Wholesaling
Finding distressed properties, getting them under contract, then selling that contract to another investor for a fee.
Definition
Wholesaling is a real estate investment strategy where an investor (the wholesaler) finds a distressed property, negotiates a below-market purchase contract with the seller, and then sells that contract to another investor (the end buyer) for an assignment fee — typically without ever purchasing the property themselves.
Wholesalers profit from the spread between their contract price and what an end buyer will pay. A property under contract at $100,000 sold to a flipper who will pay $120,000 generates a $20,000 assignment fee. The wholesaler needs no money, no credit, and no construction knowledge — just strong deal-finding and negotiation skills.
Successful wholesaling requires: consistent lead generation (direct mail, cold calling, driving for dollars, PPC), fast due diligence, the ability to build a cash buyer list, and negotiation skills to secure properties at prices end buyers will want. It's a sales and marketing business, not a passive investment.
Related Terms
Contract Assignment
Transferring the right to purchase a property from a buyer (assignor) to a third party (assignee) for a fee.
Double Close
Two simultaneous closings on the same property — an investor buys from the seller then immediately sells to the end buyer.
After Repair Value (ARV)
The estimated market value of a property after all renovations are completed.
Maximum Allowable Offer (MAO)
The highest price an investor can pay for a property and still achieve their target profit.
Off-Market Property
A property for sale that is not publicly listed on the MLS or major listing websites.