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Want to get started in real estate investing, but you're working with limited capital? I get it. When I first started learning about different investment strategies at AmeriSave, I was amazed to discover that wholesaling lets you participate in deals without needing massive down payments or renovation funds.
Real estate wholesaling is basically becoming the connector between someone who needs to sell quickly and an investor looking for their next project. You're not buying the property yourself. You're securing the right to purchase it through a contract, then passing that opportunity to someone else for a fee.
The market is actually pretty strong right now for this strategy. According to the National Association of REALTORS®, median existing-home prices hit $414,000 in April 2025, and inventory climbed 31% year over year. More opportunities for wholesalers to find motivated sellers.
But here's what you really need to understand: this isn't as simple as signing a paper and collecting a check. Wholesale real estate contracts involve specific legal documents, state-by-state regulations that changed significantly in 2025, and a careful balance of protecting everyone involved. You're working with two distinct contracts, multiple parties, and deadlines that can make or break your profit.
This guide walks you through exactly how these contracts work, what needs to be included, and how to structure deals that comply with your state's laws. We'll look at real numbers, actual contract components and the step-by-step process from finding a property to collecting your assignment fee.
Okay, so here's what's happening behind the scenes. You're essentially buying time rather than property. When you sign a contract with a seller, you're securing the exclusive right to purchase their property at a specific price within a certain timeframe. During that window, you're hunting for an end buyer who will pay more than your contracted price.
The legal principle is called "equitable conversion." This means you have the contractual right to purchase the property and can transfer that right to someone else, while the seller keeps the legal title until final closing. You're never actually taking ownership. The seller owns it until your end buyer closes the deal directly with them.
In this scenario, if you contract at $180,000, you're above the ideal formula. Wait, let me clarify that – you could still find a buyer willing to pay $195,000 if they have renovation expertise or lower carrying costs. Your assignment fee would be $15,000 ($195,000 minus your $180,000 contract price).
The transaction flows like this: you sign purchase agreement with seller for $180,000. You find an investor who wants the property. You create an assignment contract transferring your purchase rights to them for $195,000. At closing, the investor pays seller $180,000, pays you $15,000, and takes ownership.
Timing matters tremendously. Most wholesale contracts aim for completion within 30 days because that's how you make this profitable. According to industry research from Real Estate Bees surveying over 1,000 professional wholesalers nationwide, the average assignment fee is $13,000, with experienced wholesalers typically earning between $15,000 and $20,000 per deal. Geographic location significantly impacts these numbers – North Carolina and Georgia see average fees around $22,000, while Arizona averages closer to $5,000.
The 2025 legal landscape shifted significantly. Six states passed new wholesaling legislation this year. Pennsylvania's Act 52 took effect January 4, 2025, requiring specific disclosures and giving consumers 30 days to cancel contracts. Connecticut, Maryland, Tennessee, Oklahoma, and North Dakota also enacted regulations focusing on disclosure requirements and licensing thresholds.
If you're considering wholesaling, understanding your state's specific requirements isn't optional. Ten states now require licensing after one or two contract assignments. The difference between legal wholesaling and unauthorized real estate brokerage can mean fines, cease-and-desist orders, or charges for practicing without a license.
When you're wholesaling, you're working with two completely separate contracts. New wholesalers sometimes get confused about this, but each document serves a distinct purpose.
This is your contract with the property owner. You and the seller are the only parties on this document. This agreement grants you the contractual right to purchase the property without transferring ownership yet.
Parties and Property Details: You must clearly identify yourself as buyer and the property owner as seller. Include the property's full street address and legal description exactly as it appears on the deed. Legal descriptions typically reference lot numbers, subdivision plats, or metes and bounds descriptions.
Deed Type Specification: Specify which type of deed transfers with the sale. A warranty deed guarantees clear title and protects against title defects. A quitclaim deed transfers whatever interest the seller has without guarantees. Most wholesale deals use quitclaim deeds because sellers often can't guarantee clean title.
