What is the maximum assignment fee a wholesaler can charge?

What is the maximum assignment fee?

The maximum assignment fee is the highest fee you can charge before the buyer's profit gets too thin or too many buyers stop buying. It isn't the biggest number you can write on an assignment contract — it's the biggest one that still sells. (In the assignment, you're the assignor and the end buyer is the assignee; your fee is paid on top of your contract price.)

Say you have a house under contract for $100,000 and you charge $10,000. Buyers jump on it at $110,000. But if the same buyers would have paid $114,750, then $10,000 wasn't your maximum — $14,750 was, and the other $4,750 stayed with the buyer.

New to assignment fees? Start with the complete guide to wholesale assignment fees.

So how much can a wholesaler charge? As much as the maximum on that deal — and not a dollar more, or the contract sits. For a beginner, the key word is "still". Almost any fee will find a buyer if the deal is good enough; the maximum is the point just before buyers stop. Below it, you're leaving money with the buyer. Above it, the contract sits. The maximum wholesale assignment fee is the highest fee on the right side of that line — and knowing where it is lets you decide how close to it you want to price.

How high can an assignment fee be?

An assignment fee can be as high as your buyers will still pay while the deal still leaves them a fair profit — there's no fixed ceiling in dollars or percent. On one sample deal the highest workable fee is $12,650; on another it's $122,000. Is $50,000 too much? On a $300,000 house it's already past the maximum; on a $600,000 house with no repairs, nearly every buyer would still take it.

What sets your maximum assignment fee?

Two things set your maximum assignment fee: the deal and your buyers. Every dollar you add to your fee is a dollar more the buyer pays, so as your fee rises, two things happen at once:

1. The buyer's profit shrinks. At some point the deal stops being worth buying — that's the limit set by the deal.
2. Buyers drop out. Each buyer has a budget and a top price they'll pay for a house like this. At some point too few are still buying — that's the limit set by your buyers.

Here's the deal limit in numbers. A buyer expects to resell for $301,500. They pay $181,200 for the contract, spend $48,900 on repairs and $19,700 on everything else — $249,800 in, $51,700 profit. Add another $15,350 to your fee and they're in for $265,150, with $36,350 left. Keep going and the profit gets too thin for the money, time and risk.

Your maximum is the fee where the first of the two runs out.

It helps to see these two limits as two different questions you ask about every deal. The first: "At this fee, does the buyer still make enough to be worth their money, time and risk?" The second: "At this price, are there still enough buyers near me who buy houses like this?" A fee has to pass both. The maximum is simply the highest fee that does.

Which limit will you hit first?

Which limit you hit first depends on the deal. As a rule of thumb from deals like the two above:

• A thin spread — seller price plus repairs close to what the house will be worth — usually hits the deal limit first: the buyer's profit runs out before the buyers do.
• A great spread in a high price range usually hits the buyer limit first — the numbers leave plenty of room, but few buyers shop at that price.

Knowing which one stopped you matters, because the fix is different. If the deal stops you, ten thousand more buyers won't help — look at the seller price and repairs. If your buyers stop you, the numbers are fine and you need more of the right buyers. See what limits a wholesale assignment fee.

Did your last deal reach its maximum?

You can't tell whether your last deal reached its maximum from the sale alone. A deal that sells fast only proves buyers would pay at least your price, not the most they'd pay. Price too high and the market tells you: buyers go quiet. Price too low and it tells you nothing: the deal closes, you get paid, and the difference stays with the buyer.

If you want to check this on your own deals, look back at your last few. Did they sell within hours of being sent? Did several buyers want them? Did the buyer's profit look generous when you did the math afterward? If the answer is yes to all three, your fees have probably been well below your maximum — which is good news, because it means there's money waiting on your next deal.

Most wholesalers find their price after they launch: pick a number, send it out, cut it if nobody bites. That can only ever tell you when you're too high. To know your maximum, you have to work it out before you send the deal.

What happens if you charge more than the maximum?

If you charge more than the maximum assignment fee, buyers go quiet. The buyer's profit is too thin or the price is past what most buyers here pay, so the contract sits, the clock runs, and you end up cutting the fee anyway — or losing the deal.

On Example A, going from the maximum of $47,800 to $55,000 means:

Why is the maximum different on every deal?

The maximum is different on every deal because the room in each deal and the buyers who shop at its price are different. The same fee can be exactly right on one deal and ruin another:

That's why a fee you reuse from deal to deal — or copy from someone else — is a guess. It can only be right by accident.

