Real Estate Contract Clauses: What Do I Need Included When Wholesaling?


Wholesaling real estate is the biggest craze since pants with pockets. A lot of people learn about wholesaling, then immediately want to get started. I mean, it’s very attractive to hear about flipping houses with no money or credit. However, what’s rarely mentioned is what information should be included in a contract. Let me first say I am not giving legal advice. I fudged by way through a business law class in grad school before dropping out. If you want legal advice, it’s in your best interest to consult with an attorney. You can ask for a referral from a fellow BiggerPockets member in your area, Google real estate attorney (your city) or get a referral from some one at your local real estate club.

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Out Clauses: The Due Diligence Period

As a wholesaler you want to make sure your contract has out clauses. A popular out clause is the “due diligence period.” I normally ask for 30 days, also known as the inspection period. I usually end up closing way before the due diligence period is over. However, I always give myself that cushion, even though at this point in my business, I close on 9/10 properties I contract.

Related: Day in the Life of a Wholesaler: How to Find Sellers, Negotiate Deals & Assign Contracts

Most contracts have a due diligence or inspection period built in. I give myself 45 days to close, with the first 30 days as an inspection period. I’ve seen contracts that last for 90 days, or even 120, and I’ve seen a news story on someone locking up a house with a “forever” closing date. Typically, we deal with single family homes, so in my personal opinion, if you’re giving yourself longer than 45 days, you are just wasting your and the home owner’s time. We are in the business of flipping over contracts, so don’t make it harder than it needs to be.

Now, the reason you do this is because you want to give yourself a period to shop around the property to cash buyers. And in the event you cannot find a cash buyer, you want to be able to legally be able to back out of the contract. Obviously, if you don’t do it legally, the home owner could possibly sue you or keep your earnest money if any was put up.

The Right to Renegotiate Price

A second clause that may be worth having is one that specifies a certain dollar amount of repairs, so for example, if the property exceeds $15k in repairs, I have the right to back out or renegotiate price. Instead of putting a dollar amount, you could also say something like, this deal is contingent upon partner’s approval.

I don’t use the dollar amount clause or the partner’s approval clause. I only use the first clause mentioned, which is the due diligence clause. Many people use the partner approval clause. Remember, once you lock up the deal, you have to get your buyers in the property. I personally educate the home owner that I have to get my money partners in the property because they have to approve the deal. In the event your buyers don’t bite, you can tell the home owner that your partners did not approve the deal. Or you can use the dollar amount clause but be careful with that because if you say it requires $15k in repairs and the home owner gets an estimate for $5k from a licensed contractor, you could potentially end up in court trying to prove who is right.

Related: 4 Critical Elements to Master for a Top-Notch Wholesaling Business


In conclusion as a wholesaler you want to do things legally, so be sure to have these proper out clauses in the contract. Simply not picking up the phone anymore is not a legal way to get out of a contract. I’ve noticed when I explain things to home owners up front, it’s never hard feelings when the worst case scenario happens. These clauses need to be explained to the homeowner prior to signing the contract so you don’t catch them by surprise. I tell the homeowner that my money partners and contractors have to get into property to approve the deal before contracting the property. That way, it’s no surprise if I have to get into a property 3 or 4 times. Ultimately the cash buyers are your money partners because without them, the deal does not get funded. Again, if you have further legal questions about the contract or process, you should contact an attorney.

Wholesalers: Which contract clauses have saved you from bad deals?

Be sure to let me know with a comment!

About Author

Nasar Elarabi

Nasar is a corporate failure who was saved by Real Estate. Nasar is now a Wholesaler, Rehabber and Landlord in the Charlotte area. Nasar may have just barely graduated college but can flip a house like an acrobat. Nasar's work can also be found at


  1. Morris Wilson II

    Great post. I love the term “money partners.” Technically, the buyers are your partners because you are working as a team- you find the deal and they buy it. I’m still a newbie and I take integrity in business very seriously. Also, “due diligence” is the period when you research whether the property and the deal at hand. Both are accurate statements when structuring the deal with the seller and I won’t feel bad for saying them. Thanks!

