How Do I determine my assignment fee?

[Courtney S]

I want to know how do I determine how much my assignment fee will be? Please advise.

Thank you all who respond.

[Ryan Webber]

Your assignment fee is determined by how much you decide to make on the deal.

Now as Robin described you need to make it a win-win situation, and you do that by factoring your fee into your offer initially so that you can be selling it at your predetermined price.

Understand, though, that your assignment fee is whatever you think you can sell it for minus what you get the seller to sell the house to you for. You start with what you think can sell the house for and work backwards.

I personally factor in my risk into how much I determine that spread to be. If I am buying a house that I don't feel as comfortable with or that is bigger than I normally deal with then I factor in a higher profit margin for myself to protect myself from the risk.

In my market I deal mainly with properties under $50K. If I am looking to wholesale a $100K house I will build in a higher profit margin for myself to compensate for the higher risk.

One more side note here is that your best customers as a wholesaler will probably NOT be investors that rehab houses to resell. Rehabbing is a strict black or red situation. You either are going to make money or lose money on the deal. Experienced rehabbers will normally have set percentages or profit margins that they work off of (i.e. 70% of ARV minus repairs) which are fairly conservative to guarantee that they make money.

Your best customers will probably be investors that are buying for long term hold strategies (i.e. rentals, owc's, lease options, etc.). These types of investors will normally buy more properties from you than a rehabber, and they normally can buy at a higher price than a rehabber and still hit their numbers. Long term hold strategies can provide more opportunities for profit to an investor and, therefore, normally allows them to be more liberal in their purchase numbers.