TL;DR
- Assignment clause must be explicit and clear — vague language kills deals
- Inspection/contingency period is your protection — do not waive it, use it
- Know when to assign vs double close (fee disclosure, title, relationship factors)
- Title company relationships matter — find ones who understand wholesale transactions
- Most contract failures come from vague assignment language or insufficient contingencies
Purchase Agreement Essentials
The Assignment Clause
This is the core of your wholesale contract. If it is vague or missing, you cannot assign the deal.
Clear assignment language (example concept): "Buyer may assign this Agreement and all rights hereunder to any third party without Seller consent. Upon assignment, Assignee shall assume all obligations of Buyer."
What makes assignment language work: - Explicit right to assign (not just implied) - No seller consent required (or clear process if required) - Transferable to "any party" (not restricted) - Obligations transfer to assignee
Red flags in contracts: - "Non-assignable" clauses - "Subject to seller approval" without defined process - Silent on assignment (courts may interpret against you)
Inspection/Due Diligence Period
Your contingency period is your protection. This is when you: - Verify property condition - Secure your buyer - Conduct title search - Walk away if deal does not work
Recommended period: 14-21 days minimum for wholesaling - Under 14 days: Rushed disposition, higher fallthrough risk - Over 30 days: Seller may become impatient, competitive disadvantage
What you can do during inspection: - Access property for inspection and buyer visits - Order title work - Market to buyers - Back out for any reason (in most inspection contingencies)
Earnest Money Considerations
EMD shows seller you are serious, but it is also your capital at risk.
Typical wholesaling EMD: - $500-2,000 for lower-priced properties - $2,000-5,000 for mid-range - 1-2% for higher-priced deals
EMD protection: - Goes to title company (not seller directly) - Refundable during contingency period - Clear return language if contingencies not met
When EMD becomes at risk: - Contingency period expires without extension - You waive contingencies - Buyer defaults after contingency removal
Title Contingencies
Contingency for clear and marketable title protects you from: - Unknown liens - Ownership disputes - Encumbrances that affect value - Title issues that prevent closing
Never waive title contingency. If title issues exist, you need the right to walk.
Assignment Agreement
What Transfers in Assignment
When you assign, you transfer your equitable interest — your right to purchase the property under the contract terms. You are NOT transferring the property itself (you do not own it yet).
Assignment agreement components: - Original purchase agreement reference - Assignment of rights from you (Assignor) to buyer (Assignee) - Assignment fee amount - Closing timeline - Assignee assumes all Buyer obligations
Fee Disclosure Requirements
Assignment fee disclosure varies by state. Some states require explicit disclosure to all parties. Others do not.
Conservative approach: - Disclose assignment fee to all parties - Transparent with seller about your role - Builds trust and reduces disputes
Know your state: - Some states require specific disclosures - Some have licensing requirements for wholesale volume - Real estate attorney consultation recommended
Double Close Situations
Sometimes assignment is not the right structure. Consider double close when:
Fee amount concerns: - Large spread might upset seller if disclosed - Buyer does not want seller seeing their purchase price
Title/lender issues: - Buyer lender will not fund assignment - Title company will not process assignment - Chain of title concerns
Relationship considerations: - Seller has emotional attachment - Ongoing relationship with seller (repeat business)
Double close process: 1. A-B transaction: Seller to you 2. B-C transaction: You to buyer 3. Happens same day (or close together) 4. Requires transactional funding OR buyer funds A-B
The Closing Process
Title Company Coordination
Find the right title company: - Understands wholesale/assignment transactions - Experienced with investor closings - Responsive communication - Reasonable fees
Not all title companies are wholesale-friendly. Some will not do assignments or double closes. Build relationships with 2-3 that do.
What title company handles: - Title search and insurance - Document preparation - Funds management (escrow) - Closing coordination - Recording
Funding Timeline
Standard closing timeline: 14-30 days from contract acceptance
Assignment closing: Can close as fast as title work completes (often 7-14 days)
Double close funding: - Traditional: You bring funds for A-B, receive funds from B-C - Transactional funding: Short-term loan covers A-B, repaid from B-C proceeds - Same-day close: B-C funds used for A-B (depends on title company and state)
Common Closing Delays
Title issues: - Liens discovered - Ownership disputes - Missing releases *Prevention:* Order title early, review preliminary report immediately
Buyer funding: - Lender delays - Proof of funds issues - Wire timing *Prevention:* Verify buyer funds early, set clear deadlines
Document issues: - Missing signatures - Wrong entity names - Amendment needed *Prevention:* Review all documents before closing day
Seller cold feet: - Seller reconsiders - Family pressure - Better offer arrives *Prevention:* Build rapport, close quickly, stay in communication