Wholesale Real Estate Glossary
29 key terms every wholesaler should know
From ARV and MAO to novation agreements and transactional funding, this glossary covers the essential vocabulary of wholesale real estate — defined in plain English with a practical deal example for each term.
After Repair Value (ARV)
The estimated fair market value of a property after all planned renovations and repairs have been completed. Investors calculate ARV by comparing the subject property to recently sold, similarly renovated homes in the same neighborhood.
A distressed house sells for $90,000. Comparable renovated homes nearby sold for $160,000. The ARV is $160,000 — the number every other calculation in the deal is anchored to.
Assignment of Contract
The legal process of transferring a wholesaler's right to purchase a property — as spelled out in the original purchase agreement — to a third-party buyer. The assignor (wholesaler) steps out of the deal while the assignee (end buyer) closes directly with the seller.
A wholesaler signs a contract to buy a house at $85,000, then assigns that contract to a cash buyer for $95,000. The seller receives $85,000 at closing; the wholesaler collects the $10,000 spread.
Assignment Fee
The profit a wholesaler earns by selling their equitable interest in a purchase contract to an end buyer. It is the difference between the price locked in with the seller and the price the end buyer agrees to pay for that same contract.
A contract locked at $80,000 is assigned to an investor who agrees to pay $93,000. The wholesaler's assignment fee — earned without ever taking title — is $13,000.
Bird Dog
A person who scouts neighborhoods for potential investment properties and refers those leads to investors or wholesalers in exchange for a flat finder's fee. Unlike a wholesaler, a bird dog never signs a contract or acquires equitable interest.
A bird dog spots a boarded-up duplex, gets the owner's contact details, and passes them to a local wholesaler. Once the wholesaler closes a deal, the bird dog receives an agreed-upon referral fee.
Buyer's List
A wholesaler's curated database of cash buyers — fix-and-flip investors, landlords, and developers — who have verified funds, a defined buy-box, and the ability to close quickly. A strong buyer's list is what transforms a contract into a paycheck.
Before making an offer on a property, an experienced wholesaler runs the numbers against five buyers on their list who have recently purchased similar properties in that ZIP code, confirming demand before going under contract.
Cash Buyer
An investor or individual who can close a real estate transaction without financing, eliminating bank approval timelines. Cash buyers are the end purchasers in most wholesale deals because they can close in days rather than weeks.
A wholesaler assigns a contract with a 14-day close. A cash buyer on their list wires funds directly at closing, meeting the deadline that a financed buyer would have been unable to hit.
Cold Calling
An outbound lead generation strategy where a wholesaler calls property owners who have shown no prior interest in selling. Lists are typically sourced from absentee owner records, probate filings, tax-delinquent rolls, or skip trace results.
A wholesaler dials through a list of 200 absentee owners in a target ZIP code. Three owners express interest in selling, one of which becomes a signed contract.
Comparable Sales (Comps)
Recent sales of properties similar in size, condition, location, and features used to estimate the ARV of a subject property. Strong comps are within 0.5 miles, sold within 90 days, and match the subject within roughly 20% of square footage.
To value a 1,400 sq ft three-bedroom ranch, a wholesaler pulls three comps from the same subdivision that sold in the last 60 days after full renovation, averaging $145 per square foot to arrive at a $203,000 ARV.
Contingency
A condition written into a purchase contract that must be satisfied before the transaction can proceed to closing. Common contingencies include inspection periods, financing approval, and clear title. Failing to satisfy a contingency typically allows the buyer to exit without penalty.
A wholesaler adds a 7-day inspection contingency to their contract. During that window they walk the property with a contractor, confirm repair estimates, and decide whether to proceed or cancel.
Daisy Chain
A chain of multiple wholesalers who each assign the same contract to the next person for a markup, compounding the price before it reaches an actual end buyer. Daisy chains reduce deal quality and raise ethics concerns because each intermediary adds cost without adding value.
