The two contracts every wholesaler needs — what every clause means, how to fill them out, how to protect yourself, and exactly how you get paid at closing.
📖 4 Lessons
🎬 2 Videos
🧠 5 Knowledge Check Questions
📚 Primary Sources: Merrill + RealEstateSkills
Lesson 1 of 4
The two contracts you need — purchase agreement and assignment contract
Every wholesale deal requires exactly two contracts. The first is the Purchase and Sale Agreement (PSA) — a legally binding agreement between you and the seller that obligates the seller to sell the property to you at a specific price on specific terms. Without this contract, the seller can sell to anyone else at any time. The PSA is what gives you control of the deal.
The second is the Assignment Contract — a one-page document between you and your cash buyer that transfers your interest in the Purchase and Sale Agreement to them for your wholesale fee. This is how you get paid. You never own the property. You own a contract — and you sell that contract to your buyer.
On-market deals: the agent writes it. Off-market: you write it.
Contract 2
Assignment Contract
Between you (assignor) and your cash buyer (assignee)
Transfers your interest in the PSA to the buyer
States your assignment fee — this is your profit
Requires non-refundable deposit from buyer
Seller is NOT a party to this contract
Sent to title company along with the original PSA
Title company handles the closing — you do not attend
Ryan Zodi of RealEstateSkills.com — who has wholesaled in over a dozen states — makes a critical point about the PSA: getting your offer accepted by a seller is often the single most important element in closing a wholesale deal. Most wholesalers focus on price and terms, but your ability to understand and articulate the contract confidently to a seller is what separates professionals who close deals from amateurs who tie up properties and disappear. Know every clause. Explain it simply. The seller's trust in you depends on it.
💡 Where to Get Wholesale Contracts
RealEstateSkills.com offers free wholesale contract downloads at realestateskills.com/contracts — both the PSA and assignment contract are included, pre-written with wholesaler-friendly language including the inspection contingency, the "and/or assigns" clause, the liquidated damages clause, and the marketing rights clause. Always have a local real estate attorney review any contract before using it in your state — contract requirements vary by jurisdiction.
Lesson 2 of 4
The Purchase and Sale Agreement — every clause that matters for wholesalers
The PSA has many sections — most of which are standard boilerplate that applies to any real estate transaction. What matters to wholesalers specifically are the clauses that protect your position, enable the assignment, and give you flexibility to exit if needed. Here are the sections you must understand cold before you ever present a contract to a seller.
1
Parties — Seller and Buyer
The seller section must list every person who has an ownership interest in the property. If a married couple owns the house, both names must appear — and both must sign. A contract missing a required signature is void. Before writing the contract, look up the property on the county assessor's website to confirm exactly who holds title. As the buyer, list your name or your LLC — and include "and/or assigns" immediately after your name. This is the language that enables assignment.
2
Property Description
Include the full street address, city, county, state, and zip code. Also include the Assessor's Parcel Number (APN) — the unique tax ID the county assigns to every property. This is easy to find on the county tax website or on Redfin. Including the APN eliminates any ambiguity about which property the contract covers.
3
Purchase Price & Earnest Money Deposit
The purchase price is the contracted amount you agreed to with the seller. The EMD — earnest money deposit — is your good-faith deposit, held by the title company (never given directly to the seller). For off-market deals: $500–$2,500 is standard. For MLS deals: approximately 1% of purchase price. The EMD goes to an escrow account, not the seller's pocket — and it is refundable if you terminate within your inspection contingency period. Write "cash offer" on the financing line to signal no financing contingency.
4
Inspection Contingency — Your Most Important Protection
The inspection contingency gives you the right to terminate the contract during the inspection period for any reason and receive your EMD back in full. As a wholesaler, this is your backout clause and your assignment window. During the inspection period, you bring your cash buyers through the property, get their feedback, execute the assignment contract, and lock in your fee. If you cannot find a buyer before the inspection period expires, you terminate under this clause — no penalty, EMD refunded. Always get at least 7 days. On off-market deals, push for 10–14 days. Never waive this clause — without it, you are contractually obligated to close regardless of what happens.
