industries - Drafting Employee Handbooks, Standard Operations and Procedures (SOPs) manuals, employment agreements - Creating Employer-employee infrastructure to ensure business compliance with employment and labor laws - Drafting Independent Contractor Agreements and Non-Disclosure/Non-Competition/Non-Solicitation Agreements - Conducting Federal Trademark Searches and filing trademark applications - Preparing Trademark Opinion Letters after conducting appropriate legal research - Drafting Letters of Opinion for Small Business Loans - Drafting and Responding to Cease and Desist Letters I service clients throughout the United States across a broad range of industries.

Jingjing L. on ContractsCounsel

Jingjing L.

Hi there. I am a dual qualified (Illinois; England & Wales) transactional lawyer with about 5 years of experience. I have worked in two of the top international "big law" firms focusing on corporate, private equity, insurance and financial services work. I'm now working in-house and have a wide range of experience with commercial and corporate contracts as well as legal and regulatory research.

Danny J. on ContractsCounsel

I have had my own law practice since 2014 and I enjoy solving my clients’ problems. That’s why I constantly stay on top of the latest developments in the law and business of startups, entertainment, art, intellectual property, and commercial enterprise. I constantly keep learning because everything I learn helps me make my client’s life better. I assist clients in all aspects of copyright, trademark, contract, trade secret, business, nonprofit, employment, mediation, art, fashion, and entertainment law. Even though I am licensed to practice law in NY, I have worked for clients all over the country and even in Europe, Africa, and Latin America. No matter the client, I always look for ways to protect their assets, artworks, businesses, and brands with strategies to help them grow. I am a fluent bilingual legal professional who can analyze complex legal and business problems and solve them creatively for the benefit of my clients. I am detail-oriented and attentive which makes me excellent at negotiating, drafting, and revising all types of agreements and deals. I advise creatives and companies on intellectual property issues, risk management, and strategic planning. My clients love what I do for them because I employ a practical, client-tailored, and results-oriented approach to their case, no matter how small.

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I have 27 years of experience with drafting, editing, revising, reviewing and amending business and commercial contracts and agreements of all kinds.

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I'm an IP lawyer and patent attorney (US and European). I work in high tech fields, such as software, quantum computing, AI and Blockchain and many other IT related fields. I've been in IBM's IP legal function for 25 years and now am a Director in my own law firm.

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I am a U.S. lawyer (licensed in California) and have recently relocated to London. I hold a bachelor’s degree in Political Science from the University of California, Berkeley and a Juris Doctor law degree from the University of California, Hastings College of the Law. I have extensive experience in providing legal services and support in areas of business, labor & employment, IP enforcement (patent infringement, copyright & trademark), and other litigation matters; Reviewing, drafting, and editing business and legal documents/contracts; Conducting legal research and analysis, drafting memorandums, pleadings, discovery, document review, various motions, mediation briefs, and other litigation related activities; Reviewing and preparation of templates, policies, and processes for compliance with laws and regulations; educating and advising on legal and compliance issues.

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Attorney Kegler has been licensed to practice law in ​the State of North Carolina since 1998. Over the years,​ she has worked in firms that focused on small​ business financing, initial startup formation, to​ starting several businesses of her own with bootstrap​ financing to venture capital funding. As a Certified​ Dream Manager, she couples the skills of listening to​ understand the big picture to get to solutions that not​ only fit today's needs but also the long term needs of​ her entrepreneurial clients.​

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Real Estate Assignment of Contract Explained

If you are thinking about purchasing real estate, there are several real estate investment strategies you could consider. This includes buying rental property , flipping houses, BRRRR investing, buy and hold, and real estate investment trusts (REITs). Another potentially lucrative strategy for making money in the real estate industry is wholesaling. This basically involves finding real estate deals that you don’t actually plan to purchase, but plan to transfer to an end buyer. This kind of transaction uses a principle referred to as assignment of contract .

What Is an Assignment of Contract in Real Estate?

Assignment of contract takes place when one party to a contract (the assignor) transfers the legal obligations of the contract to another party. The recipient of the assignment (the assignee) then assumes responsibility for the terms of the contract. In other words, you can flip real estate contracts and make money from a real estate deal without actually owning the income property .

Is an Assignment of Contract Legal ?

Yes, assignment of contract in real estate is legal. However, contract assignment will not be enforced in the following circumstances:

How Does Assignment Work in Real Estate?

Here are the common steps for assigning a contract:

Find investment property for sale

The first thing you need to do is find a motivated seller who is willing to sell their home at a price that is below market value. The main difference between a motivated seller and a regular seller is the former’s sense of urgency. Motivated sellers want to sell fast due to reasons such as divorce, living out-of-state, delinquent taxes , or job transfers. This sense of urgency could work to your advantage at the negotiation table.