Property Condition Clauses: This outlines the property's current state and whether repairs are expected. The majority of wholesale properties sell "as is" because motivated sellers can't afford or don't want to handle repairs. Include language like "Seller makes no representations regarding property condition. Buyer accepts property in its current state with all faults."
Purchase Price and Financing Terms: State the exact purchase price and payment method. Wholesale deals typically use cash or hard money lending rather than conventional mortgages because traditional financing takes 30-45 days. Specify where earnest money deposits will be held (usually title company or attorney's escrow account). Example: "Purchase price of $180,000 to be paid in cash at closing. Earnest money deposit of $1,000 to be held by ABC Title Company."
Closing Date and Timeline: Set a specific closing date or timeframe. Most wholesale contracts specify 30 days or less. Your contract should include language allowing you to assign the contract. Sample: "Buyer reserves the right to assign this contract to another party. Seller acknowledges and consents to potential assignment."
Inspection Contingency: An inspection contingency lets your end buyer back out if they're unhappy with inspection results. This protects you because you don't want to be stuck with a contract you can't assign.
Financing Contingency: This allows the buyer to exit if they cannot secure financing. If you're working with cash buyers, this might not apply. However, if your end buyer plans to use hard money loans or DSCR loans (debt service coverage ratio loans that investors use for rental properties) you should include this protection.
Title Insurance Contingency: If the buyer can't obtain title insurance due to liens or title defects, this allows cancellation. Title insurance protects against ownership disputes, unknown liens or errors in public records.
Default Clauses for Both Parties: These define what happens if either party fails to perform. If seller backs out after signing, what are the consequences? Typical language states that if buyer defaults, seller keeps earnest money as liquidated damages. If seller defaults, buyer might pursue specific performance (forcing the sale) or sue for damages.
Risk of Loss Clause: This protects the buyer if property gets damaged while under contract. If a fire damages the property between signing and closing, who bears that loss? Standard language typically places risk on seller until closing.
Prorations and Adjustments: This covers how property taxes, HOA dues, utilities and ongoing expenses are divided between seller and buyer based on closing date.
Lead-Based Paint Disclosure: Federal law requires this for any residential property built before 1978. Sellers must disclose known lead-based paint hazards and provide buyers a 10-day inspection period.
Addenda: Space for additional terms negotiated after initial signing, such as specific repair agreements or personal property inclusions.
Once you have a buyer for your contract, you create this second document. The assignment contract legally transfers your purchase rights to your end buyer. This is where you document your profit.
Assignment Language: The contract must clearly state you're transferring all rights under the original purchase agreement. Example: "Assignor hereby assigns all rights, title, and interest in the Purchase and Sales Agreement dated October 15, 2025, between Assignor and [Seller Name] for property located at [Address] to Assignee."
Assignment Fee: This is your profit. State the exact amount. Be crystal clear about when and how this fee gets paid. Many wholesalers recieve partial payment when assignment contract is signed, with remainder paid at closing.
Payment Terms: Specify exactly when payment occurs. Typical structure: "Assignee agrees to pay Assignor an assignment fee of $15,000, with $3,000 due upon execution of this Assignment Contract and $12,000 due at closing."
Assumption of Obligations: The assignee takes on all original buyer's responsibilities. Make this explicit: "Assignee assumes all obligations and responsibilities of Buyer under the original Purchase Agreement."
Seller Consent (When Required): Some purchase agreements require seller consent before assignment. Florida statute Chapter 475.41 specifically addresses that wholesalers can only market the contract, not the property itself.
Copy of Original Purchase Agreement: Always attach a complete copy of your purchase agreement with seller to the assignment contract.
For investment property financing, many end buyers use DSCR loans or other investment products that don't require traditional employment verification. AmeriSave offers flexible loan options for real estate investors looking to fund properties acquired through wholesale contracts.
Creating a wholesale contract requires understanding what you're building and why each step matters. Taking shortcuts here can cost you the entire deal.
You've got several options for obtaining a contract template.
