Wholesaling FAQ

A seller backing out after a contract is signed can create real problems, since you may already have a buyer lined up. Purchase contracts generally include remedies for a seller default, but pursuing them can be costly and slow. Many wholesalers simply move on to the next deal rather than pursue legal remedies, though a real estate attorney can advise on your specific contract and options.

A double close (also called a simultaneous or back-to-back close) is when the wholesaler actually purchases the property from the seller and then, often the same day or shortly after, resells it to the end buyer, rather than simply assigning the contract. Wholesalers sometimes use this structure when they don't want to disclose their exact profit margin, when the assignment fee would be unusually large, or when a seller's contract doesn't allow assignment. It generally requires more capital (or short-term transactional funding) than a simple assignment.

This situation generally requires either a short sale (selling for less than owed, with lender approval) or the seller bringing cash to closing to cover the difference. A short sale can take significantly longer and requires lender cooperation, so it's important to set realistic expectations with the seller upfront about the timeline and uncertainty involved.

If an end buyer backs out before closing, the wholesaler typically needs to find a replacement buyer quickly, especially if there's a closing deadline in the original seller contract. This is exactly why having multiple potential buyers evaluate a deal, rather than relying on just one, is a common best practice.

Generally, a real estate license is not required to wholesale in Arizona as long as you are transacting as a principal (buying and reselling your own contractual interest) rather than acting as an agent for someone else's transaction, and you comply with applicable disclosure requirements under A.R.S. § 44-5101. This is general information, not legal advice — consult a licensed Arizona attorney about your specific business structure.

Yes, the same general assignment-of-contract concept can apply to commercial property, though commercial deals often involve more complex due diligence, financing, and contract terms than residential deals. Working with an attorney experienced in commercial transactions is especially important here.

An assignment transfers the wholesaler's rights under the existing contract to a new party (the assignee), while the original contract itself generally stays intact. A novation, by contrast, replaces the original contract entirely with a new one between the seller and the new buyer, releasing the original party (the wholesaler) from further obligation under the old agreement. Novations are used less often in typical wholesale deals but can come up when a seller or lender requires a cleaner substitution of parties.

Ask other local wholesalers and investors (including through a local real estate investor association or investing group) which title companies they've used for assignment closings without issues. Not every title company is comfortable or experienced with assignment transactions, so it's worth calling a few directly and asking about their experience with wholesale deals before you're mid-transaction.

A wholesaler contracts a property and assigns or resells that contract to an end buyer, typically without ever taking title or doing repairs. A flipper actually purchases the property, funds and manages renovations, and then resells it on the retail market, taking on significantly more capital, time, and risk in exchange for a potentially larger profit margin.

Assignment fees vary widely based on the deal, the market, and the property, so there's no single realistic number that applies to every first deal. New wholesalers should focus on running honest numbers and building a track record rather than anchoring to any specific profit figure before they've closed their first transaction.

An LLC is not strictly required to wholesale, but many wholesalers form one for liability protection and to operate as a distinct business entity. Whether an LLC makes sense for you depends on your specific situation, and this is a good question to discuss with an attorney or accountant.

Earnest money is a deposit that demonstrates you're serious about a purchase contract, generally held by a title company or escrow agent. Amounts vary by market and deal, and are often a relatively small, negotiated sum in wholesale contracts, but the specific amount and refundability terms should always be spelled out clearly in the contract itself.

Generally, wholesaling works best with off-market properties, since a property actively listed with a broker on the MLS is typically already under a listing agreement that governs how it can be marketed and sold. Contracting an actively listed property without involving the listing agent can create legal and ethical complications, so this is a scenario worth discussing with an attorney.

Without clear assignability language, it may be unclear or disputed whether you're permitted to assign your rights under the contract to another buyer, which can create legal risk. This is exactly why using a purchase contract specifically drafted (or reviewed) for wholesale use, rather than a generic template, matters so much. See our assignment contract guide for more detail.

Yes, wholesaling is a recognized, legal activity in Arizona, addressed under A.R.S. § 44-5101, which shapes disclosure expectations around assignment of contract. As with any regulated activity, staying compliant with current requirements matters, and consulting a licensed Arizona attorney is recommended for anyone building a wholesaling business.

A wholesaler typically contracts and assigns deals without ever owning the property, earning an assignment fee. A real estate investor (in the buy-and-hold or fix-and-flip sense) actually purchases and owns property, taking on more capital and risk in exchange for rental income or resale profit. Many people do both at different points in their career, and the two roles often work together, with wholesalers supplying deal flow to investor buyers.