You can use the following strategies to find homeowners that want to sell fast:

Visit the Mashvisor Property Marketplace

Related: The Best Tool to Find Off Market Properties

Get the contract

You can easily download an assignment of contract template from the internet. However, it is advisable to have an attorney read and approve the document. This will assure you that the contract is legally sound and that you will have the support of the attorney in case you find yourself in litigation.

One crucial detail that needs to be included in the assignment of contract document is “ and/or assigns ” next to your name. It is this clause that authorizes you to transfer investment property to an interested buyer. Be sure to disclose this information to the seller, and explain the meaning of the clause if necessary. Give them assurance that they will still get the agreed-upon purchase amount.

Related: The Basics of a Wholesale Real Estate Contract and How to Prepare One

Submit the contract

Though the process of assignment of contract varies from state to state, you will generally be required to submit the contract to a closing attorney or title company for a title search. This search will look into the history of the home to ensure that there are no liens attached to the title.

Find an end-buyer

find buyers for real estate assignment of contract

Finding buyers is an important step in the strategy of real estate assignment of contract.

You can find potential buyers using methods such as cold calling, posters and signs, newspaper ads, social media ads, Craigslist, or networking on real estate forums. Alternatively, you could solicit the help of a local real estate agent. Whatever strategies you choose, be sure to find a buyer before the contract expires. In fact, many investors who use this strategy work on putting together a buyers list before they even find a property for sale. Consider this approach as well.

Related: Here’s How to Find Cash Buyers for Real Estate

Assign the contract

Once you’ve located an interested buyer, the first thing you need to do is ask for an earnest cash deposit. Your contract should clearly mention that earnest money will be paid upfront. This clause will protect you from any breach of contract. Since the earnest money is nonrefundable, you are assured of making a profit, whether the deal closes or not.

As the assignor, you will get paid once the end buyer submits the funds for the deal. The difference between the agreed-upon value and the price you reach with the buyer will be your profit. For instance, if you agreed with the seller that you would purchase the property for $170,000 and you then assigned the contract to the buyer for $230,000, your profit (assignment fee) will be $60,000.

Real estate assignment of contract takes less time to complete compared to other real estate investment strategies  and requires little or no capital. However, working with sellers and buyers that are not conversant with assignment of contract can be challenging. In addition, you might find a buyer that will want to back out at the last minute. If you want to flip a real estate contract, you should therefore anticipate such scenarios and prepare accordingly.

what is an assignment deal

Charles Mburugu

Charles Mburugu is a HubSpot-certified content writer/marketer for B2B, B2C and SaaS companies. He loves writing on topics that help real estate investors and agents make better choices.

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Understanding an assignment and assumption agreement by Belle Wong, J.D.

Understanding an assignment and assumption agreement

Need to assign your rights and duties under a contract? Learn more about the basics of an assignment and assumption agreement.

by Belle Wong, J.D. updated  February 08, 2023  ·  3 min read

While every business should try its best to meet its contractual obligations, changes in circumstance can happen that could necessitate transferring your rights and duties under a contract to another party who would be better able to meet those obligations.

Person presenting documents to another person who is signing them

If you find yourself in such a situation, and your contract provides for the possibility of assignment, an assignment and assumption agreement can be a good option for preserving your relationship with the party you initially contracted with, while at the same time enabling you to pass on your contractual rights and duties to a third party.

The assignment and assumption agreement

An assignment and assumption agreement is used after a contract is signed, in order to transfer one of the contracting party's rights and obligations to a third party who was not originally a party to the contract. The party making the assignment is called the assignor, while the third party accepting the assignment is known as the assignee.

In order for an assignment and assumption agreement to be valid, the following criteria need to be met:

A standard assignment and assumption contract is often a good starting point if you need to enter into an assignment and assumption agreement. However, for more complex situations, such as an assignment and amendment agreement in which several of the initial contract terms will be modified, or where only some, but not all, rights and duties will be assigned, it's a good idea to retain the services of an attorney who can help you draft an agreement that will meet all your needs.

The basics of assignment and assumption

When you're ready to enter into an assignment and assumption agreement, it's a good idea to have a firm grasp of the basics of assignment:

Filling in the assignment and assumption agreement

Unless you're dealing with a complex assignment situation, working with a template often is a good way to begin drafting an assignment and assumption agreement that will meet your needs. Generally speaking, your agreement should include the following information:

In addition to these sections that are specific to an assignment and assumption agreement, your contract should also include standard contract language, such as clauses about indemnification, future amendments, and governing law.

Sometimes circumstances change, and as a business owner you may find yourself needing to assign your rights and duties under a contract to another party. A properly drafted assignment and assumption agreement can help you make the transfer smoothly while, at the same time, preserving the cordiality of your initial business relationship under the original contract.

About the Author

Belle Wong, J.D.

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