Your state's real estate commission often provides standard purchase and sale agreements. These are designed for traditional transactions though, not necessarily wholesale deals. They might not include assignment language or flexibility needed for quick closings.
The better approach? Hire a real estate attorney to draft a contract specific to your needs. Yes, legal fees range from $100 to over $1,000, but customized contracts protect you from much larger costs of failed deals or legal challenges.
Pennsylvania's Wholesale Real Estate Transaction Transparency and Protection Act requires specific contract disclosures as of January 2025. Connecticut's HB 7287 going into effect July 1, 2026, mandates registration with the Department of Consumer Protection. Generic online templates won't include these state-specific requirements.
Before you put a property under contract, you need to know who's going to buy that contract from you.
Your buyer list consists of cash investors looking for below-market properties. These are typically house flippers, buy-and-hold rental property investors, or real estate investment groups. Network at local real estate investor association meetings, join online forums and connect with hard money lenders who can refer clients.
Understanding your buyers' preferences makes finding properties easier. Some investors only want single-family homes under $200,000. Others focus on multi-family properties in specific neighborhoods.
Marketing to find these sellers involves direct mail campaigns, driving neighborhoods looking for distressed properties, online marketing to people searching "sell my house fast" and networking with probate attorneys and bankruptcy professionals.
Once you find a motivated seller and negotiate terms, execute the purchase agreement. Sign your purchase agreement with seller first. Make sure all required disclosures are included for your state.
Take that signed purchase agreement to a title company or real estate attorney and open escrow. Escrow is a neutral third-party arrangement where someone holds assets or funds until specific conditions are met. You'll deposit earnest money (typically $500-$2,000).
The title company begins a title search to identify any liens, judgements, or claims against the property. This is absolutely necessary. You don't want to assign a contract only to discover there's a $50,000 tax lien your buyer didn't know about.
While title work processes, you're actively marketing your contract to your buyer list. You're not marketing the property itself in most states – you're marketing your contractual right to purchase. The distinction matters legally.
When you identify your buyer, prepare the assignment contract. This document must be clear about assignment fees and payment timing. Disclose your fee upfront. Professional investors expect this. They care about whether numbers work for them, not how much you're making.
Send the assignment agreement to your buyer for review. Once they approve, both parties sign. This is when you typically receive your deposit portion of the assignment fee if structured that way. Make sure your buyer submits their earnest money to the title company.
At closing, all parties meet (or sign documents remotely). The end buyer signs loan documents if financing. Funds get disbursed according to settlement statement. Seller receives their contracted price. You receive your assignment fee. Buyer gets the deed and takes ownership.
The title company coordinates deed recording with county, ensures proper fund transfers and distributes final closing documents. Your job is done once you collect your assignment fee.
Double-closing is an alternative structure some wholesalers use in states with restrictive assignment rules. A double closing involves two separate transactions on same day. You actually purchase property from seller in first transaction (A-to-B), then immediately sell it to your end buyer in second transaction (B-to-C). You own the property for a few hours. This requires more coordination and sometimes transactional funding (short-term financing covering the gap). Your profit comes from difference between what you paid seller and what buyer paid you, minus any funding fees.
This worries a lot of new wholesalers. Yes, sellers can back out under certain circumstances.
If your contract includes specific contingencies or cancellation clauses, sellers might have legal rights to void the agreement. The new Pennsylvania law gives consumers right to cancel within 30 days. Connecticut's legislation provides a three-business-day cancellation window.
Better Offers: If another buyer approaches with higher cash offer or better terms, some sellers will look for ways to void your contract.
Seller's Remorse: Sellers sometimes regret decisions. If they signed under emotional stress, they might want out once they reconsider.
Inability to Find Replacement Housing: Sellers who planned to relocate might discover they can't find suitable homes within your timeframe.
Required Disclosures Missing: If you failed to include legally mandated disclosures about your intent to assign, seller might have grounds to void contract.
Contract Terms Violation: If you miss deadlines or fail to deposit earnest money as agreed, sellers can terminate for breach.
