Real Estate
Wholesaling

The mechanics

1. Identify a motivated seller via direct marketing or list sourcing
2. Negotiate purchase contract at price below retail (typical 60–75% of ARV minus rehab)
3. Contract includes "and/or assigns" language, adequate inspection period (7–14 days), small earnest money ($100–500), 30–45 day close
4. Market contract to cash buyers in your network
5. Sign Assignment Agreement with end buyer — assignment fee typically $5k–50k, paid at close
6. Close at title company — end buyer funds purchase, assignment fee paid to wholesaler from close

Assignment vs. double close

• Assignment. Simpler. Wholesaler assigns original contract to end buyer. Assignment fee paid at single close. Requires assignability language in original contract and seller/lender acceptance.
• Double close. Simultaneous closings. Wholesaler closes with seller (A–B), then immediately closes with end buyer (B–C). End buyer’s money funds both legs via transactional funding or wholesaler’s bridge. Used when assignment prohibited, or when spread large enough that fee disclosure would kill deal.
• Novation. A newer hybrid. Wholesaler controls property, lists with agent as the seller (with original seller consent), participates in the spread. Less common; more complex.

Contract essentials

• Buyer line: "[Your name] and/or assigns"
• Adequate inspection period (7–14 days)
• Small earnest money ($100–500)
• 30–45 day close window
• Contingency for title, inspection, financing (if applicable)
• Assignability clause explicitly allowed
• Liquidated damages limited to earnest money

State licensing — growing enforcement

Wholesaling without a license is illegal in several states as of 2026:

• Illinois. Since 2019 requires a real estate license for more than 1 wholesale transaction per year. HB 1600 enforcement expanded in 2024.
• Oklahoma. Real estate license required.
• Pennsylvania (Philadelphia). City-specific wholesaler license (Residential Property Wholesaler license).
• South Carolina. License required for more than 3 transactions/year.
• Maryland. Assignment of residential contracts increasingly regulated.
• Other states. No license required, but ethical disclosure of investor status recommended to reduce complaints and "acting as broker without license" exposure.

MAO for wholesalers

MAO for wholesale = End buyer MAO − Your wholesale fee

End buyer MAO (cash flipper):
  ARV × 0.70 − Rehab = End buyer all-in target

Your wholesale MAO:
  (ARV × 0.70 − Rehab) − $10,000 wholesale fee

Example:
  ARV:                 $300,000
  Rehab:                $45,000
  End buyer MAO:       $165,000
  Your fee target:      $12,000
  Your MAO to seller:  $153,000

  Contract to seller:  $153,000
  Assign to end buyer: $165,000 (for $12k fee)
  Paid at close from purchase funds.

If seller won't drop to $153k but will hit $158k,
your fee shrinks to $7k. Walk if fee
drops below your minimum threshold.

List acquisition

• Tax-delinquent. County tax collector publishes annually. High motivation, long cycle.
• Pre-foreclosure. Lis pendens filings, NOD records. Time-sensitive.
• Absentee owner with high equity. Propstream, PropertyRadar. Filter to 60%+ equity and out-of-state address.
• Probate. Court records of estate filings. Heirs often want to liquidate.
• Code violation. City inspections department. Distressed owner, forced-sale urgency.
• Eviction filings. Landlord-tenant court records. Burned-out landlord selling.
• Long-held high-equity. 20+ year ownership, low mortgage or free-and-clear, absentee. Often inherited or tired of managing.
• Divorce. Court filings. Forced-sale timeline.

Marketing channels

• Direct mail. Yellow letters, postcards, handwritten style. Cost $0.50–1.50 per piece. Response rate 0.5–2%. Typical cost per deal $1,500–6,000.
• SMS (TCPA-compliant). Express written consent required. Use compliant services (REI Reply, BatchLeads). TCPA damages $500–1,500 per unsolicited text.
• Cold calling. High-volume dialers (Mojo, BatchDialer, PhoneBurner). DNC scrub required. TCPA risk if using predictive dialer to wireless without consent.
• PPL inbound (Carrot / InvestorCarrot). WordPress sites optimized for SEO, Google Ads. Motivated-seller keywords. $3k–15k per deal cost.
• Facebook / Google PPC. Paid traffic to landing page. Cost $50–200 per lead, $2k–10k per deal.
• Bandit signs. Street-corner "We Buy Houses" signs. Illegal in most cities; fines. High nuisance to neighbors.
• REIA networking. Local investor meetings. Wholesale-to-wholesaler deals, buyer list building.

Buyer list building

• Propstream Cash Buyers — filter for cash purchases in target area
• Courthouse cash-sale MLS records — last 6 months
• Auction attendees — tax sale, foreclosure sale bidders
• Local REIA meetings
• BiggerPockets forums, local Facebook groups
• Hard-money lenders — ask who their active borrowers are
• Title companies — ask for referrals to flippers

Build a list of 50–200 vetted cash buyers. Segment by zip code, price range, asset type. Text/email new deals to segmented list within 24 hours of contract.

Common pitfalls

• Seller backs out. Finds better offer, or realizes the spread. Earnest money tied up. Depending on state, specific performance action possible but slow and expensive.
• Buyer backs out at inspection. End buyer uses inspection contingency to renegotiate or exit. You’re now stuck closing or losing earnest money.
• Title issues. Undisclosed lien, HOA dues, probate defect. Kills deal at title review.
• Assignment fee disclosure. Some end buyers demand disclosure of your fee. Large fees $20k+ can destroy the deal if visible on HUD. Double-close workaround.
• State license enforcement. Illinois, Pennsylvania, Oklahoma enforcement has increased. Operating without license = civil fines + voided contracts.
• TCPA lawsuits. SMS or robocall to wireless without consent = $500–$1,500 per violation class action. Insurance doesn’t cover willful.
• Seller unrepresented, regret. Sophisticated family member advises seller post-contract; seller challenges fairness. Document disclosures meticulously.
• Wholesale fatigue / burn-out listings. Same property marketed by multiple wholesalers. Buyer pool saturated before you start.