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The Ultimate Guide to Wholesaling in Texas

Jerry Norton

Aug 8, 2024

Wholesaling in Texas

They say everything is bigger in Texas — and that includes real estate investing! 

Texas has third highest growth rate in the nation, and because of this, homes in several cities are in increasingly high demand — which you can take advantage of as a wholesaler. 

But Texas does have specific wholesaling laws that make it different from wholesaling in other states, such as California, Florida or New York. 

In this article, we’ll break down: 

  • How wholesaling in Texas differs from other states in the US
  • Wholesale laws that are specific to Texas 
  • The best cities in Texas for wholesaling today
  • And more

If you’re ready to learn everything you need to know about wholesaling in Texas, let’s get started! 

How to Wholesale Real Estate In Texas

Let’s start with the basics of wholesaling. 

Wholesaling is often referred to as "house flipping without the renovation."

While traditional house flippers buy properties, make improvements, and sell them at a higher price, wholesalers focus solely on finding and contracting the properties at wholesale prices.

Here's why: this method requires less capital and allows for faster and more frequent transactions.

Wholesaling involves finding distressed properties at deeply discounted prices and then assigning the contract to a buyer who will purchase the property for a higher price.

The wholesaler acts as the middleman, facilitating the transaction between the seller and the buyer. This allows the wholesaler to earn a profit without actually owning the property.

That's right — you can be a real estate investor without even owning property!

So, as a wholesaler in Texas, your primary role is to find distressed properties with motivated sellers who are willing to sell below market value. 

Once you have identified a potential property, you negotiate with the seller and secure the property under contract using a purchase agreement or an option contract. 

Once this is complete, you can then sell the contract to an investor looking to purchase the property for more than the asking price. 

Your aim is to negotiate the best possible price to maximize your profit margins. 

In addition to finding and contracting properties, to succeed as a wholesaler in Texas you must be familiar with the legal requirements and regulations surrounding wholesaling. 

Wholesaling Laws in Texas

First off, you don’t need a real estate license to wholesale in Texas. But if you are going to wholesale without a license, there are certain requirements to be aware of. 

As a wholesaler in Texas, you can’t act as a broker and personally sell properties. But this does not prevent you from assigning the right to buy a property to an end buyer. 

Also, you can’t publicly market the properties under contract. 

Texas Senate Bill 2212 states that unlicensed wholesalers who act as brokers, market properties, or fail to disclose that they are wholesalers will face a penalty: “no less than, but up to three times the profit realized by the wholesaler”. 

However, you can get around these restrictions with:

  • Assignment contract: this provides you the right to assign the contract to a buyer while collecting an assignment fee for your services. 
  • Double closing or buy and sell agreements: where you personally buy and sell the property.  

While a real estate license is not required to wholesale in Texas, having one will allow you to market properties freely, and without the restrictions noted above. 

The Best Places to Wholesale In Texas

Because Texas is the second largest state in the US, there’s no shortage of land. But growing metropolitan cities full of jobs are creating a demand that wholesalers can take advantage of. 

Here are some of the best places to wholesale in Texas. 

  • Houston: The hub of a global oil and gas industry, Houston has consistent job opportunities, which attracts many to this area — and many are currently in need of a place to live. This, combined with its low median home price, makes it one of the best places to wholesale in Texas. 
  • Austin: Already known as a growing metropolitan city — a tech hub in the South — Austin’s economy was further boosted when Tesla announced that not only were they moving to Austin; they would inject $1.1 billion into the local economy in the coming years. With so much job growth and potential, the demand for housing in Austin has only increased. 
  • Dallas: Many factors, including affordability, low median home price, and the fact that Dallas ranked third on Indeed’s list of “Best Cities For Job Seekers” show that not only is Dallas a great place to live and work; it presents a fantastic opportunity for wholesalers. 

The Bottom Line: Wholesaling In Texas 

Texas is full of potential for real estate investors, especially wholesalers.

If you abide by the wholesale laws in Texas, you can experience the tremendous benefits of wholesaling in a state that is not only affordable to live in, but rapidly growing — and is expected to continue to do so.