5
Closing Date
Standard wholesale closing date: 14 days from contract execution. This is your competitive advantage over financed buyers who need 30–45 days. Specify your preferred title company or write "buyer's choice" — which gives you flexibility to use whichever title company your cash buyer prefers to work with.
6
Buyer Default — Liquidated Damages Clause
This clause limits your financial liability if you default on the contract. With a liquidated damages clause, the seller's only remedy if you fail to close (outside your contingency windows) is to keep your earnest money deposit. Without this clause, the seller could potentially pursue legal action with no ceiling on damages. Always confirm this clause is present in your contract — it is what makes wholesaling financially manageable even when deals fall apart outside the contingency period.
7
Title Contingency
The seller must deliver clear and marketable title at closing — meaning no outstanding liens, unpaid taxes, or encumbrances. If the title search reveals problems the seller cannot resolve, you have the right to terminate and receive your EMD back. When working with distressed sellers, title issues are common — back taxes, mechanic's liens, and unresolved ownership disputes appear regularly. The title company's search protects you.
8
Marketing Rights Clause
This clause — often paragraph 25 in the RealEstateSkills contract — states that the seller acknowledges the buyer has the right to market the property and/or their contractual interest before closing. This is critical because it legally enables you to advertise the deal to your buyers list and find a cash buyer while the contract is active. Without this clause, marketing the deal while under contract could create a dispute with the seller.
⚠️ Contracts Vary by State — Always Get Legal Review
Real estate contract law varies significantly from state to state. What is standard language in Texas may not be enforceable in New York. Assignment restrictions, disclosure requirements, inspection contingency wording, and closing customs are all locally specific. Before using any contract template — even a well-designed wholesaler-friendly one — have a local real estate attorney review it for your specific state. This is not optional. A contract that is not enforceable in your jurisdiction protects nobody.
Lesson 3 of 4
The Assignment Contract — how you transfer your position and collect your fee
Once you have a committed cash buyer, the assignment contract is what formalizes the transfer of your interest in the purchase agreement and specifies your wholesale fee. It is a one-page document — straightforward by design. Here is what it covers and why each element matters.
The Assignment Contract — What It Must Include
The parties: You are the assignor. Your cash buyer is the assignee. The seller does NOT appear on this contract — this is strictly between you and your buyer.
The original contract reference: Identify the purchase agreement by property address and effective date. Attach a copy of the PSA for the buyer to review — they are agreeing to take over all of its terms.
The assignment fee: This is your wholesale profit. State the exact dollar amount — $10,000, $15,000, $25,000. This fee is paid at closing through the title company and appears on the HUD-1 settlement statement. Getting paid through escrow creates a paper trail that demonstrates you are doing deals — valuable when working with future lenders or partners.
Non-refundable deposit from buyer: Require your cash buyer to put up a non-refundable deposit — typically $2,500–$5,000 — when they sign the assignment contract. This deposit is a credit toward the full assignment fee, and it is forfeit if they fail to close. It confirms their commitment and protects you if they walk away. If the seller fails to perform and cannot deliver clear title, the deposit is refunded.
The closing date: Matches the closing date in the original PSA. The buyer commits to closing by this date — if they miss it, you retain the right to reassign the contract to another buyer or pursue damages.
The complete assignment process — from signed PSA to payday
1
Execute PSA with seller
Get the purchase agreement signed by all parties. Confirm the "and/or assigns" language is present. Collect the seller's signatures on every page where initials are required.
2
Open escrow with title company
Send the executed PSA to a wholesaler-friendly title company immediately. They begin the title search. Submit your EMD to the escrow account within the timeframe specified in the contract (typically 72 hours).
