A wholesale real estate deal runs on two documents: a purchase agreement between you and the seller (with an assignment clause), and an assignment agreement that transfers your rights to a cash buyer for a fee. Get those two right and you have a business. Get them wrong and you have a lawsuit. Here's what's inside each — and the clauses that should stop your pen.
This is education, not legal advice, and definitely not a substitute for a contract reviewed by a local real estate attorney. Wholesaling and assignment rules vary by state and changed in several states in 2024–2025.
The two documents
1. The purchase and sale agreement (PSA). This is a normal contract to buy the property from the seller — except you have no intention of closing on it yourself. It's what gives you an interest to sell. The magic ingredient is the assignment clause.
2. The assignment of contract. This transfers your rights (and obligations) under the PSA to your end buyer. They pay you an assignment fee and step into your position; they close with the seller. You never take title.
The clauses that make it work
- Assignment language. The PSA must permit assignment — commonly buyer listed as "[Your Name] and/or assigns." Without it, you can't legally pass the deal on.
- Inspection / due-diligence contingency. A window to inspect and cancel for any reason with your earnest money returned. This is your exit if you can't assign the deal — treat it as non-negotiable.
- Clear, marketable title. The sale is contingent on the seller delivering clean title (no surprise liens). A title company or closing attorney verifies this.
- Earnest money deposit (EMD). Your good-faith deposit. Negotiate it low and, where possible, refundable within the inspection window.
- Closing timeline. Enough days to find and assign to a buyer (often 15–45). Too short and you can't perform; too long and the seller walks.
- Assignment fee disclosure. Increasingly, states and title companies expect the fee and your role to be disclosed. Transparency protects you.
The assignment agreement, specifically
It should name the original PSA, both parties, the assignment fee and when it's paid (usually at closing), and state that the assignee accepts all terms of the PSA. Keep it simple, attorney-reviewed, and honest.
What to never sign
- A contract with no exit. No inspection/due-diligence contingency means you're obligated to close a house you may not be able to assign. That's how beginners get personally sued.
- A non-assignable contract if wholesaling is your plan. If it says "assignment prohibited," you can't wholesale it — you'd need a double close instead.
- A huge non-refundable earnest-money deposit. If you can't assign the deal, that money can be gone.
- Anything you don't understand. If a clause is unclear, stop. Get it reviewed.
- Blanks and handshake edits. Every term goes in writing, in the document.
A word on honesty (this is the whole game)
A contract gives you the right to do this; it doesn't make every move right. Only lock up properties you can realistically deliver, be clear with sellers that you're an investor who may assign the deal, and don't tie up someone's home as a "maybe." Reputation is the only moat in this business — one burned seller travels fast.
Because assignment law varies so much by state, use state-specific, attorney-reviewed forms. Generic internet templates are a starting point for learning, not for signing. See Is Wholesaling Real Estate Legal? for the licensing side, and How to Wholesale With No Money for where the contract fits in the loop.
The come-up move
The contract isn't the scary part once you know what each clause does. Learn the two documents, protect your exit, and tell the truth — that's a durable business.
Start free on Squatters to learn the full deal flow and practice on real off-market properties before you ever sign. Squat it. Fund it. Own it. 🦝