Wholesale Real Estate Contract: Purchase Agreement & Assignment Explained
If you're wholesaling real estate, you've heard people talk about "the contract." But there are actually two different documents you'll use — and mixing them up can cost you a deal or land you in legal trouble. This guide breaks down both the purchase agreement and the assignment contract in plain English so you know exactly what to sign and why.
Key takeaways
- A wholesale deal uses two contracts: a purchase agreement between you and the seller, and an assignment contract that transfers your rights to a buyer.
- The purchase agreement must include an assignment clause or be written as "and/or assigns" to allow you to assign the contract.
- The assignment fee is the difference between your contracted purchase price and the price you assign to the end buyer — that's your profit.
- Always have a local real estate attorney review your contracts; this guide is educational only and not legal advice.
- Common mistakes include signing without an assignment clause, using the wrong contract type, and failing to disclose your role properly.
What is a wholesale real estate contract?
A wholesale real estate contract is really two separate agreements working together. The first is a purchase agreement between you (the wholesaler) and the property seller. The second is an assignment agreement that transfers your rights under that purchase agreement to an end buyer.
In simple terms: you find a great deal, get it under contract with the seller, and then sell that contract to another investor who actually buys the property. You never take ownership yourself — you're selling the right to buy the property.
Tip: Think of it like a ticket. You buy a concert ticket at face value, then sell that ticket to someone else for a higher price. The ticket is your contract.
How does a wholesale real estate contract work?
You start by negotiating a purchase agreement with the seller. This contract says you agree to buy the property at a certain price, with certain terms, by a certain date. But here's the key: your contract must allow you to assign it to someone else.
Once you have the property under contract, you find an end buyer — another investor who wants to buy the property. You then sign an assignment agreement with that buyer, transferring all your rights and obligations under the original purchase agreement to them.
The end buyer pays you an assignment fee (your profit) and then closes on the property directly with the seller. You're out of the picture after the assignment.
Warning: Never try to close on a property yourself if you don't have the funds or intent to buy it. That's called "trading without a license" in some states and can get you in legal trouble.
What is a purchase agreement in wholesaling?
The purchase agreement is the contract between you and the property seller. It's the same type of contract any home buyer would use, but with one critical addition: it must allow assignment.
Key clauses in a purchase agreement for wholesalers
Assignment clause: This clause explicitly states that you have the right to assign the contract to another party. Without it, you cannot legally transfer your rights.
"And/or assigns" language: Many wholesalers add "and/or assigns" after their name in the buyer section. For example: "John Doe and/or assigns." This signals from the start that you may bring in another buyer.
Inspection period: This gives you time to find an end buyer before you're locked into the deal. Typical inspection periods are 7–14 days, but you can negotiate longer.
Financing contingency: Some wholesalers use a financing contingency to buy time, but this can scare off sellers. Many experienced wholesalers use an inspection contingency instead.
Closing date: This is the date by which the end buyer must close. Make sure it's realistic — you need enough time to find a buyer and for them to get financing.
Tip: Always use a standard real estate purchase agreement form approved in your state. Don't write your own contract from scratch unless you're a lawyer.
What is an assignment contract?
The assignment contract is the document that transfers your rights under the purchase agreement to the end buyer. It's a separate agreement between you (the assignor) and the end buyer (the assignee).
Key elements of an assignment contract
Parties: You and the end buyer. The original seller is not a party to this contract.
Assignment fee: This is the amount the end buyer pays you for the right to take over the contract. It's your profit.
Consideration: Legal term for what each party gets. You get the assignment fee; the buyer gets the right to purchase the property at your contracted price.
Representations and warranties: You typically represent that the purchase agreement is valid and that you haven't modified it. The buyer usually agrees to perform under the original contract.
Indemnification: The buyer agrees to hold you harmless if something goes wrong after the assignment.
