How Do Real Estate Wholesalers Get Paid?
You Got the Deal—But Where Does Your Money Come From?
One of the first questions new wholesalers ask is:
“How do I actually get paid?”
Imagine an investor gets a property under contract with a seller for $100,000.
The investor then finds an end buyer willing to acquire the opportunity at an overall price of $110,000.
Where does the difference go?
Depending on how the transaction is legally structured, that difference may represent compensation to the wholesaler.
Two structures commonly discussed in wholesaling are assignment of contract and double closing.
They're different—and understanding that difference matters.
1. Getting Paid Through an Assignment Fee
In an assignment transaction, the wholesaler generally has contractual rights under a purchase agreement and transfers—or assigns—those rights to another buyer.
The buyer taking over those contractual rights is commonly called the assignee.
The amount paid to the wholesaler for that assignment is the:
Assignment Fee
Here's a simplified example:
Original Purchase Contract: $100,000
End Buyer's Total Acquisition Price: $110,000
Assignment Fee: $10,000
The seller receives the amount they're entitled to under the original purchase agreement, while the wholesaler's assignment compensation is handled according to the assignment agreement and closing documents.
In many transactions, the closing or settlement professional disburses the assignment fee when the transaction successfully closes.
The important lesson:
Getting a contract signed does not automatically mean you've been paid.
The transaction still has to make it to closing under the applicable agreements.
When Does the Wholesaler Get Paid?
In a typical assignment that provides for payment at closing, the assignment agreement is provided to the title company, closing attorney, escrow company, or other appropriate settlement professional.
The assignment fee can then appear as part of the transaction's settlement accounting and be disbursed according to the closing documents.
Depending on the transaction and agreements involved, payment practices can vary.
That's one reason wholesalers should understand exactly what their contracts say rather than assuming how or when they'll be paid.
2. Getting Paid Through a Double Closing
A double closing is different.
Instead of assigning the purchase contract to the end buyer, the investor participates in two separate transactions.
Transaction A → B
The original seller sells the property to the investor.
Transaction B → C
The investor then sells the property to the end buyer.
In this structure, the investor's potential profit generally comes from the difference between what the investor paid to acquire the property and what the investor receives when reselling it—after accounting for applicable transaction expenses.
For example:
Investor purchases: $100,000
Investor resells: $115,000
That does not necessarily mean the investor made $15,000 in profit.
Why?
There may be:
Closing costs
Funding costs
Title/settlement expenses
Taxes or other transaction expenses
and additional costs depending on the deal.
That's one reason an assignment fee and profit from a double closing shouldn't be treated as exactly the same thing.
Assignment Fee vs. Double-Closing Profit
Here's the simple distinction:
Assignment
You're generally being compensated for transferring contractual rights under an assignable agreement.
Double Closing
You're actually involved in purchasing and reselling the property through two transactions.
Our earlier article explains these structures in greater detail:
Your Fee Isn't Automatically Your Profit
Suppose you receive a $10,000 assignment fee.
It's easy to say:
“I made $10,000!”
But your business may also have incurred expenses such as:
Marketing
Property data
Software
Phone services
Travel
Professional services
Transaction support
and other operating costs.
Revenue ≠ Profit
What you receive from a transaction and what your business ultimately keeps after expenses are two different things.
What If the Deal Doesn't Close?
A signed purchase contract isn't the same thing as a completed transaction.
Deals can encounter:
Title problems
Buyer funding issues
Property-condition discoveries
Missed deadlines
Contract disputes
Seller issues
or other complications.
Whether a wholesaler is entitled to retain or receive any money when a transaction fails depends on the agreements, circumstances, and applicable law.
Don't assume:
“I have a contract, so I'm guaranteed to get paid.”
Wholesaling Rules Can Vary by State
This is especially important.
States may regulate wholesaling, assignments, marketing contractual interests, disclosures, licensing, and other activities differently. Current legislation in some states demonstrates just how specific those requirements can become.
That's why we'll devote an entire upcoming IFN article to:
Is Real Estate Wholesaling Legal?
For now, the takeaway is simple:
Understand the transaction you're participating in, understand your agreements, and verify the rules applicable where the property is located.
The IFN Approach
A Signed Contract Isn't a Payday. A Successful Transaction Is.
New investors sometimes focus heavily on the potential assignment fee.
Experienced business thinking requires looking at the entire transaction.
Is there actually a deal?
Can the buyer perform?
Can the transaction close?
Are the documents structured appropriately?
What expenses are involved?
What rules apply?
The goal isn't simply to put a large assignment fee on paper.
The goal is to build transactions that can actually make it to closing.
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Educational Disclaimer
This article is provided for general educational and informational purposes only and does not constitute legal, tax, financial, brokerage, lending, or investment advice. Real estate wholesaling, assignments, disclosures, licensing requirements, contracts and closing procedures vary by jurisdiction and transaction. Consult appropriately qualified professionals regarding your circumstances and applicable laws.