  2. I live in Miami and do fix and flips thus I am al;ways looking for the next project. I represent Investors who use their Checkbook Control Self-Directed IRAs for the “All Cash” acquisition and repair of the property.

    I have given up on using “Wholesalers” because of their draconian dictates, e.g. NO INSPECTION, HUGE EARNEST MONEY DEPOSITS, SHORT PERIOD TO CLOSE (10 DAYS) etc.

    Also, the word “wholesale” has become a joke as evidenced that I now receive multiple offers for a “hot” wholesale deal from half a dozen different wholesalers and often the property is listed on the MLS by a Realtor.

    And, I receive daily ’emails about “reduced pricing” on a “hot” deal that has lingered in the wholesaler’s portfolio for months.

    Whatever happened to a wholesaler being happy to make $5,000 – $10,000 on a $100,000 deal? In my opinion most “Wholesalers” are in fact quasi “Retailers”.

  3. Joyce & Derek Taylor

    Great post. This post came out at the right time for us. I’m a new Investor getting ready to do my first contract.
    I’ve held off being scared of messing up and not getting my deposit back if my cash buyer don’t come through.
    I’m going to print this out and take it with me.
    Thanks again, for sharing your information !!

  4. Rod NA

    In California we have 17 days to do diligence already in the contract. The problem I ran into when I include “contingent on partners approval”, the Listing agent wants that removed. Also, when I Wholesale and make an offer on a house that has been on the market for 245 days, I get a multiple offer situation from the Listing Agent. The Gatekeepers are in full swing that’s for sure!

    • Then add an addendum to your contract. Those contracts can be changed and manipulated to how you would like. I know they say the Standard California Contract, but a contract can be written on napkin and still be legal.

      • Thank you Jared! I didn’t know about the napkin! Any suggestions on the Gatekeeper Realtors who claim there are multiple offers when a house has been sitting for 245 days? Then later the house is still Active. Thank you!

        • Hey Rod. Just wanted to make sure that you know that you don’t have to stick with the 17 days that are written in the CAR residential purchase agreement and that you can adjust that as need be in the contract. As for the multiple offers, why don’t you just submit your offer anyway at the numbers that work for you? The more offers you submit, the better the chance that one will get accepted.

  5. Rod,

    Good point about phantom “multiple offers”.

    Here’s another Realtor trick, you call to arrange a showing and the Listing Realtor informs you, “Gosh, the property just went under contract today, too bad, how sad”.

    You diligently check the MLS everyday to see if a “PS” (Pending Sale) has replaced the “A” for active. Nope. So after a week or so you again call the Listing Realtor who says, “Gosh, that deal fell through but guess what, the property just went under contract again”.

    Oh how I wish we could contact the Owner of the home directly so we could get a straight answer.

  6. Zachary Clough

    Hi Nasar-

    I like the idea of a 30-day home inspection contingency period. I also like the idea of having a contingency that states “this deal is contingent upon partner’s approval” as opposed to specifying that you can renegotiate price if the property requires a certain dollar amount of repairs. Like you mentioned, that could potentially get messy if a homeowner obtains a quote far less than yours and decides to take you to court.

    Here are a few others that could potentially be helpful:
    -“Seller understands that Buyer intends to find an End-Buyer and assign this Agreement to End-Buyer for a fee (to be paid by End-Buyer).
    -“Seller grants Buyer access to the above property for showing to prospective buyers, contractors, or appraisers, along with the right to put signage in the yard advertising the property for sale.”
    -“If Buyer does not acquire an End-Buyer within 45 days of acceptance of this Agreement, this agreement becomes null and void.”

    Do you hold a real estate license by any chance? Whereas I’m also a licensed agent, it’s important that I make it very clear to all parties in the transaction that I am acting on my own behalf. I like to disclose that fact with the below contingency so it doesn’t present an issue down the road.
    -“Seller understands that Buyer is acting as a principal in the transaction and is not working as a real estate broker representing anyone other than him in the transaction, though he may hold a real estate license.”

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