5 Items You NEED in Any Real Estate Wholesale Contract

by | BiggerPockets.com

One of the most complicated tasks when starting out is knowing the legal ramifications of what needs to be in a wholesale contract. This article will be a great foundation to start with. However, laws are different in each state, so the best advice in this article is to consult an attorney.

Starting out can be expensive with legal fees. In my experience, I paid over $1,800 in legal fees to generate contracts I use for lease options. Of course, most newbies starting out do not have that kind of money. I will go through the most important content that need to be added in your purchase contract.

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Buyer & Seller’s Name

I know what you’re thinking: Of course this need to added. But there are times when someone claiming to be the owner will try and sell a property they do not own. This can happen both intentionally and unintentionally.

There are some people who are uninformed and believe because they are family, they can sell the property if a love one passes. This is how someone may try and sell a house they have no legal rights to. In cases such as this, the property will have to go through the probate process. This is done if the deceased died intestate (without a will). The family member of the deceased may try and sell the house.

It is important that you have the rightful owner agree to sell the property. Before writing the contract, it is essential to check the tax records to ensure the individual agreeing to sell the house is actually the owner.


Property Address

Again, this may seem elementary to some, but it is important. Everyone need to agree upon the property that is being sold. We like to take things a step further and add the legal description of the property. This is done because there are many new developments where we live, and some properties have the same address.

Related: The 4 Best Strategies for Finding Deals as a Real Estate Wholesaler

This does not happen often, but there is a possibility. The municipality use the legal description when addressing the property on the deed. This is done because there may be errors, so to minimize those errors, it’s good to use the legal description as well as the physical address.

Terms & Conditions

Make sure everything is spelled out. It is better to have everything in the contract and not need it than to need it and not have it. The terms and conditions will outline everything you and the seller are agreeing to. You’ll want to include the following:

  • Purchase price
  • Close of escrow date
  • Title company/closing attorney
  • As-is verbiage
  • What conveys with the purchase

This information is vital; sellers tend to forget what was agreed upon and will try to cancel the contract. Verbiage that I add in every contract: “All personal property left in/on the real property is deemed the responsibility of the buyer.” We add this verbiage because when agreeing to buy the property as-is, this limits the seller from trying to return to the property after closing. This is why what you convey with the sale of the property is important. Many times when buying a property as-is, the seller may leave a lot of personal property behind. Adding this clause in the contract will give the buyer the authority to dispose of everything that is left behind.

It is very important to spell out as much as possible. Sellers will tend to ask questions, and if something is not added in the contract, then it wasn’t agreed upon. For instance, the seller may state, “I want to leave all appliances,” then in the contract you will add all appliances are to convey with the sale of the property. Not only will the seller get amnesia, but the family members may try and step in to present problems as well.

Inspection Period

This is the key ingredient because especially for a newbie, the fear is “what if?” What if I can’t find a buyer? What if the seller finds out? What if my offer price is too high? What if, what if, what if.

The inspection period is your answer to all those questions and many more. The inspection period gives you the opportunity to find a buyer. It is good to have the inspection period a minimum of 10 days, but again, everything is negotiable, so try and push it out as far as you can within reason.

The inspection period also gives you the time to send the property to cash buyers and see what they are willing to pay for the house. This will give you the chance to renegotiate if your agreed upon price is too high. So for example, if you agreed to buy a house for $80k and you sent it to a few buyers at $85k and they are willing to pay only $75k for it, then you know you need to renegotiate with the seller to get the property below $73k at minimum to make some money. This will not always work, but it’s a 50/50 chance it will. If you’ve built great rapport with the seller, then 9 out of 10 times, they will decrease their amount.

Use the inspection period to your advantage. Leveraging the inspection period is critical in any wholesale transaction.


Earnest Money Deposit (EMD)

In most states, there must be some consideration or transfer of value for it to be a binding contract. So the buyer has to give up something and the seller have to give up something. This consideration does not always have to be money. Your consideration could be “we agree to dispose of all trash left in the property.” There is a transfer of value because you can monetize the cost of the personal property removal.

Related: What Exactly is Real Estate Wholesaling (& What Does a Wholesaler Do Every Day)?

When you are dealing directly with the seller, the earnest money deposit can be as low as $10. Yes, $10. The earnest money is good faith collateral stating you are going to exercise your right to purchase the property. In the event I do not purchase the property and I am outside the parameters of the inspection period, I forfeit the earnest money.

