When you sign a purchase contract with a seller, you have an equitable interest in that property. An assignment of contract transfers that equitable interest — and your rights and obligations under the contract — to a third party (your buyer) for a fee. The seller and end buyer close; you collect the assignment fee.
The assignment fee is the spread between your contract price with the seller and the price you sell the contract to your buyer. If you have the property under contract at $150k and sell to a buyer at $165k, your assignment fee is $15k. This is your profit — not from the property, but from finding and packaging the deal.
Assignment of contract is legal in most states but some contracts have anti-assignment clauses. REO (bank-owned) properties and many MLS listings prohibit assignment. Always use a purchase agreement that explicitly allows assignment, or add language that permits it.
In a double close (simultaneous close), you actually buy and immediately sell the property. More expensive (two sets of closing costs) but provides more privacy — the end buyer doesn't see your assignment fee. Use double close when the spread is large enough that revealing it might kill the deal.
Use a formal Assignment of Contract document that includes: original contract details, assignor (you) and assignee (buyer) information, assignment fee amount and payment terms, and representations about the contract's validity. Title companies handle the mechanics at closing.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He is active in the Northern Virginia and DC metro wholesale market.