What Is Wholesaling?
Wholesaling means you find a motivated seller, get the property under contract at a discount, then assign that contract to an end buyer (usually a fix-and-flip investor) for a fee. You never own the property—you're flipping the contract. You put down earnest money to secure the deal, use contingencies to protect yourself if you can't find a buyer, and collect an assignment fee at closing when the end buyer takes over. The fee is typically the spread between your contract price and what the buyer pays. Average assignment fees run around $13,000; experienced wholesalers often land $15,000–$20,000 per deal.
Wholesaling is acquiring a property under contract and assigning that contract to another buyer for a fee—without taking ownership.
At a Glance
- What it is: You contract to buy a property, then assign that contract to another buyer for a fee. You never close.
- Why it matters: You can make money without owning property or doing rehabs—just sourcing deals and connecting sellers to buyers.
- How to use it: Find motivated sellers, lock up the property with earnest money and contingencies, find an end buyer, assign the contract at closing.
- Typical fee: 5–10% of property price, or $10,000–$20,000 per deal depending on market and experience.
How It Works
Step 1: Find a motivated seller. Wholesalers target distressed properties, off-market deals, and sellers who need to move fast. Driving for dollars, direct mail, and pre-foreclosure lists are common lead sources.
Step 2: Get the property under contract. You negotiate a purchase price below market, put down earnest money (often $500–$2,000), and sign a purchase agreement. You build in contingencies—inspection, financing, or an "assignability" clause—so you can walk if you can't find a buyer.
Step 3: Find an end buyer. Your buyer is usually a fix-and-flip investor or BRRRR buyer. They want the property at a price that works for their model. You price your assignment so they still have room for rehab and profit. ARV (after-repair value) drives their math—they'll pay up to ARV minus rehab costs minus their profit margin.
Step 4: Assign the contract at closing. You transfer your contractual right to purchase to the end buyer. They pay you the assignment fee (the difference between your contract price and what they're paying) at closing. The seller gets their price; the buyer gets the property; you get the fee. You never take title.
Real-World Example
Cleveland duplex, 2025.
A wholesaler found a distressed duplex listed off-market. ARV after light rehab was $185,000. He contracted at $112,000 with $1,000 earnest money and a 21-day inspection contingency. He marketed to his buyer list and had an offer in 4 days: $127,000 from a local flipper. At closing, the flipper paid $127,000; the seller got $112,000; the wholesaler collected a $15,000 assignment fee. His total out-of-pocket: $1,000 earnest money (credited at closing) plus marketing. He never owned the property.
Pros & Cons
- No ownership—you don't need capital for the purchase, just earnest money and marketing.
- Fast cycle—find, contract, assign, get paid. No rehab, no holding.
- Scalable—build a buyer list and a lead system; do multiple deals per month.
- Low barrier to entry—you can start with a few thousand dollars and a lot of hustle.
- Contingencies protect you if you can't find a buyer.
- Earnest money at risk if the deal falls through and you can't get it back.
- Competitive—other wholesalers and investors are chasing the same deals.
- Legal gray areas in some states—"contracting without intent to close" can be an issue; use a real estate attorney.
- You're dependent on finding a qualified end buyer before your contract expires.
- Seller can get upset if they learn you're assigning—some contracts prohibit it or require disclosure.
Watch Out
- Contract risk: Get a solid purchase agreement with assignability language. Some states restrict or prohibit assignment; know your local rules.
- Earnest money risk: If you can't assign and the seller keeps your earnest money, you're out that cash. Use contingencies to protect yourself.
- End-buyer risk: If your buyer flakes at closing, you're on the hook to close yourself or lose the deal and possibly your earnest money. Vet buyers before you assign.
- Disclosure risk: Some jurisdictions require you to disclose that you're assigning. Hiding it can create legal problems. Work with an attorney.
Ask an Investor
The Takeaway
Wholesaling is deal sourcing without ownership—you connect motivated sellers to buyers and collect a fee for the introduction. It works when you can lock up properties below market, find qualified buyers quickly, and protect yourself with solid contracts and contingencies. The money's in the spread; the risk's in the earnest money and the clock.