Why should you keep the earnest money as low as possible? This is important because in the event you are unable to find a buyer within the inspection period time, you can continue to market the property up to the close of escrow to find a buyer. Hopefully you will find the buyer, but if you do not, the earnest money is then forfeited.

Signatures & Date

Someone recently asked me whether the agreement should be notarized. That was a great question, and my answer to them was no. The purchase contract does not need to be notarized; however, I’ve seen contracts where the buyer and the seller did not sign. If this occurs, obviously you are not under contract, and you do not have a binding agreement. Lastly, please make sure you have signatures and a date on the contract.


These are a few things that must be incorporated into a contract. Again, it is important to have an attorney review and approve the documents before using them. The contract can be very detailed or it can be very basic depending upon your preference. As long as you have a strong foundation, your contract can be an effective tool.

In a few weeks, we will discuss what is needed in the assignment contract. If you have any questions, feel free to comment. I enjoy the comments — it gives me a chance to see what I may have overlooked.

Investors: Anything you’d add to this list?

Be sure to leave a comment below!

About Author

Marcus Maloney

Marcus Maloney is a value investor and portfolio holder of residential and commercial units. He has completed over $3.3 million in wholesale transactions. Currently, Marcus is a licensed agent who wholesales virtually in multiple states while building his investment portfolio. He has also converted some of his deals into cash-flowing rentals. Marcus holds seven rentals, two of which are commercial units. He’s even purchased a school, which was converted into a daycare center. His overall goal is to turn what is a marginal profit into a significant equity position. He leverages the equity by using the BRRRR (buy, rehab, rent, refinance, repeat) strategy to increase his portfolio without any money out-of-pocket. Marcus has been featured in numerous podcast such as the Louisville Gal Podcast, The Best Deal Ever Podcast, The Flipping Junkie, and many others. He contributes content regularly to his YouTube channel and blog.


  1. Paul Winka

    Marcus, you say no notarization of the contract is needed. What happens if you get a seller that feels that they were taken advantage of and says “that’s not my signature” to get out of the deal? Nice article, thanks!

    • Marcus Maloney


      If you have a contract with the seller, a memorandum of sale can be filed with the county clerk. A filed memorandum will prohibit the seller from selling the property without your authorization. So in essence what happens…. when a title company or attorney pulls a title report the memorandum will show up and they will have to clear the sale with you. Research it in your county. The fee is minimal normally and the filing is immediate.

      Hope this helps……”Enjoying the Journey”

        • Marcus Maloney

          No, this is totally different. The memorandum is like a lien you place on the property. The only time we do this is if we suspect the seller is shopping around for high offers or they are unscrupulous. I’ve heard some investors state they do this on all properties they get under contract, I believe that is a bit much. Our county charge $10 to file a memorandum so that surety could be worth the piece of mind knowing they can’t sell the property from under you.

  2. John Thedford

    Your advice is not valid for Florida. You also do not talk about the ethics of signing a contract when you have no intention of purchasing it. Promoting dishonest potentially illegal and unethical transactions is certainly a poor blog in my opinion.

    • Marcus Maloney


      Your input is great and it brings to my attention something that I did not mention in the article. When we discuss the terms of the agreement with the seller we notify them that either we will purchase the property or one of our stakeholders who is an investment partner. This debunks yours claim of dishonesty and potentially illegal and unethical transactions. All contracts are wrote with the buying entities name along with and/or assignee.

      I’m glad you brought this up, as for the laws in Florida I have knowledge of Florida case law, this is why its always important for everyone to do their due diligence and seek professional counsel.

      Again, thank you for your input and it was dearly welcomed.

      “Enjoying the Journey”

      • John Thedford

        You M/O would not work in Florida. Florida requires equitable interest and the state has already said that $10, $25, $100 would not be equitable interest. I do hope to see states crack down on most of these operators and will express that opinion to several state regulatory agencies. I see more frauds and scammers than honest operators. The bottom line is: most are just operating as unlicensed brokers. Maybe they just got out of prison and can’t get licensed. Maybe they have convictions for fraud, etc and cannot get licensed. May they just don’t care getting an education being held accountable.

