Wholesale Real Estate Glossary
Every wholesale term you'll encounter — from ARV to wholetail — explained without jargon. Bookmark and reference.
ARV is the estimated market value of a property after all renovations are completed. Wholesalers calculate ARV using comparable sales (comps) of recently sold, fully renovated homes within roughly a half-mile radius and similar square footage, bedroom count, and condition.
A legal transfer of a purchase contract from the original buyer (the wholesaler) to a new buyer (the cash investor). The wholesaler's name comes off the contract; the new buyer's name goes on it; and the wholesaler is paid an assignment fee at closing.
The wholesaler's profit when assigning a contract. Typical ranges are $5,000 to $30,000 per deal, paid by the end buyer at closing as a separate line item on the closing statement. Fees over roughly 10% of the property price are sometimes hidden via double close instead of assignment.
An acronym for Buy, Rehab, Rent, Refinance, Repeat — a buy-and-hold strategy where investors recover their initial capital by refinancing the renovated property at its higher ARV, then redeploy that capital into the next deal.
Capitalization rate — annual net operating income divided by property purchase price, expressed as a percentage. Used by buy-and-hold investors to compare income properties. A 7% cap rate means a property generates 7% of its purchase price in net income annually.
A real estate investor who purchases properties without bank financing — typically using personal capital, hedge fund money, or hard money loans that close like cash. Cash buyers are essential to wholesaling because they can close on the timelines wholesale contracts require (usually 7-30 days).
Annual cash flow divided by the cash actually invested into a deal (down payment, closing costs, rehab, holding costs). Distinct from cap rate, which is based on purchase price. A common rental-investor target is 8-12% cash on cash.
Fees paid at the closing of a real estate transaction beyond the property price. Typically include title insurance, escrow fees, recording fees, and prorated taxes. In wholesale deals these are usually paid by the end buyer; the seller's closing costs are sometimes paid by the wholesaler or end buyer as part of the offer.
A recently sold property used to estimate the ARV of another property. Strong comps are within a half-mile radius, sold within the last 90-120 days, and have similar square footage, bedroom count, and condition. Wholesalers typically use 3-5 comps to triangulate ARV.
The process of finding an end buyer for a property under contract. Disposition includes marketing the deal, vetting interested buyers, negotiating the assignment fee, and coordinating the closing. Wholesalers either dispo their own deals or hire a dispo service.
A wholesale closing structure where the wholesaler buys the property from the seller and immediately resells it to the end buyer in two separate transactions, often funded by transactional funding. Used when the assignment fee is large enough that the seller or end buyer would object to seeing it on a single closing statement.
How long a property has been listed for sale. High DOM in a fast market is a signal of motivated seller, overpricing, or a hidden defect. Wholesalers often target high-DOM listings or expired listings as motivated-seller leads.
The investigation period a buyer uses to verify a property's condition, title, and value before committing to close. In wholesale deals the wholesaler typically does light due diligence (drive-by, basic comps) and the end buyer completes the deeper inspection during the option period.
A good-faith deposit the buyer pays to the seller (held in escrow) when a contract is signed, applied toward the purchase price at closing. In wholesale deals EMD is typically $10-$1,000 from the wholesaler to the seller, and a similar or larger amount from the end buyer to the wholesaler at assignment.
The cash investor who ultimately closes on a wholesale deal. The end buyer takes title to the property — either after the wholesaler assigns them the contract or after a double close. Most end buyers are fix-and-flippers, buy-and-hold landlords, or small institutional buyers.
A neutral third party (usually a title or escrow company) that holds funds and documents until contract conditions are met. The wholesaler's EMD, the end buyer's funds, and the deed all sit in escrow until closing day, when everything releases simultaneously.
An investment strategy where an investor buys a distressed property, renovates it, and resells it within months for a profit. Fix-and-flippers are one of the most common end-buyer profiles for wholesale deals because they need consistent off-market deal flow.
Short-term, asset-based financing from a private lender, secured by the property. Hard money typically funds at 60-75% of ARV, costs 8-13% interest plus 1-3 origination points, and closes in 5-15 days — fast enough to behave like cash for wholesale deals.
Ongoing expenses an investor pays while owning a property pre-resale or pre-rental — mortgage interest, property taxes, insurance, utilities, and HOA dues. Wholesalers factor estimated buyer holding costs into a deal's viability.
A contractual window (typically 7-14 days) during which the buyer can inspect the property and walk away if they discover material defects. For wholesale deals the wholesaler tries to keep their inspection period long enough to find and assign to an end buyer who completes the actual inspection.
A partnership where two or more wholesalers split a deal's assignment fee. Common when one party brings the seller-side contract and the other brings the cash-buyer relationship. JV splits are usually 50/50 but vary based on contribution.
A legal claim against a property for an unpaid debt. Common types include mortgages, tax liens, mechanic's liens, and judgment liens. Liens must be paid off (or otherwise resolved) at closing for clear title to transfer.
A public notice that a lawsuit affecting the title of a property has been filed (often the first step in foreclosure). Lis pendens filings are public records and a common motivated-seller lead source for wholesalers.
