How Does Wholesaling Work? A Beginner’s Step-By-Step Guide

If you’ve been looking for a way to break into real estate investing without needing tons of cash or credit, wholesaling real estate is one of the smartest ways to start. It’s simple, fast, and doesn’t require you to buy, renovate, or own a property to make money.

So, how does wholesaling work? In short, you find a property that’s selling below market value, get it under contract, and then assign that contract to another real estate investor for a profit. Instead of swinging hammers or taking out big loans, you’re connecting motivated sellers with ready cash buyers — and collecting a fee for putting the deal together.

In this guide, we’ll break down how wholesaling works step by step — from finding deals and building your buyers list to closing your first profitable assignment. Whether you’re a beginner or an investor looking to add a new income stream, you’ll get a clear roadmap for how real estate wholesaling really works and how to do your first deal the right way.

• What Is Wholesale Real Estate Investing?
• How To Wholesale Real Estate Step By Step
• How To Wholesale Real Estate With No Money
• Is Wholesaling Real Estate Easy?
• Is Wholesaling Real Estate Legal?
• Can You Wholesale Real Estate Without A License?
• Pros And Cons Of Wholesaling Real Estate
• Wholesale Real Estate: FAQ
• How To Create Win-Win-Win Scenarios When Wholesaling Real Estate?
• Final Thoughts

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What Is Wholesale Real Estate Investing?

Wholesale real estate investing is a strategy that lets you profit from property without owning it. You find a motivated seller and agree on a discounted price, put the home under contract, and then assign that contract—not the property—to an investor buyer for a fee. That fee is your profit.

You’re not flipping houses or managing rentals—you’re flipping real estate contracts. That’s why so many beginners start here: it’s low risk, teaches you to spot opportunities, and builds your negotiation and deal-analysis muscles fast. Once you understand how wholesaling works, you can run real estate wholesaling step by step like a system: find value, lock it up on paper, and match it to the right cash buyer.

At Real Estate Skills, we coach students through this process to create true “win-win-win” deals: the seller gets speed and certainty, the buyer gets a solid investment, and you get paid for putting the deal together. Ready to see the full process from A to Z? Next up, we’ll walk through how wholesaling works step by step so you can do your first deal the right way.

Learn How To Wholesale Real Estate In Every State

Once you understand how wholesaling works, you can do it anywhere — from small towns to major metro markets. Every state has its own laws and nuances, but the core real estate wholesaling step-by-step process stays the same: find motivated sellers, secure discounted deals, and connect them with investor buyers. To make things easy, we’ve created state-specific guides that show you exactly how to wholesale real estate legally and effectively across the U.S. Click below to explore how wholesaling works in your state and start building your first deals with confidence.

8 Steps To Wholesaling Real Estate

Wholesaling can be a little tricky when starting out because it feels like there's so much to do! When starting wholesaling, what should you do first? I made the wholesaling process simple for you by breaking it down into eight steps here:

1. Get Educated & Find A Wholesale Mentor
2. Find Cash Buyers & Build A Cash Buyers List
3. Find A Distressed Property Or Motivated Seller
4. Make Offers On The Properties Your Cash Buyers List Wants
5. Negotiate With The Seller
6. Get The Wholesale Real Estate Deal Under Contract
7. Close The Wholesale Deal - 3 Ways
8. Collect Your Wholesale Fee of $10,000+ (Average Amount)

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Step 1: Get Educated & Find A Wholesale Mentor

Jumping into real estate without guidance can lead to costly mistakes — especially when you’re learning how wholesaling works. The fastest way to shorten your learning curve and avoid beginner pitfalls is to get educated and work with a wholesale mentor. A mentor is someone who’s already been where you want to go — they’ve made the mistakes, learned from them, and can help you skip years of trial and error.

A good mentor does more than give advice; they provide real-world shortcuts. They’ll teach you real estate wholesaling step by step, help you recognize a deal versus a dud, and guide you through local laws and paperwork so you stay compliant. Most importantly, they’ll help you think like an investor — showing you how to build systems, negotiate confidently, and grow your network the right way.

