Purchase Contract/ Assignment Contract

[Louise Whidby]

In Real Estate Wholesaling what is the difference between a Purchase Contract and Assignment? How are they allocated?

[Kyle J.]

Yes, there is a difference. Basically, a purchase contract is an agreement between a seller and a buyer to sell/buy a property (and it usually spells out the terms under which the sale will be accomplished).

As assignment is typically where the buyer who entered into the purchase contract with the seller assigns his right to buy the property to a third party.

For example, A agrees to sell B a house for $100k and B agrees to buy the house for $100k. (There's your purchase contract.)

However, B then turns around and makes an agreement with C for C to buy the house for $105k (before B ever completes the actual purchase of the house). So B would assign the right to purchase the house to C for sales price of $105k. C would then complete the sale with A, and B would earn a $5k assignment fee (the difference between $100k and $105k) for being the middle man.