However, if you have valid contract with proper consideration, all contingencies satisfied and you're performing according to terms, sellers face legal consequences for breach. They might owe you damages equal to your expected profit or face specific performance lawsuit forcing completion.
You can wholesale commercial properties, but the game changes significantly. Commercial wholesaling involves office buildings, retail centers, apartment complexes, industrial properties and mixed-use developments.
Commercial properties are larger and more expensive. While you might wholesale a distressed house for $180,000, a small apartment building could be $2 million.
Due Diligence Is Extensive: You need to analyze lease agreements, tenant profiles, operating expenses, property maintenance records, environmental assessments, zoning compliance and development restrictions. Commercial buyers want detailed financial pro formas showing income potential.
Timelines Are Longer: Closing commercial deals typically takes 60-120 days rather than 30. Buyers need time for comprehensive inspections, environmental Phase I assessments, appraisals and loan processing.
Buyer Expectations Differ: Residential investors might accept rough repair estimates. Commercial investors demand professional reports from licensed engineers, architects and environmental consultants. They're buying based on income potential and return on investment calculations.
Assignment Fees Can Be Much Higher: Because commercial properties are more expensive, potential assignment fees scale up proportionally. A 2% fee on a $5 million office building is $100,000. However, you're taking on significantly more risk and competition is lower.
Regulations Vary: Commercial real estate transactions fall under different laws than residential deals. Some protections for residential buyers don't apply to sophisticated commercial purchasers.
Skills required include understanding cap rates, analyzing net operating income, evaluating tenant creditworthiness, assessing market rental rates, understanding commercial lease structures and navigating complex financing different from residential mortgages.
Most wholesalers start with residential properties to learn fundamentals before attempting commercial deals.
Real estate wholesaling is a way to make money from real estate without having to put up any money like you would with traditional investing. The two-document structure keeps your purchase rights agreement with the seller separate from the assignment contract that gives those rights to your end buyer. The difference between these prices is where you make your money. National averages are around $13,000 per deal, but they can be as low as $5,000 or as high as $25,000 depending on the market.
In 2025, the law changed a lot. Six states passed new laws that only apply to wholesaling, and this trend is likely to continue. You must know your state's rules about disclosure, licensing, and how to cancel a contract. Wholesalers who want to build long-lasting businesses hire good lawyers, run their businesses openly, and treat their work like a job.
To be successful, you need more than just the ability to find distressed properties. Before you sign a contract on a property, you need to have strong buyer networks, be able to negotiate deals that benefit both parties, know the market well enough to accurately estimate after-repair values and repair costs, be able to consistently find motivated sellers, and be aware of the law so that you can structure deals that protect everyone.
Wholesaling can make you a lot of money and teach you important real estate basics if you're willing to learn these skills and do business in an honest way.
Wholesaling is a real way to get into real estate investing without having to spend a lot of money like you would when buying a home. You make money by putting motivated sellers in touch with investors who have money and know how to fix things up.
Every wholesale deal is based on the two-contract structure. Knowing what should be in each document, how to protect yourself with the right contingencies and default clauses, and how to follow your state's specific disclosure rules will determine whether you build a successful business or run into legal problems.
New regulations in six states during 2025 signal that lawmakers are paying attention to wholesaling practices. More states will probably follow suit with rules about disclosure and licensing. Wholesalers who do well will be the ones who are open and honest and get good legal advice.
If you really want to get into wholesaling, you should talk to a real estate lawyer in your state to make sure your contracts are legal, get to know local real estate investors before you buy your first property, learn about property values and repair costs in your area, and check the current wholesaling rules in your state.
There is a real chance to make money. Wholesalers are making a lot of money, as shown by the fact that the average assignment fee is $13,000 across the country. But to get those numbers, you need to know a lot about markets, build strong networks of buyers, negotiate well, and stay within the law.
Are you ready to look at real estate investing from a new angle? Find out more about creative ways to finance your investments and buy property that can help you get rich through real estate.
