A wholesale deal closes one of two ways. As the buyer, you should know which before you sign anything.
Assignment
The wholesaler signs an assignment of contract that hands their contract with the owner to you. You close with the owner, at the original contract price, and the wholesaler's fee is paid at the same closing. There is one closing and one set of closing costs.
- Simple and usually cheaper.
- The wholesaler's fee shows on the settlement statement.
- It only works if the owner's contract allows assignment, and some lenders will not lend on an assigned contract.
Double close
The wholesaler buys the house from the owner and sells it to you, usually the same day, as two separate closings. The wholesaler may use short-term transactional funding for their purchase.
- Two sets of closing costs, which the wholesaler usually covers and prices into the deal.
- Their fee is not on your settlement statement.
- Useful when the contract cannot be assigned or when your lender wants the seller to be the owner of record.
What to ask
- Which way does this one close?
- Which title company or closing attorney is handling it?
- Is the owner's contract assignable, and can I see it?
- If I am using a lender, have they approved closing this way?
Some states now regulate wholesaling, with licensing or disclosure rules. The wholesaler is responsible for following theirs; it is still worth a question, and a real estate attorney can tell you what applies where you buy. This guide is general education, not legal advice.