Wholesale Real Estate: How the Assignment Deal Works

What Wholesaling Actually Is

In real estate wholesaling, you find a property, put it under contract at a low price, and then assign that contract to an end buyer, usually a flipper or landlord, for a fee. You are selling the right to buy the property, not the property itself, so you never take title in a classic assignment.

The wholesaler earns the difference between the contracted price and the price the end buyer is willing to pay. The value provided is finding and controlling a good deal that the end buyer did not have to source.

The Numbers Behind a Deal

Suppose you contract a distressed house for 150,000 dollars and a flipper is willing to pay 165,000 dollars because the after-repair value supports it. Your assignment fee is 15,000 dollars, paid at closing when the flipper steps into your contract.

The deal only works if there is real spread. That means the contract price must be low enough that, after rehab and costs, the end buyer still profits. Wholesalers therefore need the same ARV and repair-estimating skills as flippers.

Why the End Buyer Says Yes

• The property is priced below market because it is distressed or off-market.
• The ARV minus rehab and costs leaves the buyer a profit even after your fee.
• The buyer saves the time and cost of finding the deal themselves.
• The transaction can close quickly, which motivated sellers often want.

Legal and Ethical Cautions

Wholesaling rules vary by state, and some jurisdictions restrict how contracts can be marketed or require a real estate license for certain activities. Assignment clauses, disclosure requirements, and marketing limits all matter. Understand your local law before you operate.

Ethics matter too. Contracting with distressed sellers means being transparent about your role, honoring commitments, and not tying up a property you cannot actually deliver a buyer for. A double-close is sometimes used instead of an assignment where assignments are restricted.

Is Wholesaling for You

Wholesaling requires little capital but heavy marketing, negotiation, and deal-analysis effort. Success depends on generating a steady flow of motivated-seller leads and accurately estimating value. It is a business of hustle and numbers, not a passive investment.

Frequently Asked Questions