What Is Real Estate Wholesaling

Real estate wholesaling is the practice of finding discounted properties, getting them under contract, and assigning that contract to an end buyer for a fee. You never actually own the property — you control it via contract.

The wholesale fee typically ranges from $5,000 to $25,000 per deal, with the average being around $10,000. Some wholesalers do 5-10 deals per month.

How Wholesaling Works in 2025 (Step-by-Step)

Step 1: Build Your Cash Buyer List

The biggest mistake new wholesalers make is finding a deal before finding a buyer. Find buyers first.

How to find cash buyers:

• Look up recent cash purchases on Zillow or Realtor.com (filter by "Sold" + "Cash only")
• Attend local REIA (Real Estate Investors Association) meetings
• Post in Facebook real estate investor groups
• Search public records for LLCs that bought properties recently

Aim for 50-100 cash buyers before you start marketing for sellers.

Step 2: Find Motivated Sellers

Motivated sellers are people who NEED to sell quickly:

• Pre-foreclosures (30-90 days from auction)
• Out-of-state owners
• Inherited properties (probate)
• Tired landlords
• Divorcing couples
• People relocating for work

Marketing channels:

• Direct mail: $0.50-1.00 per piece, 1-3% response rate
• Cold calling: 50-100 dials per day, 5-10 conversations, 1-2 appointments
• Door knocking: Most effective, lowest cost, most rejection
• Facebook ads: $5-15 per lead
• Bandit signs: $3 per sign, illegal in some cities
• SEO content: 3-6 month ramp-up, free traffic

Step 3: Analyze the Deal

Use the 70% Rule:

Maximum Offer = (After Repair Value × 0.70) − Repair Costs

Example:

• ARV (After Repair Value): $200,000
• Repairs: $25,000
• Max Offer: ($200,000 × 0.70) − $25,000 = $115,000

If the seller accepts $110,000, you have $5,000 in equity for your wholesale fee.

Step 4: Sign the Contract

Use a state-specific Purchase and Sale Agreement with an assignment clause:

"Buyer may assign this contract to a third party. Assignee assumes all obligations of Buyer."

Key terms to include:

• Earnest money: $10-100 (small)
• Inspection period: 7-14 days (gives you time to find a buyer)
• Closing date: 21-30 days out
• Exit clause: "Subject to partner approval" (gives you a way out)

Step 5: Find Your Buyer

Send the deal to your cash buyer list:

• Email blast with property photos, ARV, repair estimate, asking price
• Text message follow-up
• Post in Facebook investor groups
• Post on BiggerPockets Marketplace

First buyer who says "yes" and puts up earnest money gets the deal.

Step 6: Assign the Contract

Sign an Assignment of Contract form with your buyer. They pay you the assignment fee (typically $5,000-25,000) at closing.

Step 7: Close the Deal

Title company or real estate attorney handles closing. You get paid, buyer gets the property, seller gets their cash. Win-win-win.

Wholesale Contract Templates

You need 3 contracts:

1. Purchase and Sale Agreement (with assignment clause)
2. Assignment of Contract form
3. Seller Disclosure (state-specific)

Get templates from:

• BiggerPockets (free)
• REIA membership ($100-200/year)
• Local real estate attorney ($300-500)

Legal Considerations

Wholesaling vs. Dealing

Some states (Illinois, Oklahoma, Ohio) consider wholesaling as "dealing" — requires a real estate license. To stay legal:

• Always use an assignment contract (never double close without disclosure)
• Never market the property to the public — only market your contract
• Disclose your fee to the seller (transparency is the law in many states)
• Use "and/or assigns" in the buyer line of the contract

State-Specific Rules

• Florida: No license required if you assign contracts (not market properties)
• Texas: Wholesalers must use specific disclosure forms
• California: Must be a licensed agent to wholesale (strict)
• Ohio: Recent laws require licensing for "marketing" properties

Always consult a local real estate attorney before starting.

How Much Can You Make Wholesaling

Average wholesale fees by market:

• Small markets (Midwest, South): $3,000-8,000 per deal
• Mid markets (Phoenix, Atlanta, Dallas): $5,000-15,000 per deal
• Large markets (LA, NYC, SF): $10,000-30,000 per deal
• Luxury markets: $25,000-100,000 per deal

Most new wholesalers close 1-3 deals in their first 6 months. After 1 year, experienced wholesalers close 5-15 deals per month.

Common Wholesaling Mistakes

1. Skip the buyer list — you'll be stuck with a contract you can't assign
2. Offer too much — kills your profit margin
3. No exit clause — you're legally bound to buy if no buyer found
4. Bad repair estimates — get 3 contractor bids, not 1
5. Skip the inspection — surprise repairs eat your fee
6. Market the property — illegal without a license in most states
7. Don't disclose your fee — sellers can sue for non-disclosure
8. Skip the title company — DIY closings go wrong

Tools for Wholesalers

• PropStream ($99/mo): Skip trace, property data, comparables
• REIPro ($197/mo): CRM + deal analyzer + contracts
• BiggerPockets Calculators (free): Deal analysis
• LeadHunting AI ($29/mo): Lead capture + AI qualification + follow-up automation
• Google Voice (free): Separate phone for marketing
• DocuSign ($10/mo): Digital signatures

Key Takeaways

• Build your buyer list FIRST — 50-100 cash buyers
• Use the 70% Rule: Max Offer = (ARV × 0.70) − Repairs
• Always use an assignment clause in your contract
• Disclose your fee to the seller (transparency)
• Check state laws before starting — some require a license
• New wholesalers: 1-3 deals in first 6 months; experienced: 5-15/month
• Average wholesale fee: $5,000-25,000 per deal