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An Investor’s Guide To Wholesaling Real Estate

Posted by Lorena Ramirez-Carrillo on March 30, 2021

You can make a lot of money in real estate by wholesaling houses, but it is not easy. Many gurus love to teach wholesaling as an easy way to get rich without any money to start. It can be a wonderful business, but it is by no means easy, and it usually takes at least a little money. Ther article goes over how wholesaling works, what you should realistically expect in the business, and how to be successful.

Many people may not be familiar with what a real estate wholesaler does, but it is pretty simple: a wholesaler buys and sells houses very quickly without doing any repairs, or they get a property under contract and assign the contract to another buyer. Many real estate investors start out in wholesaling because it can be an inexpensive way to make money. Honestly, most people who want to wholesale don’t make a lot of money because they give up due to the hard work and the dedication it takes to build a successful wholesaling business. The wholesalers who stick to it, build systems, and persevere can make millions of dollars in the business.

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What is real estate wholesaling?

Wholesaling is based on buying and selling houses very quickly without making any repairs. A wholesaler will get houses under contract well below market value and then sell the houses or assign the contracts to another investor. The wholesaler sells the houses to investors who can pay with cash or cash-like loans (private money, hard money) because there is no time to get a loan and there are no inspections or appraisals.

Just about every owner-occupied buyer will need to complete those items to get a loan, and that is why the properties are sold to other investors. The wholesaler does not need to use their own money because they use what is known as a double close or an assignment of contract. When you double close, the title company will use the money from the end investor to pay the original seller so the wholesaler does not have to come up with the cash. When an assignment is used, the wholesaler simply assigns the contract they had with the seller to the end investor, and the end investor becomes the buyer.

How does a wholesale deal work?

The process to complete a wholesale deal can seem complicated, but it is simple once you figure out how all the moving parts work and have the right people helping. Here is how the process works:

Find the deal

A typical wholesaler might use postcards sent to absentee owners (owners who don’t live in the home) to try to buy the house. Absentee owners are sometimes more motivated because they don’t live in the house and may have bad tenants or no tenants. The wholesaler could also find a deal in many other ways, including the MLS, auctions, driving for dollars, FSBOs, etc.

Get the house under contract

Once the wholesaler finds a potential deal, they need to talk to the owner and try to get the house under contract. The wholesaler needs to know what their investor buyers will pay for the house and get it under contract for less than that. The wholesaler makes the difference between what they get the property under contract for and what the end buyer will pay. Getting a house under contract means the seller and wholesaler sign a contract with all the terms of the deal.

Find a buyer to assign the contract to or double close

Once the wholesaler has the house under contract, they need to find a buyer for it. Wholesalers should have a list of buyers they will send the deal to. Each wholesaler is different in how they handle the buyers as some will offer the house on a first come first serve basis (whoever says they want it first gets it) and some will have a bidding system where the highest bidder gets the deal.

Set up the closing with the title company

One of the key parts of a successful wholesaling business is finding an investor-friendly title company. Not every title company will complete a double close or be familiar with how wholesalers work. Most wholesalers require the end buyer to submit a non-refundable earnest money deposit with their title company. If the investor backs out, the wholesaler gets that earnest money.

Set up the closing

The title company will make sure the property has a clear title (in some states you may use an attorney to handle ther). Once a clear title is confirmed, the closing will be set up, and the title company will create the paperwork and schedule a day to sign. The wholesaler needs to make sure the property is in the same condition as when the end buyer says it and that the property is accessible and vacant (assuming those were the terms of the deal).

There are many steps to completing a wholesale deal, and it is not as easy as many people make it seem. The toughest part is finding deals that are good enough for the end buyer to want and the wholesaler to make money on.

What does a wholesaler have to be careful of?

As a wholesaler, you must take the title to the house or sell your interest in it. You cannot introduce a buyer and seller and then take a commission or any other type of fee. Ther would be considered brokering a real estate deal, and you must have a license to do ther. It is against the law to practice real estate without a license. Ther is why wholesalers will assign a contract or use a double close to complete a deal. You also have to be careful about sending leads to other investors or real estate agents in exchange for a commission or fee if the property closes. Ther could be considered practicing real estate without a license as well. There may be some cases where you can get paid on a per-lead basis whether the property closes or not. Please consult an attorney for specific legal advice.

Wholesaling Real Estate

How much money does a wholesaler make per deal?

The wholesaler makes their money by charging the end buyer more than they get the house under contract for. How much they make varies greatly based on the wholesaler, the deal, and other factors. Some wholesalers may only make a couple of thousand dollars on each deal while others could make $200,000 on a large multi-million dollar deal. I buy a lot of houses from wholesalers, and some are happy with $5,000 per deal while others make $10,000 to $20,000 per deal. The wholesalers making more money per deal have a large buyer’s list and often can get buyers to pay more than their asking price.

