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February 17, 2026

What Is a Real Estate Wholesaler | The Borges Real Estate Team

What Is a Real Estate Wholesaler?

A real estate wholesaler is a middleman who contracts to buy your property at a steep discount—typically 60-70% of value—then sells that contract to an actual investor for profit, without ever purchasing your home. Wholesalers pocket "assignment fees" of $5,000-$40,000 by flipping your contract. They're behind most "We Buy Houses Cash" signs.

Drive through any Los Angeles neighborhood—Pasadena, Highland Park, the Valley—and you'll see them: handwritten "bandit signs" on telephone poles (those handwritten "We Buy Houses" signs you see everywhere) promising "We Buy Houses Cash!" Your mailbox is probably full of postcards making the same claim. Texts from unknown numbers. Voicemails from "investors" who just want to help.

But here's what most homeowners don't realize: many of these "buyers" have no intention of purchasing your home. They don't have hundreds of thousands of dollars sitting in the bank. They're not investors renovating properties.

They're wholesalers—middlemen who make money by getting your home under contract, then selling that contract to someone else. If you're being contacted by someone claiming to buy houses for cash, call (213) 444-2225 before signing anything—we'll help you verify whether they're legitimate.

How Wholesaling Actually Works

Step 1: Finding Motivated Sellers

Wholesalers identify homeowners who might accept below-market offers. They specifically target:

People in bad financial situations—when they see liens, debt, or distress signals
Long-term owners embarrassed about condition—sellers who underestimate their home's worth
Probate and trust sales—heirs are overwhelmed and don't want to prep the property
Vacant properties—often a sign of motivated sellers who've already moved

Step 2: Making the Lowball Offer

Their first offer is what I call their "home run" offer—typically 60-65% of the after-repair value. They're hoping you'll accept without pushback.

They're willing to come up from there, but only if you negotiate. Most homeowners don't, because they don't know the numbers.

Step 3: Getting the Contract

If you accept, the wholesaler gets your property "under contract." Critically, their contract includes "and/or assigns" language—the legal right to transfer the contract to another party.

Step 4: Finding an End Buyer

Now the clock is ticking. The wholesaler needs to find an actual investor willing to pay more than their contract price before closing. They market through investor networks: "I've got a deal in Altadena—$550,000, ARV $800,000, needs $60K in work. Who wants it?"

Step 5: Assigning the Contract

If they find an interested investor—say, one willing to pay $580,000—the wholesaler "assigns" their contract. They collect the difference: $580,000 – $550,000 = $30,000 assignment fee.

They never owned the property. Never used their own money. Never took title. They simply flipped a piece of paper.

Step 6: Closing (Maybe)

If the wholesaler can't find a buyer? The deal falls apart—usually at the worst possible moment for you.

How Wholesalers Make Money (From Your Equity)

Element	Amount
After-Repair Value	$900,000
Wholesaler's offer to you	$540,000 (60% ARV)
Investor pays wholesaler	$580,000
Wholesaler's profit	$40,000

That $40,000 comes directly from your equity. It's money that could have gone to you.

Why Deals Fall Apart

The wholesaling market has exploded with inexperienced operators. There are people as young as 17 running full wholesaling operations now. They're very well trained in having conversations with homeowners. They know how to build rapport.

But where many fall short is in their ability to properly value the property.

When they miscalculate value, that's when deals fall apart. They can't find an investor willing to pay enough, and they either cancel, ask for a price reduction, or string you along for months.

We have clients who come to us after a 2-4 month disaster—sometimes 6 months—of escrow with a wholesaler who couldn't perform.

Already dealing with someone who keeps extending escrow? We help sellers exit bad contracts and find better alternatives. Call (213) 444-2225.

Wholesalers vs. Legitimate Cash Buyers

Factor	Wholesaler	Legitimate Investor
Proof of funds	Can't provide	Shows bank statements immediately
Contract language	"And/or assigns"	Their name/company only
Earnest money	$1,000 or 1%	3% non-contingent
Closing timeline	30-60+ days	7-14 days
Track record	No completed purchases	Portfolio of bought properties
Decision-making	Needs "partners" to view	Makes own decision

How to Protect Yourself

Ask: "Are you the one buying my house, or are you assigning this contract?" Honest wholesalers will admit they're assigning. Many will deflect.

Demand proof of funds immediately. Say: "I need a bank statement or proof of funds letter within 24 hours, or we're not moving forward." Real buyers have funds. Wholesalers don't.

Check for "and/or assigns" in any contract. This language means they plan to flip your contract.

Require 3% earnest money deposited within 48 hours. Real buyers put real money at risk.

Expect a 7-14 day closing. Anyone needing 30-60 days to pay cash isn't actually paying cash.

If you're unsure about someone who's contacted you, we can help verify them—free of charge.

Wondering If Your "Cash Buyer" Is Actually a Wholesaler?

Send us the offer or contract. We'll tell you exactly what we see—and whether you're dealing with someone who can actually close.

Free contract review
Honest assessment—no games
Alternative options if needed

📞 (213) 444-2225 · ✉️ [email protected]

Frequently Asked Questions

How do wholesalers find properties?

They target people in financial distress, long-term owners who underestimate their home's value, probate and trust sales, and vacant properties. Methods include signs, postcards, cold calls, texts, and driving neighborhoods.

How much do wholesalers make per deal?

Assignment fees typically range from $5,000 to $30,000, but can exceed $40,000-$50,000 on expensive Los Angeles properties.

Why would anyone sell to a wholesaler?

Some sellers prioritize speed and convenience over price. Others don't realize they're leaving money on the table. And some are misled about who's actually buying.

Can I sell directly to investors instead of through a wholesaler?

Yes. Working with an agent who has relationships with legitimate cash buyers cuts out the wholesaler middleman, potentially adding that $10,000-$40,000 assignment fee back into your proceeds.

Are "We Buy Houses" companies all wholesalers?

Not all, but many are. Some are legitimate investment companies that actually purchase properties. The verification process reveals which is which.

About the Author

Justin Borges leads The Borges Real Estate Team at eXp Realty, with over a decade of experience working with professional flippers and investors throughout Los Angeles. Having started his career working with hedge fund-backed flippers, Justin understands exactly how legitimate investors operate—and how to distinguish them from wholesalers. Based in Pasadena, the team serves all of LA County.

Contact: (213) 444-2225 · [email protected]

This article provides general information about real estate transactions. Consult with qualified professionals for advice specific to your circumstances.