        • Marcus Maloney


          Your point is well taken and I have come to know that there are reputable wholesalers in the industry that are licensed Realtor and I am one of those individuals, we do not put down $10,$25,or $100 in most cases we furnish $1000 EM. We (wholesalers generally) are not ALL ex-cons, or scammers, however we do know there are some bad apples in the bunch like any industry. I’ve seen many so called reputable Realtor incarcerated or fined for unethical practices. I am the first one to agree with you if there is unscrupulous activities occurring those individuals should face harsh punishment. So in essence it seems as though we are on the same page in our responses.

          I’m not quite sure where the conversation turned to where you are addressing libel or defamation???? However thanks for your input and again those practicing fraud should be charged.

          “Enjoying the Journey”

  3. carl brown

    Sweet info Marcus! Keep up the great work, we really need more tips and tricks to keep unscrupulous real estate agents like john thedford from trying to shoot us down every chance they get. I love the word DEBUNKED! lol awesome!!

  4. wayne brooks

    I didn’t read any “debunking” of John Thedford’s assertion of dishonest and unethical behavior, just BS.
    As far as “debunking” any BS here….
    I have to laugh every time I see the “either we will buy the property, or one of our “stakeholders/partners/investors” will buy the property, as a way to explain the “and/or assigns” BS. This is as opposed to the Truth, which would be “I have contracted your property for less than what I think it is worth. I’m going to try and sell the property to someone else for more than I’m signing a contract with you for, for a profit. If I can’t resell it to someone else for more money, I’m going to cancel my contract with you, because I have no intention of actually buying your property myself, and I don’t have the money to buy it anyway, even if I wanted to.”

    • Marcus Maloney


      Do you have any input that may add value or input newbies can use to help them get started?

      I can only speak on our performance; in the years our company have wholesaled properties there’s is only 1 property that we did not either close on or have an end buyer. If you have the network you will not have to be concerned about not performing. This is why I always recommend building a strong network.

      “Enjoying the Journey”

  5. John Thedford

    It appears the clown is distressed to the point of libel and defamation of character. His posts speak to his credibility, integrity, and desperation. It will be a PLEASURE if I can get him in court and I intend to take any action necessary to make it happen. That is in addition to GREC.

  6. John Thedford

    See the post from carl brown. I have it printed out. I have already contacted my attorney. I FULLY INTEND to take legal action if my attorney says I have a viable case. I have held a RE license 12 years and NEVER had one complaint. I also hold a federal firearms license which required federal background checks, etc. carl brown is DESPERATE to discredit me and harm my reputation not only on BP, but in the real estate community.

  7. Breon Smith

    If a seller home is about to be in a tax auction and its distressed very badly and in a high crime area would this be a property an agent would want to list or buy, or would this be a problem a wholesaler could solve. Any answers would be grateful.

    • Marcus Maloney


      A situation as this is what you are really looking for. MOTIVATION, MOTIVATION, MOTIVATION, the more distress the seller is in the more likely you are to get the house under contract. Your position as a wholesaler is to help those who are in distress. You are a problem solver.

      “Enjoying the Journey”

  8. Kim Banks

    John Thedford,
    I have never heard of someone who gets a kick out of dragging people to court. That is really weird. Find a new hobby. Do some community service. It’s a shame you don’t know the stories of the sellers who are truly helped by people who – oh, horrors! – assign their contracts. I just helped a seller who had lost her house at a tax auction. She had no money. We were able to get money to the seller during the period of redemption and help her get moved. She had no other way out of that situation. It should all be about helping sellers. I helped another family in Oregon. The wife was so grateful for my help, as her husband had just lost his job. There was even a spousal support judgment on the property that needed to be paid prior to closing. Who do you think paid it? Me! Please do not assume you are better than everyone, John. I , for one, would never, ever make a sport of trying to get people in trouble. If you don’t understand contract assignment , seller financing, or sub-2’s, and how these techniques can really help people out of crummy situations, keep your uneducated opinions to yourself. Notice we’re not saying how creepy we think gun-toting hard money lenders are!

  9. Matt Mitchell

    @ Marcus Maloney

    Great article, thanks for sharing. You mentioned you were a licensed Realator, is this something you have to disclose in your contract, or during the process? What advice do you have in regards to this?

    Also I would love to see you contract, is it still available at equityrealestateblog.com as you mentioned earlier?

    Another subject that is hard to find good info on or direct answers on is, what is the step by step process one takes once a contract is in place to close the deal? If you could write an article on this subject I think it would be well received.

    Thanks in advance!

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