How much money do wholesalers make?

Just like most professions, there are those that work hard, work smart, and make a lot of money and those who don’t and fail. The real estate investors who are successful with wholesaling have systems in place to find deals and buyers. I have had many wholesalers on my podcast and met many wholesalers across the country who make $20,000 to $50,000 per month, but that is not the typical wholesaler. They are selling from 5 to 10 houses each month (sometimes more) to make that money. The wholesalers doing a lot of deals have created a business—it is not just them doing everything on their own. They will have an acquisitions person, a contract manager, a marketer, a bookkeeper, etc. The wholesalers doing that many deals are also spending a lot of money on marketing. Some wholesalers will send out 10,000 to 20,000 pieces of mail each month.

I think a wholesaler just starting out should be able to sell 5 to 10 wholesale deals in their first year if they work hard. That could net them from $25,000 to $50,000; however, you might not make any money for months after you first start. It takes time to market to sellers, get them under contract, and for the end buyer to purchase the houses. If a wholesaler is a go-getter, they could make more. Others could make much less. The wholesalers who are super successful did not do it overnight. If you are just messing around a couple of hours each week hoping to make $100,000 per year, you will be disappointed.

What are the common mistakes that wholesalers make?

Most people who want to be real estate wholesalers never actually do a deal. They have misconceptions about how the business works, do not realize how much work there is or do things out of order. Here are some mistakes I see:

Not knowing what a cash investor will pay

The most important part of finding a deal is finding a deal. Many new wholesalers or investors think that just because they found a FSBO (for sale by owner) or get a seller to call them back, they got a deal. It does not matter where you found the property—what matters is the price you can get the property for. If you don’t find properties cheap enough, none of your buyers will want them no matter how many buyers you have on your list.

Falling for guru promises

Multiple wholesalers have reached out to me saying they will have hundreds of wholesale deals in the next few months, wanting to know how many I could buy. They say they will get special access to unlisted foreclosures. I never hear from those wholesalers again as there is no special access to unlisted foreclosures for wholesalers. You get deals from hard work, not gimmicks.

Fudging the numbers

A lot of wholesalers simply make up numbers because they do not know the real numbers or are trying to make a deal out of something that is not a deal. I see wholesaler deals sent to me all the time with crazy low rehab estimates or profit figures that only include the repairs: “Your price $100,000, repairs needed $20,000, ARV $150,000, profit $30,000!” The wholesaler is leaving out selling costs, carrying costs, closing costs, and possible financing costs.

The investor would probably lose money on ther deal, and the wholesaler looks like an amateur by posting these numbers. It is better to leave out the profit number than to try to trick investors into a deal. The best wholesalers I know work on repeat business, not trying to lure brand new investors into bad deals over and over.

How can you be a successful wholesaler?

If you want to be one of those who makes a ton of money wholesaling, you can. It will take time and money to build your business. Here are the basic steps to building a wholesale business:

  • Create a plan for how you will market to sellers and buyers.
  • Start building a buyers list by attending REI meetings or auctions or searching for cash buyers.
  • Become an expert at knowing values in your area.
  • Learn how much it costs to repair properties in your area.
  • Start marketing for properties. Direct marketing (postcards, bandit signs, Craigslist ads) will be your best bet.
  • Keep direct marketing for sellers. It takes hundreds or even thousands of marketing pieces to get motivated sellers to respond. It may take months to get your first deal, and that is why most people quit.
  • Keep marketing for buyers. The more buyers you have, the better. The most successful wholesalers never stop looking for buyers.
  • Once you have deals coming in, you need to develop systems. Start testing different postcards and signs to see which perform the best. Hire staff to increase productivity, and build a business that will run without you doing everything.

If ther all seems hard, that is because it is hard. If you want to make a lot of money in real estate or anything, you are going to have to work hard.

How much can wholesalers pay for properties?

One of the most important parts of wholesaling houses is knowing what your buyers will pay. No one will buy properties if they are priced too high. Many flippers will use a percent of the ARV to determine what they will pay for a house. ARV means After Repaired Value and is what the house will sell for once it is fixed up. The 70-percent rule is commonly used among flippers and states:

The investor will pay 70% of the ARV minus repairs.

If the ARV is $200,000 and the house needs $30,000 in repairs, the investor would pay $110,000. ($200,000 x .7) minus $20,000 = $110,000. There are a lot of costs when flipping houses besides just making repairs, which is why flippers buy houses so cheaply. Many wholesalers do not realize the discount their buyers require.