Should you always charge the maximum?

Not always. The maximum is information — what you do with it is your call. At the maximum, fewer buyers are left, and you only need one buyer to close but you want more than one who could:

• When certainty matters most, charge a little under the maximum and keep more buyers in. If your first buyer loses financing or changes their mind, others are still there.
• When you want the most from the deal, charge close to the maximum and accept a smaller pool.

Either way you're choosing from data, not guessing — and you know exactly what the extra dollars cost you in buyers. See how much profit to leave your cash buyer.

Can you raise your maximum assignment fee?

Yes — you can raise your maximum assignment fee, but only by changing what sets it:

• Lower your seller price. On Example A, contracting at $130,000 instead of $140,000 raises the maximum from $47,800 to $57,800 — every dollar you save with the seller is a dollar more your fee can be. See MAO vs. assignment fee.
• Get the repairs right before you set the fee. If Example A really needs $60,000 of work, not $30,000, the maximum is $18,400, not $47,800. Promise buyers the wrong number and the deal falls apart.
• Reach more of the right buyers. On Example B your buyers stop at $122,000 while the numbers would allow $192,500. More buyers who shop at that price can raise the maximum.

What doesn't raise it: picking a bigger number and hoping.

Of the three, the seller price is where most wholesalers can gain the most, and it's decided before you ever meet a buyer. Knowing your maximum fee in advance changes how you negotiate: you know exactly how much each dollar off the seller price adds to what you can earn. See MAO vs. assignment fee.

Is there a legal limit on assignment fees?

There is no single nationwide dollar cap on assignment fees in the United States. But wholesaling laws, licensing, disclosure and advertising rules vary by state, so whether a particular deal is allowed can't be judged from the size of the fee alone. Two different questions are at play:

• The legal question: is this assignment allowed? Your purchase agreement has to allow assignment, and wholesaling rules differ by state — some require disclosures, some require a license for certain activity. Check your state's current rules, and talk to a local real estate attorney when you're unsure.
• The money question: how much will the deal and your buyers bear? That's the maximum this guide is about.

Is there an assignment fee limit?

There's no general dollar limit on assignment fees in most places — the practical assignment fee limit is set by the deal and your buyers. What states do limit is how you wholesale: several now require written disclosures to the seller before they sign, some require a license for certain activity, and your purchase contract has to allow assignment in the first place. None of those set a maximum dollar amount; they set the rules you work within.

So the limit you'll actually run into on most deals is the market one: the point where the buyer's profit runs out or too few buyers still buy. Check your state's current rules once, then focus on finding that market limit on every deal. See does the buyer see your assignment fee? for the disclosure rules.

Find your maximum assignment fee, step by step

Your maximum is the fee where the first of two limits runs out: the buyer’s profit, or the number of buyers still willing to pay. Work out both and take the lower one. The sample deal: ARV $300,000, repairs $30,000, your contract $140,000.

1. Find the profit limit.
   Work the buyer’s math backward at the lowest return buyers here accept (15% on this deal): ARV − 8% selling, ÷ 1.15, − repairs and holding, ÷ 1.02. That’s the most a buyer can pay: $187,800, a fee of $47,800. Every line: how to calculate your assignment fee.
2. Find the buyer limit.
   For each recent investor purchase, work out (price + repairs) ÷ ARV. Then find the highest price at which at least half of them paid that share or more. Here, 4 of 8 reach the $188,500 price; above it, fewer than half do. That’s a fee of $48,500. How to find the purchases: how to determine your assignment fee from real buyer data.
3. Take the lower of the two.
   Profit limit $47,800vsBuyer limit $48,500→Maximum $47,800
4. Note which limit set it.
   That tells you what would raise it. The profit limit moves with the deal: a lower contract, tighter repairs or a better-supported ARV. The buyer limit moves with buyers: a wider list, or buyers who have paid more for houses like this.

How do you find your maximum assignment fee?

You find your maximum assignment fee by testing fees against real data, not by guessing one:

1. Look at what investors near you actually paid for houses like this one — recorded cash and LLC purchases, the price and the value.
2. Count who's still buying at each fee — budgets, top prices for a house like this, repair limits.
3. Check the buyer's profit at each fee after their costs to buy, hold and resell.
4. Stop where the first one runs out. That fee is your maximum — and you'll know which limit set it.

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