Find Your Next Real Estate Deal
Search Now

What Should a Wholesale Real Estate Contract Include?

Jerry Norton

Mar 14, 2024

Your success as a real estate investor depends upon your knowledge of the industry — and that includes how to create and edit real estate contracts, especially for wholesaling. 

A well written wholesale real estate contract can protect your interests and help you sleep at night; a wholesale contract with missing elements can mean financial loss and stress. 

That’s why, in this article, we’ll break down the aspects to include in a wholesale real estate contract. 

Let’s begin! 

What To Include in a Wholesale Real Estate Contract

Wholesaling is a form of real estate investing where you act as a middle man between a distressed homeowner and a cash buyer.

After getting the property under contract, you then sell that contract to a buyer and receive a commission once the deal is complete. 

(You can even reverse the process in what’s known as reverse wholesaling!)

But you probably already knew that, so let’s get right to the good stuff: a wholesale real estate contract. 

To create the best wholesale real estate contract, it needs to have the following items:

Property Description

The wholesale real estate contract should provide a detailed description of the property, including:

  • the address
  • legal description
  • square footage 
  • number of bedrooms
  • And more

Purchase Price and Terms

The wholesale real estate contract should state the agreed-upon purchase price as well as the terms of payment. 

This includes:

  • the amount of the earnest money deposit 
  • any contingencies related to financing or inspections
  • the timeline for completing the transaction

Closing Date and Conditions

The wholesale real estate contract should specify the agreed-upon closing date.

Along with that, any conditions or contingencies that need to be fulfilled before closing should be written out.

Risk of Loss & Damage Clause

Having of loss & damage clause can protect you as the buyer if the property sees damage while it's under contract.

Title Insurance

Title insurance protects against title defects that can prove costly. Having this type of insurance can protect you during the transaction.

Assignability Clause

The assignability clause grants the wholesaler the ability to assign the contract to another buyer without seeking the seller's explicit approval. 

Disclosure Requirements

Every wholesale real estate contract must adhere to all disclosure laws and regulations. This includes disclosing any known defects or issues with the property along with communicating with the buyer about the wholesaler's role in the transaction.

Failure to meet these disclosure requirements can not only lead to legal consequences; doing so can hurt your reputation as a wholesaler.

Common Mistakes in Wholesale Real Estate Contracts

Let's take a look at few mistakes that wholesale real estate contracts have and how to avoid them.

Vague or Incomplete Property Description

A vague property description can lead to disputes between parties.

The goal when writing a wholesale real estate contract is to foresee potential disputes and prevent them from happening with the terms in the contract itself — and this includes a well written property description. 

Lack of Clear Payment Terms

Another mistake made in wholesale real estate contracts is a lack of clear payment terms. 

Failure to clearly define the payment terms, such as the amount, method, and overall timeline, can cause delays and issues. 

Ignoring Legal Requirements

Different states have different rules for wholesaling.

For example, what works in Florida may not work in Texas or Georgia, and all of them combined may be different than California. 

That's why it's critical to know what you can and can't do as a wholesaler in your specific location.

The Bottom Line: Wholesale Real Estate Contract

There you have it: a wholesale real estate contract.

By creating a well written contract, you can protect both yourself and the profit you can make on your next wholesale real estate deal.