Wholesale Real Estate Contract: What It Is and What It Needs

Current Market Context

The Two Contracts in a Wholesale Deal

Every wholesale transaction involves two separate agreements:

• Purchase and Sale Agreement: Between you (the wholesaler/buyer) and the motivated seller. Sets the purchase price, closing date, contingencies, and EMD.
• Assignment Agreement: Between you and your end buyer. Transfers your rights in the Purchase and Sale Agreement to the end buyer in exchange for your assignment fee.

Key Clauses in Your Purchase Agreement

1. Assignment Clause

The most important clause. Language typically reads: "Buyer reserves the right to assign this contract to any entity or individual without seller approval." Without this, you cannot legally assign your purchase rights. Some sellers push back on this — be prepared to explain that it's standard in investment transactions.

2. Inspection / Due Diligence Period

A defined window — typically 7–21 days — during which you can inspect the property and back out without losing your EMD. This is your protection period to verify condition, confirm ARV, and find your buyer. Don't sign a contract without one.

3. Closing Date

Set a realistic timeline. Most wholesale deals close in 14–30 days. If you need more time to find a buyer, negotiate 30–45 days upfront. Extending the closing date after the fact requires seller approval and can create friction.

4. Earnest Money Deposit

Typically $500–$2,000 on wholesale deals. Low enough to limit your downside if the deal falls apart, high enough to show the seller you're serious. Your EMD is at risk if you back out outside the inspection period.

5. As-Is Clause

Wholesalers buy as-is. Include language that the seller makes no representations about property condition and buyer accepts the property in its current state. This protects you from post-closing claims.

6. Purchase Price

Your negotiated price must leave room for your assignment fee AND your end buyer's profit. Buyer's max offer = (ARV × 0.70) − Rehab. Your contract price should be 5–15% below that number.

The Assignment Agreement

Once you have an end buyer, the assignment agreement is a short document (1–2 pages) that includes:

• Reference to the original purchase agreement (address, purchase price, closing date)
• The assignee's name (your end buyer)
• Your assignment fee amount
• When the fee is paid (at signing of assignment, or at closing)
• Assignee's acknowledgment that they've reviewed the original contract and accept all terms

Double Close vs. Assignment

An assignment is transparent — the seller sees your fee on the settlement statement. A double close uses transactional funding to close A→B (you buy from seller) and B→C (you sell to end buyer) in the same day. The seller doesn't see your profit. Double closes cost more (transactional funding fees) but are useful when your assignment fee is large and you want to keep it private.

Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been buying and selling real estate in Northern Virginia for 20+ years.