If you’re brand new, a mentor can make the difference between spinning your wheels and closing your first deal fast. They’ll help you avoid rookie mistakes like overpaying for properties, trusting the wrong buyers, or using contracts that don’t protect you. That’s why successful wholesalers almost always credit their first big breakthrough to the right mentor or program.

Whether you choose a one-on-one mentor or a structured program, invest in your education early. A great mentor helps you see opportunities others miss and gives you the confidence to take action — turning uncertainty into clarity and your first wholesale deal into many more.

Step 2: Find Cash Buyers & Build a Cash Buyers List

“Begin with the end in mind.” — Stephen Covey, author of The 7 Habits of Highly Effective People.

One of the first lessons in learning how wholesaling works is that you should always begin with your end buyer in mind. In wholesaling, your cash buyers are the real estate investors who ultimately purchase the deals you find. They determine what types of properties you should target, what neighborhoods to focus on, and even what price ranges make sense. Building a solid cash buyers list early gives you clarity, confidence, and direction — so you never waste time chasing the wrong leads.

Think of your buyers list as your personal roadmap for every deal. The more specific you get about your buyers’ goals, the easier it is to connect motivated sellers with investors ready to close fast. Here are essential questions to ask when qualifying cash buyers:

• What areas (zip codes, neighborhoods, or school districts) do you prefer to buy in?
• What property types do you specialize in — single-family, multifamily, or fix-and-flips?
• How many properties do you typically purchase per month?
• What kind of return on investment do you target after renovations or resale?
• Do you use your own cash or private/hard money financing?
• Are there any property types you avoid? (e.g., cracked slabs, septic systems, new builds)
• How quickly can you close once a deal meets your criteria?

By building relationships before you find deals, you ensure that every property you contract already has a potential buyer in line. This not only accelerates your closings but also helps you master real estate wholesaling step by step with predictable, repeatable success.

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Watch the video above to learn how to attract trustworthy cash buyers, avoid common networking mistakes, and strengthen your buyers list — an essential foundation of every profitable wholesaling business.

Step 3: Find a Distressed Property or Motivated Seller

Now that you have your cash buyers lined up, it’s time to find the right deals to bring them. This is where the real action begins — locating distressed properties and motivated sellers who are ready to make a deal. In simple terms, this step is where how wholesaling works really comes to life. You’re not looking for perfect homes; you’re looking for opportunities — properties that need work, sellers that need solutions, and deals that make sense for investors.

Start by focusing on the types of properties that signal motivation: pre-foreclosures, foreclosures, inherited homes, tax-delinquent properties, and houses with visible neglect (like boarded windows or overgrown lawns). These owners are often more flexible and open to offers below market value because they’re facing financial or personal challenges. You can also target absentee owners — landlords tired of problem tenants — and For Sale By Owner (FSBO) listings, where sellers may be motivated to avoid agent commissions.

As you grow, build a system for sourcing leads consistently — because real estate wholesaling step by step depends on keeping your deal pipeline full. Remember, every successful wholesale transaction starts with finding a motivated seller who values convenience over price. When you help solve their problem, you create a win for them, a win for your buyer, and a win for yourself.

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Step 4: Make Offers on the Properties Your Cash Buyers Want

Now that you know what your cash buyers are hungry for, it’s time to go hunting for the right deals and start making offers with confidence. This is the point where how wholesaling works shifts from theory to action. You’re not just finding random properties — you’re targeting opportunities that match the exact criteria of your buyers list. That’s how you move deals fast and make predictable profits.

Start by focusing your search on properties that meet your buyers’ preferences — whether that’s a 3-bedroom fixer-upper in a certain zip code or small multifamily units under $300K. When you know what your investors want, you can reverse-engineer every offer to fit their buy box. This targeted approach not only saves time but also increases your closing rate dramatically.

Once you’ve identified properties your buyers would want, calculate your Maximum Allowable Offer (MAO) using a simple formula: MAO = (ARV × 70%) – Repair Costs – Your Desired Profit. This ensures your offer price leaves enough room for your buyer to profit and for you to earn your assignment fee.