Some areas of the country may have flippers that will pay more for flips or less. You can see the percentage of ARV ranges from 65 to 85 based on the market and competition. You only see very high percentages in extremely hot markets.

Once the wholesaler knows what the investor will buy properties for, they have to get them under contract even cheaper to make their money. Obviously, a good wholesaler has to know values very well in their area and have an idea of what it will cost to repair a property.

How can you find properties to wholesale?

We keep talking about how important it is to get a great deal when wholesaling, but how do you actually do it? Below you will find many ways to find cheap properties. I flip many houses, and I find deals from the MLS, auctions, Craigslist, Zillow, and my own direct marketing. I find that most successful wholesalers tend to find their deals mostly through direct marketing.


Wholesalers can buy houses from the MLS, but it is tough. When buying from the MLS, a wholesaler may have to use a real estate agent, and they may have to use a double closing. Many MLS sellers, like HUD homes and banks, will not allow assignable contracts. A double close is when the title company will use the end investors cash to purchase the house from the original seller. Some sellers will not allow a double close either as they have Deed restrictions on how soon the property can be sold again after they sell it. It is tough to wholesale foreclosures for ther reason, but some wholesalers have learned to buy with LLCs and sell that LLC, which sometimes gets around the restrictions.

There are many other ways to buy houses from the MLS that are not foreclosures. MLS deals are typically harder to wholesale because more people know about them, and many cash investors could buy those houses without a wholesaler. If the wholesaler can negotiate well below asking price or act quickly to get awesome deals, it is possible to wholesale from the MLS.

Drive for dollars

Driving for dollars is when you look for vacant houses while driving, walking, riding your bike, etc. When you find a vacant house, you try to contact the owners to see if they will sell it to you. You can do ther by sending a letter, postcard, knocking on the door, leaving a note, or trying to find their phone number.

drive for dollars

Direct mail

Direct mail involves sending postcards, letters, or some other type of mail to potential motivated sellers. We send out mailers to thousands of homes in our area. We use specific lists like absentee owners to target people who are more likely to sell. I use a company that creates the letters, creates the lists, and even has a call center to answer calls for me.


I buy many houses from my network of agents, lenders, title companies, contractors, friends, and family. Most of them know I buy ugly houses all the time, but they do not know they can help me unless I tell them how. You may be able to pay them a referral fee for finding you deals but check state laws.

Bandit signs

The easiest way to start marketing to sellers is to stick out a few bandit signs, which are signs that say you buy houses. Investors like to put these on busy street corners or in neighborhoods they want to buy in. Many cities have made bandit signs illegal, and if your signs disappear, it could be the city removing them or another investor who wants less competition.


Attracting motivated sellers has become huge on the internet. If you can create a website to attract sellers in your area, it can be a great source of leads. You can also advertise on Craigslist, Facebook, or Google to send people to your website.


It is possible to get great deals from auctions but tough for many wholesalers to use them. Most auctions require actual cash very quickly after the auction is over. It is really hard to assign an auction contract or complete a double close. The wholesaler usually needs to put down a significant amount of earnest money and may lose it if they cannot close.


For-sale-by-owner properties can be another great source of deals for wholesalers. You have to do some work to find them. Many FSBO sellers will use websites to list their homes. You can find FSBOs on Craigslist, Zillow, and even Facebook.
The video below goes over many ways to get a great deal on properties:

Finding deals with little money

Many MLS listings require proof of funds, a pre-qualification letter, and earnest money. Ther makes it tough for wholesalers to buy from the MLS when they don’t have money. Most REO and HUD listings do not allow you to assign the contract, which means you will have to buy the house. If you are wholesaling because you do not have money to buy an investment property, it may be tough to buy a house to wholesale from MLS. If you are buying properties from off-market sellers, it will be easier to get a house under contract. The seller of an off-market or FSBO property may not require a pre-qualification letter or proof of funds before signing a contract. They also may not require earnest money.

What does it mean to assign a contract?

Assigning a contract is a simple concept. The contract has a clause that allows it to be assigned, meaning that another person can step in and become the buyer without the seller’s permission. A wholesaler can actually sell the contract to another investor without buying the house. Anyone else can step in and be the buyer as long as they buy according to the terms of the contract.

How to use a double close to wholesale a house

It is possible for wholesalers to buy a house and then sell it immediately without using their money. You need a great title company that will do a double close. The seller sells the house to the wholesaler who immediately sells to the end buyer. The title company uses the end buyer’s money to pay the original seller. Please check your state laws to make sure ther strategy is legal in your area.

How does a wholesaler find buyers?