Yes, sellers can back out in some situations, but it depends on the terms of your contract and the laws in your state. If your contract has contingencies that aren't met, like inspection or title contingencies, the sellers might have a good reason to cancel. The new state laws that went into effect in 2025 give sellers the right to cancel. For example, Pennsylvania's Act 52 gives sellers 30 days to cancel after signing the contract, while Connecticut's law gives sellers three business days. Aside from these legal rights, sellers may try to back out if they get better offers from other buyers, feel bad about selling after signing under emotional circumstances, can't find suitable replacement housing before the closing date, or find out that you didn't give them the required information about your wholesaling intent. But if you have a valid contract with the right amount of money, all of the contingencies are met, and you are following the terms of the agreement, the seller will face breach of contract consequences. In these cases, you usually lose your earnest money, get paid damages equal to your expected profit, or even have to go to court to force the sale to go through. Getting enough earnest money to show that you are serious, including liquidated damages clauses that spell out exactly what will happen if you don't pay, recording the memorandum of contract with the county to make your interest public, setting realistic timeframes so you don't have to rush to find buyers, and keeping in touch with sellers throughout the process are all good ways to protect yourself.
Instead of looking for a generic template, your first priority should be to find out what the legal requirements are in your state. Real estate lawyers who know how to wholesale in your state are the best people to help you find contracts. They will write up personalized contracts that follow your state's rules about disclosure, use language that will hold up in court, include protection clauses for your specific situation, and follow the new laws that will go into effect in 2025. Legal fees usually cost between $100 and $1,000, but this money protects you from losing a lot more money if a deal falls through or you have to go to court. If you can't afford attorney fees right away, your state's real estate commission might have standard purchase agreements. However, these often don't have the assignment clauses and flexibility that are needed for quick cash closings. Some real estate agents can give you contracts, but this is only true if you're working with a representative and the agent knows how wholesaling works. When you network with experienced local wholesalers, they may be able to give you contract referrals or templates that they have used successfully. However, you should still check that these are legal in your state. Reputable real estate legal document websites offer state-specific templates, but you need to be very careful to make sure that these include all the disclosures that are required for 2025. Several states now require certain language in contracts about your intention to wholesale, the consumer's right to cancel, advice to get legal advice, and the fact that you are not the property owner. New laws in Pennsylvania, Connecticut, Maryland, Tennessee, Oklahoma, and North Dakota all require these disclosures. No matter where you get the contract, have a lawyer look it over before you use it for real business.
Yes, it is legal to wholesale commercial property, but it is much more complicated than wholesaling residential property. The basic process of assigning a property and giving the end buyer the right to buy it stays the same, but the requirements for size and complexity go up a lot. Commercial properties are usually bigger and cost more than single-family homes. The prices of these properties can range from hundreds of thousands to tens of millions of dollars. This means that the assignment fees could be higher, but the due diligence requirements would be much higher as well. Residential investors may be okay with rough estimates for repairs, but commercial buyers want full property condition reports from licensed engineers, environmental Phase I studies to look for contamination, detailed financial analysis of current leases and tenant profiles, evaluations of operating expenses and net operating income, checks of market rental rates and capitalization rates, and checks of zoning compliance. Commercial transaction timelines are longer than the 30-day windows that are common in residential wholesaling. This is because buyers need a lot of time for professional inspections, appraisals, and complicated financing arrangements. Commercial buyers are smart investors who look at return on investment metrics, not home buyers who make emotional choices. This means that your property analysis needs to be very thorough. There is less competition in commercial wholesaling because not as many people know how to judge office buildings, retail centers, apartment complexes, and industrial properties. But you are also taking on a lot more risk because of the size and complexity of the transactions.
