Wholesaling serves as the entry point for many real estate investors across markets like Chicago, Atlanta, and Miami.
You find a distressed property, secure a contract at a deep discount, and then connect that property with a cash buyer who wants a project.
The big question every wholesaler faces once they have a deal under contract is how to actually get paid.
You generally have two paths to choose from: the Assignment of Contract or the Double Closing.
Choosing the right exit strategy impacts your profit transparency, your closing costs, and your legal standing in different states like Illinois or Florida.
Let's dive into this course-style breakdown to see which strategy fits your next deal.
The Assignment of Contract: Speed and Simplicity
Assignment of Contract A legal maneuver where the original buyer (the wholesaler) transfers their rights and obligations within a purchase agreement to a new buyer (the end investor) for a fee. This allows you to "sell" the deal without ever actually owning the property or using your own capital.
Jump in and look at how this works in a real-world scenario.
When you use an assignment, you are not selling a house; you are selling a piece of paper.
You sign a contract with a seller in a market like Birmingham or Little Rock, and then you sign an Assignment Agreement with your cash buyer.
Your cash buyer pays an Assignment Fee directly to you at the closing table.
Explore the benefits of this strategy if you are just starting out with limited funds.
It requires the least amount of capital because you do not have to "fund" the purchase of the house yourself.
Access more details on how the closing works by visiting the Home Loans Network loan process page.
Why Wholesalers Love Assignments
- Minimal Capital: You usually only need a small Earnest Money Deposit (EMD).
- Low Risk: You never take title to the property, so you avoid many liabilities.
- Speed: These deals close quickly because there is only one transaction at the title company.
However, there is a catch: transparency.
The seller and the buyer both see exactly how much money you are making on the HUD-1 settlement statement.
If your assignment fee is $40,000 on a $100,000 house, the seller might feel cheated and try to back out of the deal.
Image Note: Include a graphic showing an Assignment Fee breakdown. Text on image: Ebonie Beaco - Mortgage Strategist
The Double Closing: Privacy and Protection
Double Closing A transaction involving two distinct real estate closings occurring back-to-back: the A-to-B (Seller to Wholesaler) and the B-to-C (Wholesaler to End Buyer). The wholesaler briefly takes legal title to the property before immediately deeding it to the final investor.
Compare this to the assignment method where you are just a middleman on paper.
In a double closing, you are actually a buyer and then a seller.
This is often the preferred route for wholesalers in Virginia or Michigan who are working on high-profit deals.
Because there are two separate transactions, the original seller (A) does not see the price the final buyer (C) is paying.
Your profit remains private.
This strategy is highly effective when your spread is large: typically $20,000 or more.
It keeps the focus on the value of the deal rather than the size of your paycheck.
The Mechanics of the Double Close
- A-to-B Transaction: You buy the house from the seller using Transactional Funding or your own cash.
- B-to-C Transaction: You sell the house to your investor 15 minutes later.
- Profit: You keep the difference between the two prices, minus two sets of closing costs.
Since you are taking title, you will pay for title insurance and escrow fees twice.
This eats into your profit, but it protects the deal from "seller's remorse."
If you are looking for long-term financing for properties you decide to keep rather than wholesale, check out Home Loans Network mortgage basics.
Image Note: Include a diagram of the A-to-B and B-to-C flow. Text on image: Ebonie Beaco - Mortgage Strategist
Comparing the Costs: Assignment vs. Double Close
Efficiency is the primary driver when choosing between these two.
In an assignment, your costs are practically zero.
In a double closing, you are looking at paying 1% to 2% of the purchase price for transactional funding, plus your closing costs.
Let's look at a financial example for a property in Gary, Indiana.
Assignment Scenario:
- Contract Price: $150,000
- Assignment Fee: $10,000
- Your Total Profit: $10,000
- Capital Required: $500 EMD
Double Closing Scenario:
- A-to-B Purchase Price: $150,000
- B-to-C Sale Price: $190,000
- Transactional Funding Cost (1%): $1,500
- Double Closing Costs: $3,000
- Your Total Profit: $35,500
- Capital Required: $151,500 (Usually borrowed via a bridge loan or transactional lender)
In the second scenario, the $40,000 spread might cause the seller to freak out if they saw it on an assignment form.
By double closing, you protect that $35,500 profit.
If you're an investor looking to transition from wholesaling to buying and holding, explore DSCR rental property loans to scale your portfolio.
Legal Considerations Across State Lines
The legality and customs of these strategies vary significantly.
In some parts of Florida, title companies are very comfortable with double closings.
In Illinois, there are specific regulations regarding how wholesalers market properties, often requiring a real estate license if you aren't careful with your "equitable interest" language.
Always ensure your contracts include an "and/or assigns" clause if you plan to go the assignment route.
Without this clause, you might be stuck closing on a property you don't have the funds to buy.
If you find yourself in a bind where you need to close but your buyer falls through, you might need to pivot to a Bridge Loan.
Access information on quick funding options for these scenarios at Home Loans Network.
Image Note: Map highlighting states like FL, IL, GA, VA. Text on image: Ebonie Beaco - Mortgage Strategist
Which Strategy Wins for Your Business?
The "winner" depends entirely on the specific deal on your desk.
Follow these rules of thumb to simplify your decision:
Choose Assignment When:
- The profit is under $15,000.
- The seller is an investor who understands the wholesale process.
- You have zero capital to put toward the deal.
- You are in a state where assignment is the standard practice.
Choose Double Closing When:
- The profit is $20,000 or more.
- The seller is a sensitive homeowner who might feel taken advantage of.
- The end buyer is using traditional financing (some lenders don't allow assignments).
- The contract has "no-assignment" clauses (often seen in bank-owned REOs).
Regardless of the path you choose, having a strong financing partner is critical.
While you might be wholesaling today, your end buyers will need Fix and Flip Financing or DSCR Investor Loans to take the project to the finish line.
Being able to recommend a solid mortgage strategist makes you a more valuable partner to your buyers.
Review common questions about financing at the Home Loans Network FAQ.
Transitioning from Wholesaler to Investor
Wholesaling is a great way to build a "war chest" of cash.
Eventually, you might want to stop giving away the best deals and start keeping them.
This is where strategies like the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method come into play.
You can use a Hard Money Loan to buy and fix the property, then move into a long-term Landlord Loan.
Extracting equity through a Cash-Out Refinance allows you to move onto the next deal without leaving your cash trapped in the property.
Calculate your potential returns using our mortgage calculators.
Image Note: A "Wholesaler to Wealth" roadmap graphic. Text on image: Ebonie Beaco - Mortgage Strategist
Strategic Guidance for Your Next Move
Real estate is a team sport.
Whether you are assigning a contract in Atlanta or double closing a deal in Richmond, you need a strategy that protects your interests and maximizes your profit.
Don't let financing hurdles stop your momentum.
If you are a wholesaler looking to provide better value to your buyers, or an investor ready to fund your next acquisition, let's talk.
We provide the tools and loan programs that help real estate professionals close more deals across the country.
Schedule a 1 on 1 at https://calendly.com/homeloansnetwork
Ebonie Beaco Mortgage Strategist | Senior Loan Officer Home Loans Network powered by Loan Factory Inc. NMLS #2389954 HomeLoansNetwork.com 312-392-0664
