How to Calculate Your Assignment Fee in Wholesale Real Estate

The assignment fee is the wholesale investor's profit — the spread between what you put the property under contract for and what you assign it to a buyer for. Calculating it correctly requires understanding what your investor buyer needs to make (the 70% rule) and working backward to your maximum contract price.

The Wholesale Assignment Fee Formula

Your buyer needs to buy at 70% of ARV minus rehab. You need to acquire at a price low enough to leave room for your fee. The math works backward from what the investor buyer will pay.

Step-by-Step Assignment Fee Calculation

• Step 1: Determine ARV from recent comparable sales
• Step 2: Apply buyer's 70% rule: ARV × 0.70 = Buyer's Max Price Before Rehab
• Step 3: Subtract estimated rehab: Buyer's Max Price Before Rehab − Rehab = Buyer's Maximum Offer (MAO)
• Step 4: Subtract your target assignment fee from the Buyer's MAO = Your Maximum Contract Price
• Step 5: Negotiate with seller to get under contract at or below your max contract price

Example Calculation

ARV: $220,000. Buyer's 70% price: $154,000. Rehab: $40,000. Buyer's MAO: $114,000. Your target assignment fee: $10,000. Your maximum contract price: $104,000.

How Much Assignment Fee Is Too Much?

Assignment fees that leave an investor buyer with a thin margin or eliminate their profit will kill your reputation quickly. Ensure your buyer has a realistic chance to profit. Fees of $5,000–$15,000 on residential deals are common. Fees above $25,000 are possible on higher-value properties but require that the buyer's margins are genuinely preserved.

Common Mistakes in Calculating Assignment Fees

• Using an optimistic ARV that doesn't hold up to comparable sales scrutiny
• Underestimating rehab costs — give buyers a conservative estimate, not an optimistic one
• Adding your assignment fee on top of the buyer's MAO rather than within it
• Failing to disclose your assignment fee to the buyer

Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been investing in Northern Virginia real estate for 20+ years.