Depending on where you live, how experienced your lawyer is, and how complicated the contract is, you can expect to pay between $100 and $1,000 per contract for legal help with reviewing or writing a wholesale contract. A simple template review, in which an attorney looks over a standard purchase agreement you found online and makes sure it meets your state's requirements, could cost between $100 and $300. This is based on the idea that the contract is already well-structured and the lawyer is mostly checking to see if it follows the rules instead of making a lot of changes. Writing a custom contract from scratch that fits your specific wholesaling business model usually costs between $500 and $1,000 or more. This is a good investment because the lawyer will include your state's disclosure requirements, your preferred assignment language and fee structure, protection clauses for common deal problems, and specific terms for the types of properties and buyers you want to target. Some real estate lawyers offer wholesalers flat-fee packages that include making contract templates and reviewing a certain number of deals each year. These packages could cost between $1,500 and $3,000 a year, but they come with ongoing legal help. Real estate lawyers charge between $150 and $500 per hour, depending on the market and their level of experience. This means that a one-hour consultation to go over your contract could cost between $150 and $500. In cities where the cost of living is higher, legal fees are usually higher than in rural areas. These costs may seem high at first, but keep in mind that if a deal goes wrong because of bad contract language, you could lose $10,000 or more in assignment fees and be sued by either the seller or the buyer.
To figure out your assignment fee, you need to take into account a number of things instead of just one formula. First, you need to know how much your end buyer can afford while still making money. The 70 percent rule says that investors usually pay no more than 70 percent of the property's value after repairs, minus the cost of repairs. If the ARV of the property is $300,000 and the repairs cost $50,000, this calculation shows that the investor's highest offer would be $210,000. But you need to include your assignment fee in this amount. If you rented out a property for $180,000 and your buyer can only pay $210,000, your possible assignment fee is $30,000. That being said, it's important to leave your buyer a good profit margin if you want them to come back. Find out how much profit your buyer expects from this kind of deal. Flippers who have done it before usually look for a net profit of $40,000 to $60,000 after all costs. The right fees depend a lot on the state of the market. Real Estate Bees' 2025 survey data shows that average assignment fees vary greatly from state to state, from $5,000 in Arizona to $22,000 in North Carolina and Georgia. This is because property values and investor expectations are different in each state. Your relationship with buyers is very important. If this is your first deal with a certain investor, you might be willing to accept a lower fee of $5,000 to $8,000 to build trust, knowing that future deals will cost more. The characteristics of a property can affect the potential fee. For example, properties that are in need of a lot of repairs but are in desirable areas might be able to charge higher assignment fees because the difference between the purchase price and the ARV is large. The level of competition in your market affects what buyers are willing to pay. You might have to accept lower fees if there are a lot of wholesalers in the same market. Being clear about your fee builds trust. Professional investors know that wholesaling comes with assignment fees, but what matters most to them is whether the numbers fit their investment criteria.
There are a number of contract terms that are very important for protecting your interests. The first is clear assignment language that makes it clear that you have the right to assign the purchase contract to someone else. This clause should say something like, "Buyer has the right to give this contract to anyone Buyer wants." The seller agrees to the assignment of this agreement. If you don't include this language, you might not have the legal right to transfer your contractual obligations, which would completely stop your wholesaling strategy. Inspection contingencies protect you by letting you cancel the contract if the property's condition isn't what you expected or if your end buyer finds problems during their due diligence. A standard way to say this might be: "This contract is only valid if the Buyer agrees to the condition of the property after a professional inspection within 10 days of signing the contract." The buyer can end this agreement for any reason based on the results of the inspection. Time is of the essence clauses establish that meeting deadlines is legally significant and failure to perform on time constitutes breach of contract. This keeps you safe if sellers try to put off closing or if your end buyer doesn't do what they said they would do on time. Liquidated damages clauses make it clear what happens if one party doesn't follow through, which makes it easier to enforce. For instance, "If Buyer defaults on this contract, Seller may keep all earnest money as liquidated damages." If the Seller doesn't follow through, they will have to pay the Buyer liquidated damages equal to the Buyer's earnest money plus any documented costs incurred during the contract period. Title contingencies let you back out if the seller can't give you a marketable title or if there are liens and encumbrances that make the property uninsurable. This protects you from finding out about $50,000 in tax liens that weren't mentioned up front.
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