How much is too much for an assignment fee

4 Replies

Just want some opinions about at what point is an assignment fee to high and should you double close. I understand that you can include the assignment fee in the principle price in a contract but when can a profitable buy high assignment fee be a problem for a seller or end buyer?

As long as there is space for your investor to make their profit, your assignment fee is fine.  Everyone wants to make as much as possible.  However, no reasonable/serious investor is going to begrudge you your profit.  And, yes, you can do a double close - if it's legal in your state - and bake it in.  However, it will be disclosed in the closing details, so don't think you're hiding anything.  Just be upfront with you investors, don't squeeze them and find good deals.  Personally, if you brought me a deal that met my criteria, after your assignment fee was baked in, I wouldn't care if your assignment fee was $50k.  The fact is, you left enough meat on the bone for me to get my profit. 

I don't think that there is a limit on an assignment fee.  However, on the other hand you should use some common sense.  If you bring an investor a deal where she makes $20,000 and you're making $15,000 they may not like that.  

@Naqi Taylor Do not limit the success of your business based on someone else’s feelings, period. If it’s a good deal a serious rehabber / buy and hold investor will be tickled-pink to buy it from you. When you do a double close you are buying the property and you become the owner. This means your purchase price will end up on the auditors website, most likely a month or two later. That is when your end buyer will find out what you paid originally, not at closing. This is the advantage to a double close, which you already knew. Don‘t ever let someone else tell you what your worth is.
I appreciate the feedback. I’m not necessarily worried about feelings. I just wanted to hear thoughts on how much you would typically assign for before you go for a memorandum of Contract or double close. It never was about hiding the numbers. I feel like if my buyers know my margins it’ll make them want to do further business to find these deals. Possibly create rapport where I can give them better numbers to widen their margins