When submitting offers, focus on speed and consistency. Use prewritten email templates, follow up with agents regularly, and always include proof of funds from a cash buyer or investor partner if possible. Over time, as you repeat this process, you’ll build strong relationships with agents, sellers, and investors — the key to mastering real estate wholesaling step by step and closing deals predictably.

Step 5: Negotiate With The Seller

Wholesaling is a well-paying strategy, but how much you make per deal depends on how good a deal you can negotiate with the seller. This is because you only get to keep the difference between the seller’s price and the sale price as your assignment fee.

At the same time, you cannot mark up the sale price beyond market value since most potential home buyers are also investors looking to make money from the same property. Try to negotiate an offer between 40% and 60% below the asking price so you can comfortably market it at a higher price.

Step 6: Get The Wholesale Real Estate Deal Under Contract

Whatever wholesale contract you go with, be sure that this important language is in there:

• The right to assign the contract to someone else.
• An inspection contingency allows you to back out of a deal if something comes up that is unexpected.

The contract is always the “law of the land.” Meaning, that you have to abide by what is written on the contract and what you and the seller agree to on that contract. The only way that a contract can be changed is if something is crossed out and initialed/signed by both parties acknowledging the change. Even then, I recommend using addenda that is signed by all parties if any changes need to be made to the wholesale contract.

Step 7: 3 Ways To Close The Wholesale Deal

The three most common ways to wholesaling a real estate deal are:

1. Assigning the wholesale contract
2. Double Closing (also called a simultaneous closing)
3. Entity Assignment

Assigning the contract is when you transfer the rights to buy the property to another investor for a wholesale fee. Your name is then taken off the contract and the other investor replaces you in the contract. You may have heard of “how to invest in real estate with no money.” Well, here is one of the best ways to do it! You can get a property under contract, assign it, and make $10,000 in a week or two without spending $1. Isn’t that great?

Double closing is when you close on the property in your name and then close once again with the investor who wants to buy it from you. Most of the time, you do not need any of your own cash to purchase the property.

In a double closing situation, you line up 2 escrows back to back, so you immediately close on the seller’s property in your name and then immediately sell the property to your investor cash buyer at a surplus. When done correctly, you can use all of the investor’s funds without having to use any of your own capital.

Some escrow companies and investors are not too keen on doing a double close with only one person’s money. In this particular situation, you can always close on the first property with your own capital and then close immediately with the investor’s money, and then, the investor will own the property. This can be difficult if you do not have the capital to outright buy the deal, so there are actually companies that will provide this sort of transactional funding for you. The transactional funding company may charge you a couple of percentage points on the money you borrow, but at least you get the wholesale real estate deal done!

The third way you can close a wholesale deal is when you do an Entity Assignment. This is when you create an LLC, get the property under contract with the LLC, and then assign the membership rights of that LLC to the new investor. This is particularly useful when dealing with a seller who refuses to assign the contract or if you're dealing with legalities that do not allow you to assign or double close on the deal.

Step 8: Collect Your Wholesale Fee

Make sure your hard work is rewarded! The average wholesale fee is 5% to 10% of the total price of the property.

The best house flippers who renovate property actually make it a goal to wholesale property every month to keep consistent cash flow coming into their real estate investing businesses! A lot of renovations can take at least a few months to complete, so doing wholesale deals that typically close in 2 weeks or less provides a steady stream of capital to their investing business!

Once again, I recommend wholesaling to anyone who wants to get started in real estate. You can do it with $0, and it's basically risk-free when done correctly. Be sure to always include a contingency in your wholesale contract that allows you to back out if unforeseen circumstances happen, and also make sure your contracts are assignable! Review this step-by-step guide about the wholesaling process, and you'll be in great hands!

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*For in-depth training on real estate investing, Real Estate Skills offers extensive courses to get you ready to make your first investment! Attend our FREE Webinar Training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way!

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How To Wholesale Real Estate With No Money

If you’ve ever wondered whether you can start real estate investing with little or no cash, good news: you can. In fact, understanding how wholesaling works reveals one of the few real estate strategies where you don’t need to buy, renovate, or finance properties at all. Instead, you earn money by connecting sellers and investors — and getting paid for creating that opportunity.