3
Market the deal and find your buyer
During the inspection period, bring your cash buyers through the property. Send the deal details — address, price, ARV comps, repair estimate, photos — to your buyers list. Get your highest and best offer from a committed buyer.
4
Execute assignment contract with buyer
Send the assignment contract to your buyer for signature. Collect the non-refundable deposit simultaneously — the assignment is not effective until both the signature and the deposit are received. Do not hand over the deal without the deposit.
5
Send both contracts to title
Send the executed assignment contract to the title company along with your buyer's contact information. The title company now has both the original PSA (seller to you) and the assignment (you to buyer). They handle everything from here.
6
Closing day — collect your fee
Title closes with the seller and your cash buyer. Ownership transfers directly from seller to buyer — you never appear on the deed. Your assignment fee is wired to you from the title company. You do not need to attend closing. Jerry Norton has not attended a closing in years.
🎬 Watch: Wholesale Contracts Explained
Ryan Zodi · RealEstateSkills.com · August 2024 · Complete line-by-line walkthrough of both the purchase agreement and assignment contract — with free download links
2024 Wholesale Contracts Walkthrough · Simple one-page PSA and assignment contract filled out live with a real example deal
Lesson 4 of 4
Double closing — when assignment is not possible and what to do instead
🧑💼 Employee Path
Acquisition professionals and transaction coordinators at investment companies deal with contracts every single day. Your fluency with the PSA, the assignment contract, and the closing process is a core job competency — not just background knowledge. Understanding every clause in both contracts makes you a more effective advocate for deals you bring in, a better communicator with title companies and attorneys, and a more valuable team member across the entire transaction lifecycle.
🏢 Entrepreneur Path
As a wholesaling entrepreneur, the contract is the asset. The moment the seller signs your purchase agreement, you control something valuable — and everything after that is execution. Knowing how to present a contract confidently, explain every clause simply, and answer a seller's questions without hesitation is a real competitive advantage. Sellers sign with people they trust. Your contract knowledge is part of what builds that trust.
When assignment is not possible
Assignment is the standard approach — used in approximately 99% of wholesale transactions. But occasionally, assignment is blocked. The seller objects to the assignment. The contract has a no-assignment clause. The buyer does not want the seller to know the price difference. In these situations, the double close is the alternative.
In a double close, two separate transactions happen in sequence — sometimes on the same day, sometimes within the same escrow. Transaction A: you close on the property from the seller using transactional funds — short-term lending provided for 24–72 hours specifically for this purpose. Transaction B: you immediately sell the property to your cash buyer at the higher price. The proceeds from Transaction B repay the transactional lender and cover two sets of closing costs, with your wholesale spread left over.
Alex Martinez recommends assignment for 99% of deals — the double close involves more steps, more cost (transactional lending fees, two closing cost sets), and more complexity. Use it when assignment is genuinely not possible, not as a default strategy.
Protecting your deal — the affidavit of memorandum
One protection many new wholesalers overlook: once your PSA is signed, you can record an Affidavit of Memorandum of Agreement with the county. This document clouds the title — it shows up in any title search and prevents the seller from selling the property to someone else while you are under contract. If you have reason to believe a seller might try to go around you, or if the deal is high-value enough to justify the extra step, recording this document is inexpensive insurance.
💡 The Non-Disclosure / Non-Compete Agreement
When you share deal details — including the property address — with a potential cash buyer, you are trusting them not to contact the seller directly and cut you out of the deal. Most buyers are honest. A small number are not. For high-value deals or new buyer relationships, have the buyer sign a Non-Disclosure / Non-Compete Agreement (NDNCA) before sharing the seller's contact information. This agreement prevents the buyer from approaching the seller directly and ensures your position in the deal is legally protected. Jerry Norton includes this in his free contract package specifically for this purpose.
D
Here is what separates wholesalers who close deals from wholesalers who just make offers: when a seller asks you to explain a clause in your contract, you can answer clearly and confidently. That moment — where you know your contract better than the seller does, and you explain it simply and honestly — is where deals are won. Sellers do not sign with the person who has the highest offer. They sign with the person they trust. Your contract knowledge is trust-building in the most practical sense possible. Read both contracts until you could explain any section from memory.
Your Darco Mentor · Module 5 Complete
📌 Module 5 Key Takeaways
Every wholesale deal needs two contracts: the Purchase and Sale Agreement (PSA) between you and the seller, and the Assignment Contract between you and your cash buyer. The PSA gives you control of the deal. The assignment contract transfers that control to your buyer for your wholesale fee.
The "and/or assigns" language in the PSA is what legally enables assignment. It must appear next to your name as the buyer. Without it, assigning the contract can be challenged. Include it on every deal, every time.
The inspection contingency is your most important protection — it gives you the right to terminate for any reason during the inspection period and receive your EMD back in full. As a wholesaler, this period is your assignment window. Never waive it. Always get at least 7 days.
The liquidated damages clause limits your default liability to the earnest money deposit only. Without it, a seller could pursue uncapped legal damages if you fail to close outside your contingency windows. Confirm this clause is in every PSA you sign.
The assignment contract must include: your assignment fee (stated in dollars), a non-refundable deposit from the buyer (typically $2,500–$5,000), the closing date, and a clause holding you harmless for any issues the buyer inherits. The assignment is not effective until both the signature and the deposit are received.
The complete process: PSA signed → title company opens escrow → inspection period → cash buyers walk property → assignment contract signed + deposit collected → both contracts sent to title → closing day → fee wired to you. You do not attend closing.
Double closing is the alternative when assignment is blocked — two sequential transactions using transactional funds. It is more expensive and complex than assignment. Use it only when necessary, not as a default.
🧠 Knowledge Check
5 questions — click your answer, then check all at once.
1. You put a property under contract at $150,000 with an inspection contingency of 10 days. On day 8, your best cash buyer tells you they cannot close because they ran out of capital. You have not found another buyer. What are your options — and which protects you completely?
A
You must close on the property yourself since the inspection contingency only protects you if a physical defect is found during an inspection — not for buyer-side financing issues.
B
You can terminate the contract under your inspection contingency — you are still within the 10-day window, which gives you the right to exit for any reason. Notify the seller in writing before day 10 that you are terminating. Your EMD is refunded in full. You walk away with no penalty. The inspection contingency does not require you to cite a specific defect — "does not pass personal inspection" is sufficient.
C
You can extend the inspection period by notifying the seller verbally — this gives you more time to find another buyer without risking your deposit.
D
You forfeit your EMD but are otherwise released from the contract — the liquidated damages clause caps your loss at the deposit amount regardless of whether you are within the contingency period.
2. You are about to sign a purchase agreement as the buyer. Your name is written as "John Smith." What critical language must appear immediately after your name — and what happens if it is missing?
A
"as trustee" — this language protects your personal assets by indicating you are acting as a trustee rather than an individual buyer.
B
"and/or assigns" — this language explicitly reserves your right to assign the contract to a third party (your cash buyer). Without it, while contracts are technically assignable by default, the seller or their agent may challenge the assignment, and the transaction can become unnecessarily complicated. Including it makes the assignment clean, unambiguous, and professionally standard.
C
"LLC" — all wholesale purchases must be made through a business entity to be legally assignable, so the buyer name must reflect a business rather than an individual.
D
"contingent upon financing" — this language gives you the right to exit the contract if you cannot secure funding, which is essential protection for a wholesaler who may not have personal capital to close.
3. Your assignment contract states a $12,000 assignment fee and requires a $3,000 non-refundable deposit from the buyer. The buyer signs and sends the $3,000 deposit. Three days before closing, the buyer backs out. What do you keep — and what are your remaining options?
A
You must refund the $3,000 deposit because the buyer's failure to close terminates the assignment contract and all obligations under it, including the deposit requirement.
B
You keep the $3,000 non-refundable deposit — the buyer forfeits it by failing to close. You then have the right to reassign the contract to another cash buyer, purchase the property yourself, or terminate under any remaining contingencies. The $3,000 is yours regardless of what happens next. This is exactly why the non-refundable deposit exists — to financially commit the buyer and compensate you if they walk away.
C
You keep the $3,000 but you are now legally obligated to close on the property yourself since you can no longer assign the contract after the original buyer backed out.
D
The $3,000 deposit goes to the seller as compensation for the deal falling through — your assignment contract created a liability to the seller that the deposit offsets.
4. A seller asks you to explain what the "liquidated damages" clause in the purchase agreement means and why it is there. What is the accurate, honest explanation?
A
Liquidated damages means the seller is pre-agreeing to a specific penalty amount if they decide not to sell after signing — it protects the buyer if the seller backs out of the deal.
B
Liquidated damages means that if the buyer (you) fails to close on the contract outside of a contingency, the seller's financial remedy is limited to keeping the earnest money deposit. In exchange, both parties are released from further liability. For the seller, it provides certainty — they know exactly what compensation they receive if the deal falls through. For the buyer, it caps downside risk — you cannot be pursued for unlimited damages just because a deal did not close.
C
Liquidated damages means the property has been appraised and the damages from any physical defects discovered during inspection have been pre-calculated and agreed upon by both parties before closing.
D
Liquidated damages is a legal formality required by most states that has no practical effect on either party — it is standard boilerplate that can safely be ignored during contract negotiations.
5. Why does ownership transfer directly from the seller to the cash buyer in an assignment transaction — rather than passing through the wholesaler — and why does this matter financially?
A
Ownership passes through the wholesaler briefly but is immediately transferred to the buyer — the transfer happens so quickly it does not appear on the public record.
B
In an assignment, the wholesaler never takes title — they transfer their right to purchase (their contractual position) to the cash buyer, so the deed transfers directly from seller to buyer. This matters enormously: the wholesaler never owns the property, so they never have closing costs as a buyer, never pay transfer taxes as a seller, never need to carry insurance, and never face the FHA seasoning restrictions that apply to properties resold within 90 days of purchase. The wholesale fee appears as a line item on the HUD settlement statement — not as a property sale.
C
Direct title transfer is a legal requirement in all states — wholesalers are legally prohibited from taking title to properties they intend to resell within 90 days due to anti-flipping regulations.
D
The title passes directly to save time — requiring the wholesaler to take title would add an extra week to the closing process, which motivated sellers are not willing to accept.
📚 The books behind this module
The Real Estate Wholesaling Bible
Than Merrill — FortuneBuilders
Chapter 16 covers purchase and sale agreements in detail — what to include, how to structure contingencies, and what makes a contract wholesaler-friendly. Chapter 26 covers assignment of contract mechanics, and Chapter 27 covers double closing for situations where assignment is blocked.
Colin Andrews Egbert & Matthew Leitz — RealEstateInvestor.com
Covers the three closing methods (assignment, simultaneous/double close, retail), assignment contract mechanics including the "and/or assigns" language, how to protect your leads from buyers who might try to cut you out, and the NDNCA agreement for buyer protection.
Section 4 and 5 cover the purchase contract and assignment process with real dollar examples and the exact sequence from signed PSA through closing day. Written specifically for beginners who need the process explained simply before adding complexity.
⏭️ What's Next — Module 6: Building Your Buyers List & Closing Deals
You know how to find deals, analyze them, talk to sellers, and lock them up on paper. The final piece is building the buyers list that turns every contract into a closed deal. Module 6 covers how to find serious cash buyers, what questions to ask them, how to present deals professionally, and how to build the long-term buyer relationships that make wholesaling a consistent, scalable income — not a one-time transaction.