Wholesaling Real Estate Agreement

Wholesaling Real Estate Agreement

A Wholesaling Real Estate Agreement is a legally binding contract between a wholesaler and a property owner that outlines the terms under which the wholesaler can purchase a property and then assign or sell that contract to an end buyer, often for a profit. This type of agreement allows the wholesaler to secure the right to purchase a property without actually needing to buy it outright.

The agreement typically includes several key components:

1. Property Details: The address, legal description, and other pertinent information about the property being sold.

2. Purchase Price: The agreed-upon amount the wholesaler will pay the property owner for the rights to purchase the property.

3. Assignment Clause: A provision that allows the wholesaler to assign their rights under the contract to another buyer, usually specifying any conditions or fees associated with this assignment.

4. Closing Date: The date by which the transaction must be completed, which is often negotiated to give the wholesaler time to find a buyer.

5. Earnest Money Deposit: A small amount of money that the wholesaler may put down to demonstrate their serious intent to complete the transaction, often refundable if the deal does not go through.

6. Contingencies: Conditions that must be met for the contract to remain valid, such as inspections, financing, or other specific conditions favorable to the wholesaler.

For example, if a wholesaler finds a distressed property owner who agrees to sell their home for $100,000, the wholesaler may enter into a Wholesaling Real Estate Agreement with the owner. The wholesaler then markets the property to potential buyers for $120,000. If they find a buyer willing to purchase it, they can assign the contract to that buyer, potentially earning a profit of $20,000 without ever owning the property themselves.