A step-by-step breakdown of the wholesale real estate process — from finding deals to closing and profiting.
Wholesale real estate is one of the most accessible real estate investment strategies because it requires little to no capital or credit. Here's how it works from start to finish.
Wholesale real estate involves finding deeply discounted properties — typically from motivated sellers — putting them under contract, and then assigning that contract to a cash buyer investor for a fee. The wholesaler never actually purchases the property outright; they profit from the difference between the contracted price and the buyer's price.
The foundation of wholesale real estate is finding sellers who need to sell quickly and are willing to accept below-market offers. Motivated sellers include homeowners facing foreclosure, people with inherited properties, landlords tired of tenants, people going through divorce, and those with severely distressed properties.
Before making an offer, wholesalers research the property's after-repair value (ARV), estimate renovation costs, and calculate their maximum allowable offer (MAO). The formula: MAO = ARV × 70% − Repair Costs − Wholesale Fee. This ensures enough margin for both the wholesaler's fee and the end buyer's profit.
Once the seller accepts, the wholesaler signs a purchase agreement that includes an assignability clause — this is legally critical. The contract must explicitly allow assignment to a third party (the end buyer).
With the property under contract, the wholesaler markets the deal to their buyer's list — investors looking for exactly this type of opportunity. The buyer signs an assignment agreement taking over the contract.
The deal closes at a title company experienced with wholesale assignments. The seller receives their agreed price, the end buyer takes ownership at the wholesale price, and the wholesaler receives their assignment fee — all at the closing table. No bank needed, no mortgage.