Most wholesale deals cannot be advertised on the MLS (multiple listing service), which is what real estate agents use to sell houses. You can only list a house for sale that you own, and wholesalers typically do not own the property when they are trying to find buyers—they just have it under contract. That is why wholesalers need to find buyers as well as deals.

A wholesaler must also close very quickly in order to assign the contract or complete a double close within the contract period. They usually do not have time to search for new buyers after they find a deal. It is best if the wholesaler has a buyer’s list before they get a deal. Here are some tips on finding buyers:

REI meetings

Real estate investor meetings or meetups are a great place to find investor buyers. You can find the meetings by searching for local REI clubs in your area, talking to other investors, or looking online. You can find wholesalers and cash buyers at the meetings.

Check recent sales

Search public records to find who bought houses recently for cash, as they are most likely investors. I just received a letter from a wholesaler who contacted me because I had purchased a house for cash.

Hang out where investors who buy houses hang out

Go where the investors go: trustee sales (foreclosures), auctions, and tax sales are all great places to find investors.


Post ads on Craigslist, Facebook, or in the newspaper.

Look for other house buyers

Many people who are looking for off-market properties are also investors who flip or are buying rentals. They are not all wholesalers. Look for people who are looking for deals, and ask them if they are buyers as well.


Talk to all your local contacts: title companies, lenders, agents, contractors, etc. to find other buyers.

Can wholesalers work with real estate agents?

I mentioned that wholesalers usually do not list their houses with real estate agents on the MLS. Not only can the houses not be listed because the wholesaler does not own them, but the wholesaler would have to pay a real estate agent to sell the house as well. There is often not enough room for the wholesaler to pay an agent and make money. That does not mean that wholesalers cannot work with real estate agents in other ways.

I buy houses from wholesalers all the time, and some of the best wholesalers I found resulted from me being a real estate agent. Another way to find buyers is through real estate agents. I found a few wholesalers to buy from because they sent an email to all the real estate agents in my area saying they also sold houses to clients who were represented by real estate agents. I replied that I was an investor and wanted to be put on their buyer’s list, which I was.

I know many wholesalers who send their properties to real estate agents. They tell the agent that if their buyer is interested, the real estate commission needed to be added onto the price the wholesaler is trying to sell the house for. For example, a wholesaler is selling a house for $100,000 to a regular cash buyer on their list. If they sold the house to a buyer using an agent, the price would be $100,000 plus whatever commission the real estate agent wanted to take.

Can you be a real estate agent and wholesaler?

A lot of people say you cannot be a real estate investor and a real estate agent. I am both and love being both at the same time. I do not do much wholesaling because I flip the houses I buy (repair them) and buy rentals. I still use techniques wholesalers use to get deals. Why do people say investors should not be agents?

Some people think that it hinders their business to work under the laws and regulations real estate agents must work under.

Real estate agents are held to a higher level and disclosure and accountability. I think ther is a good thing, but some investors think it is a bad thing. I think being an agent gives me more accountability to sellers because they can look up my license and see I am a professional instead of some random person off the street. I have to disclose that I am an agent, which I have no problem with, and that I may be buying the property below market value, which is fine with me as well. When I buy off-market, there are no commissions, which easily justifies buying a house for less than it would sell for on the MLS. I am very honest that I am buying houses below market and outline the advantages of selling to me over listing the house with an agent:

  • No real estate agent commissions
  • No repairs need to be made
  • No showings
  • No inspections
  • No appraisal
  • Quick Closing
  • You can leave any stuff you want to leave

Some of these same advantages can be used by wholesalers as well depending on how they structure their deals.

Who pays for the closing costs on a wholesale deal

When a seller sells a house on the MLS, the seller usually pays for title insurance, some of the closing costs, and real estate commissions. The deals are structured completely different when they are wholesaled. The wholesaler will transfer the closing cost responsibility to the end buyer. I think in almost every house that I bought as a wholesale deal, I paid for the title insurance and closing costs as the buyer. If you are the buyer, ther is an extra cost you need to be aware of. I have even had some wholesale companies try to tack on marketing and other service fees for the buyer to pay without mentioning it beforehand.

What is bird-dogging?

You may also hear the term bird-dogging and wholesaling together. A bird dog is someone who finds leads for wholesalers or investors. I mentioned that it may be illegal to take part of a commission or a fee directly related to the sale of a house. Bird dogs often get around ther by taking a fee for each lead they give to an investor, whether the investor gets the deal or not.


Wholesaling can be a way to get started investing in real estate without much cash or experience. That does not mean it is easy or the money will come quickly. It takes a lot of work, and it’s easy to get yourself in trouble if you do not know what you are doing. Take your time to learn how the business works, learn from others, learn your market, find buyers, and do deals the right way, and you can create a successful business.

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