Here’s how real estate wholesaling step by step works with zero upfront capital. First, research your target market to identify areas with strong investor demand and affordable distressed homes. Next, look for motivated sellers — homeowners facing foreclosure, tax delinquency, or who simply want a fast, hassle-free sale. Once you’ve found a potential deal, negotiate the lowest possible price and get the property under contract.

Even top investors use other people’s money (OPM) to close deals and scale their portfolios. The key takeaway? You don’t need deep pockets to get started — you just need the knowledge, relationships, and confidence to connect the right buyers and sellers. Once you understand how wholesaling works, you’ll see that your real power isn’t money — it’s your ability to find and control great deals.

Read Also: How To Wholesale Real Estate With No Money

Is Wholesaling Real Estate Easy?

Wholesaling is one of the best real estate investing techniques because it requires no previous experience and is not capital-intensive. Additionally, it has quick turnarounds, as most deals take no more than three months to close.

However, to excel, wholesalers need to actively search the market for not just any leads but motivated seller leads. They also need to create, maintain, and continuously update a solid cash buyer’s list, which makes wholesaling pretty tough for beginners. On the upside, wholesaling properties gets better and easier the more experienced you become and the larger your network gets.

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Is Wholesaling Real Estate Legal?

Yes, wholesaling real estate is legal. As an experienced wholesaler and real estate investor, I know that some are skeptical about wholesaling and real estate investing. Over the years, I’ve coached aspiring and professional wholesalers and heard every excuse under the sun why wholesaling shouldn’t work. But guess what? They ARE all excuses… not reasons. Wholesaling is legal and can work in every real estate market.

Many who think wholesaling is illegal are thinking about the process in the wrong way. For example, those who think wholesaling is illegal usually believe that a wholesaler is trying to act as a real estate agent or broker in the transaction, but this is not the case. A real estate wholesaler is not selling a house or a piece of property. See, selling a piece of property is actually the job of a licensed real estate agent or broker, however, a wholesaler is only selling the equitable interest in a contract to buy a property. Do you see the difference?

To repeat, wholesaling real estate is legal because this is the process of selling the equitable contract rights to buying a property, and not selling the property itself! Be sure not to get it twisted because many get confused about this concept. Also, be sure to take everything you hear about wholesaling being illegal with a grain of salt because, usually, everything stems from this common misunderstanding we just cleared up!

Can You Wholesale Real Estate Without a License?

Yes, you can absolutely wholesale real estate without a license. One of the reasons so many beginners love this strategy is that once you understand how wholesaling works, you’ll see it doesn’t require a real estate license or large amounts of money to get started. As a wholesaler, you’re not acting as an agent or broker who represents others for a commission. Instead, you’re selling your equitable interest in a purchase contract — a completely legal transaction in every state when done correctly.

This distinction is crucial: real estate agents market properties for clients, while wholesalers market the contract to buy those properties. You control the deal, not the property itself. That’s why it’s 100% possible to operate legally and profitably without a license — as long as you follow state guidelines and disclose your role honestly to both the seller and buyer.

That said, some wholesalers eventually choose to get licensed for added flexibility, access to the MLS, and extra credibility when networking with agents or investors. But you don’t need a license to begin — you just need knowledge, integrity, and consistent action. Once you grasp how wholesaling works, you’ll realize the opportunity is open to anyone ready to put in the effort.

Pros & Cons of Wholesaling Real Estate

Like any investment strategy, how wholesaling works comes with both advantages and challenges. For beginners, understanding these trade-offs helps you decide if wholesaling aligns with your goals, resources, and time commitment. Here’s a clear breakdown of what to expect before jumping in:

Pros and Cons of Wholesaling Real Estate

Understanding both sides of how wholesaling works helps set realistic expectations. Wholesaling can be a fast, low-cost way to enter the real estate market and build income — but it requires persistence, networking, and strong communication to succeed. If you treat it like a business

Real Estate Wholesaling Step-By-Step: FAQs

1. Do You Need A Real Estate License To Wholesale Houses?

No, you don’t need a real estate license to wholesale houses since wholesale real estate essentially involves selling or assigning the rights to purchase a property to an end buyer, in most cases, another investor. But while it’s not a prerequisite, it’d be a good idea to get one since it opens up more investing opportunities.

