Wholesaling 101: Complete Guide to Assignment Contracts

Wholesaling real estate offers investors a way to profit from real estate without the need for significant capital or credit. By mastering the art of assignment contracts, you can build a profitable business connecting motivated sellers with cash buyers.

What Is Real Estate Wholesaling?

Wholesaling involves getting a property under contract at a below-market price, then assigning that contract to an end buyer for a fee. The wholesaler acts as a middleman, facilitating the transaction between seller and buyer.

The Wholesaling Process

Step 1: Find Motivated Sellers

Target property owners who need to sell quickly:

• Distressed homeowners facing foreclosure
• Landlords tired of managing problem properties
• Inherited properties with multiple heirs
• Properties with significant repair needs

Step 2: Analyze the Deal

Use the 70% rule as a starting point:

• ARV (After Repair Value): $200,000
• Estimated Repairs: $30,000
• 70% Rule Price: $140,000 - $30,000 = $110,000
• Your Offer: $105,000 (leaving room for assignment fee)

Step 3: Get the Property Under Contract

Use a purchase agreement that includes:

• Assignment clause: "and/or assigns"
• Inspection period: 7-10 days
• Financing contingency: 21-30 days
• Proof of funds: From your end buyer

Step 4: Find Your End Buyer

Build a buyers list of:

• Fix and flip investors
• Buy-and-hold investors
• Real estate agents with investor clients
• Hard money lenders

Step 5: Assign the Contract

Create an assignment agreement that transfers your rights to the end buyer for your assignment fee.

Key Contract Components

Purchase Agreement Must Include:

• Buyer name: "[Your Name] and/or assigns"
• Assignment rights: Explicit language allowing assignment
• Earnest money: $10-$1,000 (depends on market)
• Contingencies: Inspection, financing, title

Assignment Agreement Must Include:

• Original contract details: Property address, purchase price
• Assignment fee: Your profit ($5,000-$15,000 typical)
• Buyer responsibilities: All contract obligations transfer
• Closing instructions: Title company information

Legal Considerations

Important: Check your state's laws regarding:

• Real estate licensing requirements
• Assignment contract validity
• Disclosure requirements
• Maximum assignment fees

Common Mistakes to Avoid

• No buyer lined up: Always have buyers before getting contracts
• Overpaying for properties: Stick to the 70% rule
• Poor contract language: Use attorney-reviewed forms
• Inadequate due diligence: Verify all property details

Building Your Wholesaling Business

Marketing for Sellers

• Direct mail campaigns
• Bandit signs (where legal)
• Online advertising
• Networking with industry professionals

Building Your Buyers List

• Attend local real estate investment meetings
• Partner with real estate agents
• Build relationships with hard money lenders
• Use online platforms and social media

Expected Profits

Typical assignment fees range from $5,000-$15,000 per deal, with experienced wholesalers earning:

• Beginner: 1-2 deals per month
• Intermediate: 3-5 deals per month
• Advanced: 10+ deals per month

Success Tips

• Focus on motivated sellers: Don't waste time on retail sellers
• Build systems: Automate your marketing and follow-up
• Know your numbers: Understand repair costs and market values
• Provide value: Solve problems for both sellers and buyers

Wholesaling can be an excellent entry point into real estate investing, providing cash flow and market education without the risks of property ownership.