Wholesaler A locks a property at $70,000 and sells the contract to Wholesaler B for $80,000, who sells it to Wholesaler C for $90,000, who finally brings it to an end buyer at $100,000. The property's ARV would need to support all four parties — often it does not.
Distressed Property
A property experiencing physical deterioration, financial hardship (tax liens, pre-foreclosure), or both, which motivates the owner to sell below market value. Distressed properties are the primary acquisition target in wholesale real estate.
A landlord who has not collected rent in 18 months, owes back taxes, and cannot afford repairs is motivated to accept a below-market cash offer to exit the situation quickly — a textbook distressed seller scenario.
Double Close (Double Escrow)
A two-transaction closing structure where the wholesaler first purchases the property from the seller (the A-to-B leg), then immediately resells it to the end buyer (the B-to-C leg) on the same day or within a very short window. The wholesaler takes title momentarily, keeping the spread private.
A wholesaler negotiates $95,000 with a seller and has an end buyer at $120,000. Rather than revealing the $25,000 margin via an assignment, they execute two back-to-back closings, funding the A-to-B leg with transactional funding.
Driving for Dollars
A hands-on lead generation method where an investor physically drives target neighborhoods to identify vacant, boarded-up, or visibly neglected properties. The properties are then skip traced and the owners contacted directly.
A wholesaler spends two hours on a Saturday driving through a target ZIP code, logging 18 addresses of properties with overgrown lawns, boarded windows, or visible disrepair into a lead-tracking app.
Equitable Interest
The enforceable right to purchase a property that a buyer acquires the moment a signed purchase agreement is in place. Equitable interest is what a wholesaler possesses — and what they sell — before a deed ever changes hands.
Once a seller signs a purchase agreement, the wholesaler holds equitable interest. That interest is the asset being sold to the end buyer via an assignment of contract.
Earnest Money Deposit (EMD)
A good-faith deposit, typically held in escrow, paid by the buyer when a purchase contract is executed. It demonstrates serious intent to close and may be forfeited if the buyer walks away outside an allowable contingency.
A wholesaler submits a $500 EMD with a purchase contract. If the deal closes, the deposit is credited toward the purchase price. If the wholesaler backs out after the inspection period, the seller may retain the $500.
Gap Funding
Short-term private capital borrowed to cover the difference between a primary hard money loan and the total cost of an acquisition or renovation. In a wholesale context, it often refers to any bridge capital needed to facilitate a double close.
A fix-and-flip investor secures 70% LTV hard money but needs an additional $18,000 to complete the purchase. A private gap funder provides the remaining capital for a short-term, interest-only note.
JV (Joint Venture)
A co-wholesaling arrangement between two wholesalers who combine resources — typically one brings the deal and the other brings the buyer — and split the assignment fee at closing. Terms are usually spelled out in a simple joint venture agreement.
Wholesaler A has a locked contract but no buyer. Wholesaler B has a cash buyer ready for exactly that property type. They JV: Wholesaler B brings the buyer to close, and the $15,000 assignment fee is split equally.
Lead Generation
The systematic process of finding property owners who are motivated to sell. Methods include direct mail, cold calling, driving for dollars, pay-per-click advertising, skip tracing, and pulling data from public records such as probate, tax-delinquent, and pre-foreclosure lists.
A wholesaler runs a monthly direct-mail campaign to 500 absentee owners, generating on average four inbound calls and one signed contract per month.
Letter of Intent (LOI)
A non-binding written document outlining the key proposed terms of a deal — purchase price, earnest money, due diligence period, and closing timeline — before a formal purchase contract is drafted. LOIs are more common in commercial wholesale deals.
A wholesaler presents a seller with an LOI offering $210,000 for a small commercial building with a 21-day due diligence period. Once both parties agree on terms, the LOI is replaced by a binding purchase agreement.
