Real estate wholesaling glossary
The terms wholesalers, sellers, buyers and title companies use, each explained in a sentence or two. Where a term has a full answer page, the definition links to it.
- 70% rule
- A rule of thumb that an investor should pay no more than 70% of after-repair value minus repairs. The remaining 30% covers profit and costs; markets vary. Full answer
- Absentee owner
- An owner who does not live in the property, such as a landlord or an heir. Absentee owners are a common list for finding motivated sellers. Full answer
- Addendum
- A signed document added to an existing contract that changes or adds a term, such as a new closing date. Both parties must sign it. Full answer
- After-repair value (ARV)
- What a property should sell for once renovated to a typical market standard, estimated from recent sales of similar renovated homes nearby. Full answer
- And/or assigns
- Wording after the buyer’s name in a purchase agreement that signals the buyer may assign the contract to someone else. Whether it is enough depends on the contract and state. Full answer
- As-is value
- What a property is worth today in its current condition, before any repairs. The gap between as-is value and ARV, less repairs and costs, is the opportunity. Full answer
- Assignee
- The person or company that takes over a contract by assignment, usually the end buyer in a wholesale deal.
- Assignment
- Transferring your rights under a purchase agreement to another buyer. In wholesaling, the end buyer closes on the seller’s contract and pays the wholesaler a fee. Full answer
- Assignment agreement
- The contract between the wholesaler and the end buyer that transfers the purchase agreement and states the assignment fee and deposit.
- Assignment fee
- What the wholesaler earns for assigning the contract: the end buyer’s price minus the wholesaler’s contract price with the seller. Full answer Calculator
- Buy box
- A cash buyer’s criteria: the areas, price range, property types, repair level and strategy they buy. Matching deals to buy boxes is the core of disposition. Full answer
- Cash buyer
- An investor who can close without a traditional mortgage, using cash, private money or hard-money loans. Wholesalers sell their contracts to cash buyers. Full answer
- Closing
- The final step of a sale, where funds are paid out, documents are signed and the deed is recorded, usually through a title company or closing attorney. Full answer
- Closing statement
- The itemized record of every charge and credit at closing, including the price, payoffs, fees and, in an assignment, often the assignment fee.
- Comparable sales (comps)
- Recent sales of similar homes nearby, used to estimate a property’s value or ARV. Full answer
- Contingency
- A condition in a contract that must be met for the sale to go ahead, such as an inspection or financing contingency. It often gives the buyer a way out.
- Deal sheet
- A one-page summary of a wholesale deal sent to buyers: address, photos, price, ARV, repairs, comps and timeline, without the seller’s details or the fee. Full answer
- Deed
- The legal document that transfers ownership of real estate. It is signed by the seller and recorded with the county after closing.
- Disposition
- Selling the contract to an end buyer after it is signed: matching buyers, sending the deal, handling showings and getting a commitment to close. Full answer
- Double close
- Two back-to-back closings: the wholesaler buys from the seller, then sells to the end buyer, so the two prices stay separate. Full answer
- Driving for dollars
- Driving neighborhoods to note vacant or run-down properties, then finding and contacting the owners.
- Due diligence period
- Another name for the inspection period: the days after signing when the buyer can investigate the property and cancel with the deposit returned. Full answer
- Earnest money
- A good-faith deposit paid when the purchase agreement is signed, held by a title company or attorney and credited at closing or refunded under the contract’s terms. Full answer
- Electronic signature
- A signature made electronically, valid for most real estate contracts under the federal ESIGN Act and state UETA laws when the parties agree to sign that way. Full answer
- End buyer
- The buyer who actually closes on the property in a wholesale deal, usually a flipper or landlord.
- Equitable interest
- The right to buy a property that a buyer holds under a signed purchase agreement, before they own it. Several states regulate how wholesalers market an equitable interest. Rules by state
- Equity
- A property’s value minus everything owed on it. High-equity owners can accept a discounted price and still be paid off. Full answer
- Escrow
- Funds or documents held by a neutral third party, such as a title company, until the conditions of the sale are met.
- Fix and flip
- Buying a property, renovating it and selling it to a retail buyer. Flippers are the most common buyers of wholesale deals. Full answer
- Hard money loan
- A short-term loan from a private lender secured by the property, often used by flippers who buy from wholesalers.
- Inspection period
- A set number of days after signing when the buyer can inspect and cancel with the deposit returned. Wholesalers use it to find an end buyer. Full answer
- Lead-based paint disclosure
- The federal disclosure required for most sales of homes built before 1978, with the EPA pamphlet and a chance for the buyer to test. Full answer
- Lien
- A legal claim against a property for a debt, such as a mortgage, tax lien or contractor’s lien. Liens are paid off from the sale proceeds at closing.
- Maximum allowable offer (MAO)
- The most a wholesaler can offer the seller: ARV times the buyer’s percentage, minus repairs and the wholesaler’s fee. Full answer Calculator
- Memorandum of contract
- A short recorded notice that a purchase agreement exists. Some states restrict its use by wholesalers, so check before recording one.
- Motivated seller
- An owner who needs to sell quickly or simply, for example because of foreclosure, an inheritance, a tired landlord situation or major repairs. Full answer
- Novation
- A strategy where the seller keeps the home while the investor lists and sells it at a higher price, keeping the difference. Listing activity is often regulated. Full answer
- Pre-foreclosure
- The period after an owner falls behind on the mortgage and before a foreclosure sale. Several states have extra protections for these owners.
- Probate property
- Property going through a court process after the owner’s death. Heirs often want a simple sale, but the estate’s authority to sign must be confirmed.
- Proof of funds
- A bank statement or lender letter showing a buyer can pay. Ask cash buyers for it before you commit to a closing date.
- Purchase agreement
- The contract between buyer and seller setting the price, terms, deposit, deadlines and closing. A wholesale agreement must also allow assignment. Full answer
- Repair estimate
- The expected cost to bring a property to the condition its ARV assumes, including a contingency for surprises. Full answer
- Seller’s property disclosure
- A form where the seller states what they know about the home’s condition. Many states require a specific form. Full answer
- Short sale
- A sale for less than what is owed, which the lender must approve. Wholesale offers below the payoff usually need one.
- Skip tracing
- Finding current phone numbers and email addresses for property owners. Texting and calling the results must follow do-not-call and consent rules.
- Title commitment
- The title company’s report of who owns the property, what liens and restrictions exist, and what must happen before it will insure the title.
- Title company
- The company that checks title, holds deposits, prepares closing figures and records the deed. Some states use closing attorneys instead. Full answer
- Transactional funding
- A short-term loan, often for one day, that funds the wholesaler’s purchase in a double close until the end buyer’s money arrives. Full answer
- Wholesaler
- An investor who contracts to buy a property at a discount and sells that contract to an end buyer for a fee, without buying the property themselves. Full answer
- Wholesaling disclosure
- A written notice some states require that tells the seller the buyer intends to resell or assign the contract for a profit, often with cancellation rights. Rules by state