A regional database of properties listed for sale by licensed real estate agents. Wholesalers typically work off-market (outside the MLS) because MLS-listed properties are exposed to retail buyers and rarely sell at the discount wholesale deals require.
A property owner with a strong reason to sell quickly at a discount — typically due to financial distress, divorce, inherited property, code violations, or job relocation. Wholesalers spend most of their time finding motivated sellers because they're the only sellers who will accept wholesale offers.
A public filing by a lender notifying a borrower they have defaulted on the mortgage. NODs are the formal start of the foreclosure process in most states and are a common motivated-seller lead source.
A property for sale that is not listed on the MLS. Off-market deals are how wholesalers source most contracts — through direct mail, cold calling, driving for dollars, online lead gen, or referrals — because there's no listing-agent commission or competition driving the price up.
A short, paid period (typically 7-10 days, $100-$500) during which the buyer can terminate the contract for any reason. Common in Texas wholesale contracts. Functions similarly to an inspection period but with explicit unilateral termination rights.
A document (bank statement, hard money pre-approval letter, or attorney trust letter) demonstrating a buyer has the funds available to close. Sellers and listing agents commonly require POF before accepting an offer; cash buyers on a wholesaler's buyer list typically have POF on file.
The window between a Notice of Default filing and the actual foreclosure auction. Homeowners in pre-foreclosure are highly motivated sellers because they want to avoid the credit damage of a completed foreclosure. Wholesalers often source these deals from public NOD filings.
The court process of distributing a deceased person's estate, including any real estate. Probate properties are common motivated-seller leads because heirs often want to liquidate inherited homes quickly to split proceeds among beneficiaries.
A property where a buyer and seller have signed a purchase agreement but the deal has not yet closed. In wholesaling, "under contract" means the wholesaler has secured the right to purchase and can now legally market the contract to end buyers.
A deed transferring whatever interest the grantor has in a property — without warranties of title. Used in family transfers and to clear minor title clouds. Generally avoided in wholesale closings because it does not protect the buyer from title defects.
Replacing an existing mortgage with a new one, typically at a different rate or to extract equity (cash-out refi). Cash-out refis are the "R" in BRRRR — landlords use them to recover the cash they invested into a renovated rental.
The renovation work performed on a distressed property to bring it to retail condition. Rehab budgets vary widely — light cosmetic rehabs may cost $10-30k while full gut renovations exceed $100k. Wholesale deal pricing depends heavily on accurate rehab estimates.
A property owned by a bank or lender after an unsuccessful foreclosure auction. REO properties are sold by the bank, often at a discount, but typically through a listing agent rather than off-market.
A wholesale pricing heuristic: maximum allowable offer = (ARV × 70%) − repair costs. This leaves the end buyer 30% of ARV to cover closing costs, holding costs, sale costs, and profit. The 70% figure flexes to 75-80% in hot markets and 60-65% in slower ones.
A property sale where the lender accepts less than the outstanding mortgage balance to avoid foreclosure. Short sales require lender approval and typically take 60-180 days, making them harder to wholesale than standard pre-foreclosure deals.
The practice of locating a property owner's current contact information (phone, email, address) using public records, data brokers, and third-party tools. Wholesalers skip-trace lists of distressed-property owners to enable direct outreach.
A creative-financing structure where a buyer takes ownership of a property "subject to" the existing mortgage staying in place — the seller's loan is not paid off, the buyer just takes over payments. Risky for the seller (loan stays in their name) and for the buyer (due-on-sale clause risk).
A transaction where the seller acts as the lender — the buyer makes payments to the seller over time instead of obtaining a bank loan. Common when the seller owns the property free and clear and prefers monthly income over a lump sum.
A government claim against a property for unpaid property taxes. Tax liens take priority over most other liens and must be settled at closing. Properties with tax liens are common wholesale leads because the owner is often financially distressed.
A neutral third-party that researches a property's ownership history, issues title insurance, and handles closing logistics. Wholesalers should use title companies experienced in wholesale assignments and double closes — most general-practice title companies are not.
Insurance protecting against losses from title defects (forged deeds, missed liens, boundary disputes) discovered after closing. Title insurance is paid as a one-time premium at closing and is typically required by lenders.
Very short-term (24-48 hour) financing used to fund the buy side of a double close. The wholesaler borrows the purchase price for the seller-side closing, immediately resells to the end buyer, and repays the loan from the end-buyer's funds — all on the same day.
A real estate investor who profits by getting properties under contract at below-market prices and selling those contracts (or completing a double close) to cash investors. Wholesalers earn assignment fees, not equity — they do not take title to the property in standard assignments.
A real estate investing strategy where the investor secures a discounted purchase contract with a motivated seller and sells that contract to a cash investor for an assignment fee — without taking title or financing the property. Profits typically range from $5k to $30k per deal.
A hybrid strategy between wholesaling and retailing — the investor buys a property at a wholesale price, does minimal cleanup (no full rehab), and lists it on the MLS for a retail sale at a higher margin than a pure wholesale assignment fee.
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