What is Wholesaling?
Wholesaling is the real-estate strategy of putting a distressed property under purchase contract and assigning that contract to a cash buyer for a fee. The wholesaler never owns the property — they're paid for connecting motivated sellers to investor buyers.
A wholesaler's economics: source a property at a discount (typically 65-75% of ARV), sign a purchase contract with the seller, then assign the contract to an end buyer (flipper, BRRRR investor, or landlord) for an assignment fee, typically $8,000-$25,000. The end buyer closes with the seller at the contract price; the wholesaler is paid the assignment fee at closing from the title company.
Wholesaling works because of arbitrage between two markets: the off-market distressed-seller pool (where the wholesaler operates) and the cash-buyer demand pool (where the wholesaler exits). Both pools exist; the wholesaler is paid to connect them.
The discipline lives in the buyer side, not the seller side. Wholesalers who build segmented, vetted cash-buyer lists of 50+ active investors can move almost any reasonable deal in 48 hours. Wholesalers with 5 buyers sit on great deals while their earnest money bleeds out during the inspection period.
Concepts that connect.
An assignment fee is the amount a wholesaler is paid for assigning the rights of a real estate purchase contract to an end buyer. Typical fees in 2026 range from $5,000 to $25,000 on single-family deals, depending on the spread and the market.
A cash buyer is an investor who can close on a wholesale or off-market deal without relying on traditional bank financing — typically using actual cash, hard money, private lender funds, or HELOC proceeds. Cash buyers are the demand side of wholesaling and the most important relationship in the business.
Maximum Allowable Offer (MAO) is the highest price a wholesaler or flipper can pay for a property and still hit their required profit margin. Derived from the 70% rule: MAO = (ARV × 0.70) − repair costs − assignment fee.
Earnest money is the deposit a buyer puts down at contract execution to demonstrate commitment. In wholesale deals, EMDs typically range from $10 to $1,000 — far smaller than retail. The EMD goes toward closing costs at closing, or to the seller if the buyer defaults.
An option fee is a non-refundable payment a wholesaler makes to a seller for the exclusive right to buy a property within a specified period (typically 30-90 days). Different from earnest money — the option fee buys time, not commitment to close.
A double close (also called a simultaneous close) is a wholesaling exit where the wholesaler actually buys the property from the seller and immediately resells to the end buyer in two back-to-back transactions. Used when an assignment isn't allowed or when the wholesaler wants to hide their margin.
A novation is a three-party contract that replaces the original buyer (the wholesaler) with a new buyer (the end investor), with the seller's explicit consent. Used as an alternative to assignment in states with restrictive wholesale-assignment laws.
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