Assignable Contracts: What They Are and How They Work in Real Estate

28 November 2025

When it comes to real estate, there are tons of strategies investors use to make money. One of the lesser-known but highly effective methods is using assignable contracts.

If you've ever wanted to get into real estate without taking on a mortgage, flipping houses, or spending a fortune upfront, this is a strategy worth knowing about. So, let's break it down in simple terms: what exactly are assignable contracts, and how do they work?

What Is an Assignable Contract?

An assignable contract is a legal agreement that allows the original buyer (also known as the assignor) to transfer their rights and obligations under the contract to someone else (the assignee) before the deal closes.

Think of it like reserving a ticket for a concert. You find a great deal on tickets months before the show, but when the event is near, you're unable to attend. Instead of losing out, you transfer the ticket to a friend for a profit. Assignable contracts in real estate work in a similar way.

Now, why would someone want to do this? The main reason is wholesaling real estate—a strategy where investors secure properties under contract and then assign those contracts to end buyers, usually for a fee.

How Do Assignable Contracts Work in Real Estate?

Let's break down the process step by step:

1. Finding a Property

A real estate investor identifies a property that is priced below market value. This could be a distressed home, a foreclosure, or simply a motivated seller looking for a quick sale.

2. Getting the Property Under Contract

The investor (the assignor) signs a purchase agreement with the seller. However, instead of intending to buy the property, they include a special clause in the contract stating that the agreement is assignable.

3. Finding an End Buyer

The investor then looks for another buyer (the assignee) who wants to purchase the property at a higher price. This is often another investor, a house flipper, or someone looking for a good deal.

4. Assigning the Contract

Once the end buyer is found, the original investor assigns the contract to the new buyer for a fee. This assignment fee is the investor’s profit for facilitating the deal.

5. Closing the Deal

The new buyer steps in, finishes the transaction, and officially becomes the owner of the property. The original investor walks away with a profit without ever owning the property.

Why Would Someone Use an Assignable Contract?

✅ Low Risk, High Reward

One of the biggest reasons investors love assignable contracts is that they require little to no money upfront. Since you're not actually purchasing the property, you don’t need a mortgage or a hefty down payment.

✅ Fast Turnaround

Compared to traditional real estate investing, which can take months or even years, assignable contracts allow investors to make money in weeks or even days.

✅ No Repairs or Renovations

Since you're never actually taking ownership of the property, you don’t have to worry about fixing it up, dealing with tenants, or handling maintenance issues.

✅ Great for Beginners

If you're new to real estate investing, assignable contracts can be a fantastic way to start without the massive financial commitment.

Potential Risks and Challenges

Of course, like any investment strategy, assignable contracts come with their own set of challenges. It’s not always sunshine and profit!

❌ Not All Contracts Are Assignable

Some sellers (or their attorneys) include “non-assignability clauses” in contracts, which means you cannot transfer the contract to someone else.

❌ Finding End Buyers Can Be Tough

If you've secured a property under contract but can't find a buyer before the deadline, you run the risk of losing your earnest money deposit.

❌ Legal and Ethical Concerns

Some states have strict regulations on contract assignments, and some sellers may feel misled if they discover you're not actually the final buyer.

❌ Negotiation Skills Are Key

To succeed with assignable contracts, you need strong negotiation skills to secure properties at a discount and convince sellers to allow assignments.

How to Protect Yourself When Using Assignable Contracts

If you're considering assignable contracts as your real estate strategy, here are some smart tips to ensure you're protected:

🛑 Use Clear Contract Language

Make sure the agreement explicitly states that the contract is assignable. Without this clause, you could run into legal trouble.

🛑 Work With a Real Estate Attorney

Laws vary from state to state, so having a knowledgeable attorney review your contracts can save you from potential headaches.

🛑 Find a Strong Network of Buyers

The faster you can assign a contract, the smoother the process will be. Build relationships with cash buyers, investors, and flippers in your area.

🛑 Be Transparent With Sellers

Honesty goes a long way—always inform sellers that you may assign the contract to another buyer.

Assignable Contract vs. Double Closing: What’s the Difference?

Some people confuse assignable contracts with double closings, but they’re actually two different strategies.

| Feature | Assignable Contract | Double Closing |
|------------------------|--------------------|----------------|
| Ownership Transfer | No | Yes |
| Number of Transactions | One | Two |
| Requires Financing | No | Yes |
| Investor Profit Visibility | Yes (seller and buyer see fee) | No (profits are hidden) |

With a double closing, the investor actually buys the property first and then immediately sells it to another buyer. While this can hide your profit margin, it also requires more capital since you have to fund the first purchase.

Is Assigning Contracts Legal?

Yes, assigning contracts is legal, but there are rules and regulations that vary by location. Some states have started cracking down on wholesaling practices, requiring real estate licenses to assign contracts legally.

Always check with local laws and consider consulting a real estate attorney to ensure you’re operating within legal boundaries.

Final Thoughts

Assignable contracts are an incredible tool for real estate investors, especially those looking for a low-risk, high-reward strategy. By understanding how these contracts work, creative investors can create profitable opportunities without ever owning a property.

However, like any business model, success depends on knowledge, networking, and ethical practices. If you're serious about using assignable contracts, educate yourself, build your buyer list, and always protect your legal rights.

Have questions or personal experiences with assigning contracts? Let’s chat in the comments below!