Can an assignment fee be too high?

When is an assignment fee too high?

An assignment fee is too high when it pushes the buyer's price past what the deal or your buyers will bear: either the buyer's profit gets too thin to be worth it, or too few buyers near you still buy at that price. It's never too high because of the dollar amount alone.

If you're new, it helps to picture the deal from the buyer's side. Your buyer isn't paying you a fee as a separate thing — they're paying a total price for the contract: your contract price with the seller plus your fee. Then they spend money on repairs, on holding the house (loan payments, taxes, insurance, utilities) and on selling it. What's left at the end is their profit. Every dollar you add to your fee is a dollar less of that profit. At some point the profit is too small for the money, time and risk involved, and buyers say no. That point is where your fee becomes too high.

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

What makes a wholesale assignment fee too high?

Two different things make a wholesale assignment fee too high, and it's worth knowing which one you're dealing with, because the fix is different.

The deal runs out. The house simply doesn't have enough room between your contract price and what it will sell for once it's fixed, after repairs and costs. Push the fee past that and the buyer's profit becomes too thin. No buyer — however many you have — will pay it, because the numbers don't work.

Your buyers run out. The numbers might still leave the buyer a fair profit, but few buyers near you shop at that price. Investors each have a budget and a top price they'll pay for a house like yours. Past a certain price, most of them have dropped out, even though the deal still makes sense on paper.

A fee can be too high for either reason. When it's the deal, you need a better contract price or more accurate numbers. When it's your buyers, you need to reach more of the right buyers. See what the maximum assignment fee is for how to find where each limit is.

Is a high assignment fee always too high?

No — a high assignment fee isn't always too high, and a small one isn't always safe. This surprises most beginners, who tend to think "big fee = greedy, small fee = safe." The deal decides, not the size of the number.

Look at two real sample deals. On a $235,000 house under contract for $140,000 with $30,000 of repairs, even a $5,000 fee is too much — the most buyers will pay above your contract is $950, because there's almost no room in the deal. On a $600,000 house under contract for $250,000 with no repairs, buyers will pay a $122,000 fee and still keep 35% for themselves. A $122,000 fee sounds enormous; on that deal it's simply what the market pays.

So stop judging your fee by how it sounds. Judge it by what it does to the buyer's numbers.

How much is too much for an assignment fee?

How much is too much for an assignment fee depends entirely on the deal: it's too much the moment the buyer's profit gets too thin or too few buyers still buy. There's no dollar amount that's too much everywhere. The table below shows the same five fees on three sample deals, so you can see how the answer changes:

Read across a row and you'll see why rules like "never charge more than $20,000" don't work. A $20,000 fee is far too high on the $250,000 house, and far too low on the $600,000 one. The only way to know what's too much is to work it out for the deal in front of you. See how to calculate your assignment fee.

Is a $10,000, $20,000 or $30,000 assignment fee too high?

A $10,000, $20,000 or $30,000 assignment fee is too high only on a deal where buyers won't pay it. On the $250,000 sample house above, where buyers pay at most $12,650, $10,000 fits but $20,000 and $30,000 are too high. On the $300,000 house, where buyers pay up to $47,800, all three are too low — charging $20,000 there would leave $27,800 with the buyer. On the $600,000 house, every one of them is far too low.

If you're asking this question about a real deal, the table is your answer: find what buyers will pay on your deal, and compare.

What happens when your assignment fee is too high?

When your assignment fee is too high, buyers go quiet. They look at your price, do their math, see a thin profit and move on to the next deal in their inbox. The contract sits, your deadline with the seller gets closer, and you end up cutting the fee anyway — or losing the deal. On the $300,000 sample deal:

Going just $7,200 past the maximum cost 42 buyers. Push further and you can end up with only one buyer left. That buyer might still close — but if they lose their financing, find a problem at inspection or simply change their mind, nobody else is there to step in, and you're back to cutting the price with even less time.

Why isn't my wholesale deal selling?