Purchase agreement vs. assignment contract: what's the difference?
| Aspect | Purchase Agreement | Assignment Contract |
|---|---|---|
| Parties | You (buyer) and seller | You (assignor) and end buyer (assignee) |
| Purpose | Get the property under contract | Transfer your rights to another buyer |
| Profit mechanism | Not directly — you pay the seller | You receive an assignment fee from the buyer |
| Obligations | You must perform or assign | After assignment, the buyer performs |
| Disclosure | Seller knows you're the buyer | End buyer knows they're taking over your contract |
How to assign a wholesale real estate contract step by step
Find a deal and negotiate a purchase agreement with the seller. Make sure the contract includes an assignment clause or "and/or assigns" language.
Get the contract signed by both you and the seller. You now have the property under contract.
Market the deal to your buyer list. Use your network, social media, or a wholesale platform to find an end buyer.
Once you have a buyer, sign an assignment agreement with them. The agreement should state the assignment fee and that the buyer agrees to the terms of the original purchase agreement.
Provide the end buyer with a copy of the original purchase agreement (you can redact the purchase price if you want, but many wholesalers disclose it).
The end buyer closes with the seller directly. You receive your assignment fee at closing, usually from escrow.
Tip: Use a reputable title company or closing attorney who understands wholesale transactions. Some title companies won't handle assignments, so ask upfront.
Common mistakes wholesalers make with contracts
No assignment clause: You sign a standard purchase agreement without an assignment clause. Later, you try to assign it and the seller refuses. Always confirm the contract allows assignment.
Using the wrong contract type: Some wholesalers try to use an option contract instead of a purchase agreement. Option contracts give you the right to buy but don't obligate you. They work differently and may not be accepted by all sellers or title companies.
Not disclosing your role: In some states, you must disclose that you are a principal (buying for yourself) or an agent. Failing to do so can be considered fraud.
Signing without contingencies: If you don't have an inspection or due diligence period, you're locked in immediately. You need time to find a buyer.
Ignoring state laws: Real estate contract laws vary by state. What works in Florida may not work in California. Always consult a local attorney.
Warning: Never sign a contract that says "non-assignable" unless you plan to buy the property yourself. You cannot assign a non-assignable contract.
How to protect yourself with wholesale contracts
Use a real estate attorney. Spend a few hundred dollars to have an attorney review your contract templates. It's cheap insurance against costly mistakes.
Get everything in writing. Verbal agreements are nearly impossible to enforce. Always use written contracts for both the purchase agreement and the assignment.
Keep clean records. Save signed copies of all contracts, amendments, and correspondence. You may need them if a dispute arises.
Understand your state's licensing laws. Some states require a real estate license to wholesale. Others allow it without a license as long as you don't market yourself as a real estate agent.
Use a double-close if needed. In a double close, you actually buy the property and then immediately resell it to the end buyer. This requires more money but can solve title company issues and keep your profit confidential.
Recommended tools / next steps
Now that you understand the contracts, the next step is to get your hands on the right forms. Check out our directory of wholesale contract templates and software that can help you generate state-specific agreements. If you're just starting, find a local real estate attorney who specializes in wholesaling and have them review your first few deals.
Ready to find the right tools? Browse our list of the best wholesale real estate software to manage your contracts, leads, and deals from one place.
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Frequently Asked Questions
What is the difference between a purchase agreement and an assignment contract in wholesaling?
A purchase agreement is between you and the seller to buy the property. An assignment contract is between you and an end buyer, transferring your rights under the purchase agreement to them.
Do I need a real estate license to assign a wholesale contract?
It depends on your state. Some states allow wholesaling without a license as long as you don't act as a real estate agent. Others require a license. Always check your state's laws and consult an attorney.
What happens if my purchase agreement doesn't have an assignment clause?
Without an assignment clause, you cannot legally transfer the contract to another buyer. You would need to either buy the property yourself or renegotiate with the seller to add an assignment clause.
How is the assignment fee paid?
The assignment fee is typically paid at closing through escrow. The end buyer's funds are used to pay the seller the original purchase price, and the remaining amount (your fee) is paid to you.
Can I assign a contract if the seller doesn't know I'm wholesaling?
Yes, as long as your contract allows assignment. You don't have to disclose your intent to assign, but some states require disclosure. It's best to be transparent to avoid legal issues.
What is a double close and when should I use it?
A double close is when you actually buy the property and then immediately resell it to the end buyer. Use it if the title company won't handle assignments, or if you want to keep your profit confidential.