I am trying to determine what a reasonable assignment fee would be. I plan to do some wholesaling and trying to get an idea of how many deals I need to reach my goals. I understand the property and neighborhood are important variables in determining a reasonable fee but has anyone been able to establish a specific percentage of the profit? I heard some investors get an assignment fee equal to 10% to 25% of the profit potential in a deal. Let’s say for example, I have a deal as follows:
Looks like you are looking at an income property. If so, you left out a critical number for seasoned guys—NOCF (Net Operating Cash Flow). You need that to calculate cash on cash return on investment.
But to your original question, try to make as much as you can and then determine how you will close. If you are making more than you are comfortable letting your buyer know, then double close the transaction and they will never know.
Most typically on houses $200,000 or less the fee I see charged is $5000. It makes sense that it could be more if the houses are more, but the end buyer needs to have that much more room for profit to pay a higher fee.
When you make your offer to purchase, you need expect the majority of investors are looking to pay 70% ARV - repair costs (or less) and you need to subtract whatever fee you want from that amount.
Whatever the case, I think one of the best strategies is to let the market determine your fees. In other words, why not have multiple buyers bid against each other for the assignment fee. The highest bidders wins.
Minimum of $3000 and ranging up to whatever you can get market wise, but yeah usually between 3-5k per deal. Some wholesalers spank everything for at least $10k, but they usually don’t do as many deals.