Your wholesale deal may not be selling because your fee is too high — or because of something your fee can't fix. Beginners almost always blame the fee first, but cutting a fee that isn't the problem just means you make less and the deal still doesn't sell. Check these before you cut:

• The seller price is too high. On a $200,000 house under contract for $150,000 with $40,000 of repairs, the buyer can't make money even with a $0 fee. That's a contract problem, not a fee problem — you agreed to pay the seller too much for the house.
• The repairs are off. If you estimate $31,400 and buyers see $54,900, you're $23,500 apart before your fee even comes up. Buyers will price the house off their repair number, not yours.
• The ARV is off. An ARV of $402,000 when the comps say $351,500 makes a big fee look fine on paper while buyers keep saying no. If buyers keep questioning your value, recheck your comps.
• You're not reaching enough of the right buyers. If the numbers work but few buyers have seen the deal — or the wrong ones have — the fix is wider marketing to buyers who actually buy this kind of house, not a lower fee.
• The deal is missing information. Buyers who can't see photos, a repair breakdown or your comps often pass rather than do the work themselves.

See MAO vs. assignment fee for getting the seller price right from the start.

Should you lower your assignment fee if buyers aren’t interested?

Not until you know why buyers aren't interested. Dropping your price $5,000 at a time until someone bites tells you buyers liked a lower total price — it doesn't tell you which part of the deal was wrong. And each cut tells your buyers the deal isn't moving, so some start waiting for the next one.

Pay attention to counteroffers instead. One buyer offering far below your price is one opinion — maybe a bargain hunter, maybe someone with expensive money. But if several experienced buyers come back independently at about the same number, that's information. They may be seeing higher repairs, a lower ARV — or a fee that really is too high. Ask them what they see; buyers will often tell you exactly which number they disagree with.

Then fix the right thing:

• If the deal is the limit — the buyer's profit is too thin — lower the fee to where it works, or fix the seller price, repairs or ARV.
• If your buyers are the limit — the numbers work, but few buyers shop at that price — market the deal wider before you cut.

Do buyers care how big your assignment fee is?

Most buyers care about their price and their profit, not your fee. Your fee is part of what they pay, but they're buying the whole deal: price, repairs, costs and resale. They usually see your fee on the assignment agreement and the closing statement, and some states require you to disclose it — see does the buyer see your assignment fee?

A buyer who still makes a fair profit rarely walks over the size of your fee. A buyer whose profit is too thin walks whatever your fee is — $5,000 or $50,000. That's why "is my fee too big?" is really the wrong question. The right one is "does the buyer still have a deal worth buying at their total price?"

What do you say when a buyer says your fee is too high?

When a buyer says your fee is too high, move the conversation to their numbers. Walk them through the ARV and your comps, the repairs, their holding and selling costs, and what they keep at your price. If they still make a fair profit, the objection is about how your fee feels to them, not about the deal — and you can hold your price with confidence.

If their numbers show a thin profit, the objection is real. Then it's time to recheck your ARV and repairs or adjust the fee — not because the buyer complained, but because the deal says so. What doesn't work is apologizing or cutting just to end an awkward conversation. That teaches buyers to object on every deal.

Can a deal that sells instantly mean your fee was too low?

Yes — and it's the mistake nobody notices. If five buyers call within minutes and three want the deal at your price, the same buyers may well have paid more. When a fee is too high, the market tells you: buyers go quiet. When it's too low, the market says nothing — the deal closes, everyone is happy, and the money you left behind stays invisible.

So being afraid of a fee that's too high has a cost too. Many beginners shrink their fee "to be safe," sell instantly, and never find out they gave away thousands. See what a good assignment fee is.

How do you know if your assignment fee is too high?

You know if your assignment fee is too high by checking it against real buyers before you send the deal, not after it sits. Two tests, on a $60,000 fee on the sample deal (ARV $300,000, repairs $30,000, your contract $140,000):

1. Turn the fee into the buyer’s price and its share of value.
   $140,000 + $60,000 = $200,000. ($200,000 + $30,000) ÷ $300,000 = 76.7%.
2. Count the investors who have paid that much.
   Of 8 recent investor purchases nearby, the highest was 74.8%. 0 of 8 reach 76.7%. If fewer than a quarter reach your price, it’s too high for this market.
3. Run the buyer’s profit.
   Gets back $276,000. Puts in $200,000 + $30,000 + $4,000 buying + $19,020 holding = $253,020. Keeps $22,980, or 9.1%. Under about 12% is too thin for most flippers.
4. If it fails either test, find the fee that passes both.
   Here that’s about $48,500 (4 of 8 investors, buyer keeps 14.7%). How to find it: how to determine your assignment fee from real buyer data.
5. Already sent it and it isn’t moving?
   Recheck ARV and repairs first; buyers often reject the numbers, not the fee. Then re-price to the buyer-supported range in one clear move instead of small cuts.

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