Note, if a licensed real estate agent were to wholesale a property, they’d be required to disclose their profession as it’s illegal for them to market properties they may have a financial interest in.

2. Do I Need A Real Estate Agent To Wholesale?

No, you don’t need a real estate agent to start wholesaling properties. However, it pays to have one since they’ll speed up the buyer-finding process, enabling you to close the deal sooner than you would if you were to single-handedly wholesale the property.

3. How Much Money Can I Make Wholesaling Real Estate Per Property?

Most wholesalers earn an average of 5% to 10% of the total price of the property. However, what you make may be above, within, or below this range depending on your wholesale marketing techniques, the volume of properties you wholesale annually, your target location, and the market purchase price point.

4. What Are The Documents Needed For Wholesaling Real Estate?

As noted, wholesaling real estate essentially involves assigning the rights to buy a property to the end buyer. You’re neither the seller nor the buyer. In that light, you will need a wholesale contract, which is technically a purchase and sale agreement from the property owner.

Unlike a standard purchase contract, which only indicates the transfer of property ownership from one individual to another, a purchase and sale agreement grants a wholesaler the rights to legally transfer a property’s sale contract to the end buyer.

5. How Do I Structure A Wholesale Real Estate Contract?

A wholesale real estate contract is essentially a purchase and sale agreement, which means you should include your legal name and address, as well as the seller's name and address. It should also feature a property description, deed type, the marketable title, information about any deposits or earnest money you may have paid, and financing terms. The contract should also include a contingency clause highlighting financing, inspection, and other contingency details.

How To Create Win-Win-Win Scenarios When Wholesaling Real Estate

You create a win for the seller of the property because you are getting them out of a sticky situation. For example, the seller can be facing foreclosure and needs to sell their home quickly to avoid ruining their credit for years. Maybe the property is owned in trust with six different owners, and instead of putting the property on the market and evaluating 20 different offers, they may just want to work with you with no commissions involved.

You also create a win for the real estate investor you’re selling the wholesale contract to. This investor wants to renovate the property and make a profit. A majority of the time, their profit will be larger than your wholesale fee (what you get paid), but your wholesale fee can be larger at times. As long as your investor (the person buying the deal) makes the return on investment that they need, then they should not care about how much money you make from the wholesale deal.

For example, let’s say you get a property under contract at $250,000, and your cash buyer will buy the property at $300,000. Well, then you can get a $50k wholesale fee for finding that deal and getting it under contract. Keep in mind that the investor is taking on more risk by either using their own capital or borrowing capital to buy, fix, & flip the deal. They have to make a profit on the deal, and in order to run a great wholesaling business, you want everyone to win. Don't forget this!

You’re also creating a win for yourself. You found the deal! You got it under contract! You did some of the hardest work! Also, what I believe to be the MOST IMPORTANT WORK! No investor (your cash buyer) can make money without the DEAL.

When you get the wholesale deal, the ball is in your court. You can wholesale the property or renovate it. All in all, you create a win for yourself by taking home a wholesale fee.

Final Thoughts On Real Estate Wholesaling Step-By-Step

Once you understand how wholesaling works, you’ll see it’s one of the most practical ways to start earning income in real estate without taking on debt or owning property. By learning real estate wholesaling step by step—from finding motivated sellers to assigning contracts for profit—you can build momentum, experience, and cash flow faster than with most traditional investing methods.

Wholesaling isn’t about luck—it’s about skill, consistency, and following a proven process. When you take the time to master the fundamentals, stay persistent, and surround yourself with the right guidance, you’ll discover just how powerful this business model can be. And if you’re ready to accelerate your journey, Real Estate Skills is here to teach you exactly how wholesaling works so you can close deals confidently and start growing your investing career today.

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*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs.