Wholesaling
Wholesaling is finding deeply discounted properties, putting them under contract, and then selling that contract to another investor for a fee — you never actually buy the house.
Think of it as the real estate equivalent of flipping concert tickets. You secure the right to buy a property at $150,000, find an investor willing to pay $170,000, and assign your contract for a $20,000 assignment fee. The seller gets their sale, the investor gets a deal below market value, and you pocket the spread.
How a Wholesale Deal Works
Step by step:
- Find a motivated seller — typically someone facing foreclosure, divorce, inheritance, or a property in rough condition
- Negotiate a purchase contract at a steep discount (usually 60-70% of after-repair value)
- Market the contract to your investor buyer list
- Assign the contract (or do a double close) to the end buyer
- Collect your fee at closing — typically $5,000 to $25,000 per deal
The entire process can happen in 2-4 weeks. No renovation, no tenants, no mortgage needed.
Why Wholesaling Attracts Beginners
You don’t need money or credit. Seriously. You’re not buying the property — you’re buying the right to buy it and selling that right. Your only costs are marketing (to find sellers) and potentially earnest money ($500-$2,000 that gets refunded or applied at closing).
That low barrier to entry is exactly why every real estate guru on YouTube sells a wholesaling course. The reality is more complicated than the pitch.
The Hard Truth
Finding deals is hard work. Most wholesalers spend $2,000-$5,000/month on marketing (direct mail, driving for dollars, online ads) before their first deal closes. The majority of people who try wholesaling quit within six months because they can’t find enough discounted properties.
You also need a strong buyer list. The best contract in the world is worthless if you can’t find an investor to take it off your hands before your inspection contingency expires.
Legal Considerations
Several states now regulate wholesaling. Illinois, Oklahoma, and Philadelphia require a real estate license to assign contracts regularly. Other states require disclosure that you’re assigning the contract. Failing to follow local regulations can result in fines or voided deals.
Also, some sellers feel taken advantage of when they discover you never intended to buy their property. Ethical wholesaling means being transparent about your role and ensuring sellers understand the arrangement.
Looking to buy property the traditional way? Read our buying guide and use the mortgage calculator to run your numbers. More investing terms in the glossary.