Maximum Allowable Offer (MAO)
The highest price a wholesaler can pay for a property while still leaving sufficient profit margin for the end buyer (typically a fix-and-flip investor). The standard formula is: ARV × 0.70 − Estimated Repairs − Desired Assignment Fee.
ARV is $200,000. Estimated repairs are $30,000. Desired assignment fee is $10,000. MAO = ($200,000 × 0.70) − $30,000 − $10,000 = $100,000. The wholesaler should not offer more than $100,000.
Motivated Seller
A property owner who needs to sell quickly due to financial pressure, life circumstances, or property condition — and is therefore willing to accept a price below full market value in exchange for speed and certainty of close.
A homeowner facing foreclosure in 60 days, behind on property taxes, and unable to afford needed repairs is highly motivated. They may accept a cash offer at 65% of ARV to resolve their situation immediately.
MLS (Multiple Listing Service)
A shared database maintained by real estate boards that allows licensed agents and brokers to list and search properties for sale. Wholesalers use MLS data primarily for pulling comps to validate ARV, not for finding off-market deals.
A wholesaler without an agent license accesses MLS sales data through a licensed realtor partner or a data service to pull the last 90 days of sales in a target ZIP code and verify the ARV on a prospective deal.
Novation Agreement
A contract structure that substitutes the original seller-buyer relationship, making the wholesaler the new seller on the deal. Unlike an assignment, a novation allows the wholesaler to list, market, and sell the property on the open market — including on the MLS — collecting the full price spread at closing.
A wholesaler negotiates a novation with a distressed seller at $110,000. They relist the property on the MLS, find a retail buyer at $145,000, and net the $35,000 spread (minus agreed seller concessions) at closing.
Pre-foreclosure
The legal period between a lender filing a notice of default and the property going to auction or reverting to the bank. Homeowners in pre-foreclosure are often motivated sellers because a wholesale cash sale can protect their credit and allow them to avoid a public auction.
A wholesaler pulls a list of Notice of Default filings from the county recorder's office. One owner, 90 days behind on payments with an auction date set in 45 days, accepts a cash offer and closes in 18 days.
Proof of Funds (POF)
Documentation — typically a bank statement, line of credit letter, or transactional funding commitment letter — that demonstrates a buyer has the capital necessary to close a transaction. Many sellers and listing agents require POF before accepting an offer.
A wholesaler submits a cash offer on a listed property. The listing agent requests POF. The wholesaler's transactional lender provides a funding commitment letter for the full purchase amount, satisfying the requirement.
Skip Tracing
The process of locating current contact information — phone numbers, email addresses, mailing addresses — for property owners who are absent, unreachable through standard records, or who have moved away from their investment properties.
A wholesaler identifies 40 vacant properties while driving for dollars. They run the owner names through a skip trace service and recover phone numbers for 32 of them, which become their cold-call list.
Title Search
A review of public property records — deeds, mortgages, liens, judgments, and easements — to verify the chain of ownership and identify any encumbrances that could affect a buyer's ability to take clear title at closing.
A title company discovers an unpaid contractor lien from 2019 during the title search. The seller must satisfy the lien before the closing can proceed, or the buyer accepts the lien as a negotiated price reduction.
Transactional Funding
Ultra-short-term bridge capital — typically a one-day or same-day loan — used to fund the A-to-B leg of a double close. The lender is repaid immediately from the B-to-C proceeds. Fees are usually 1–2.5% of the transaction amount.
A wholesaler needs to purchase a property at $95,000 before reselling at $122,000. A transactional lender wires $95,000 in the morning for the A-to-B close; by afternoon the B-to-C close funds the payoff plus the lender's 1.5% fee.
Vacant Property
A property with no occupants — neither owner nor tenant. Vacant properties frequently have deferred maintenance, unpaid taxes, and absent owners who are difficult to reach but often highly motivated to sell once contacted.
A wholesaler skip traces the owner of a vacant single-family home, reaches them in another state, and learns they inherited the property two years ago and have no interest in managing it — a motivated seller scenario.