How To Wholesale Real Estate In Arizona: Step-By-Step (2024)

In this article, we’ll show you exactly how to wholesale real estate in Arizona. Let’s dive in!

• What Is Wholesaling Real Estate?
• How To Wholesale Real Estate In Arizona (9 Steps)
• Is Wholesaling Real Estate Legal In Arizona?
• How Much Do Real Estate Wholesalers Make In Arizona?
• Do You Need A License To Wholesale Real Estate In Arizona?
• Is Wholesaling In Arizona Easy?
• Final Thoughts On Wholesaling In Arizona

Arizona is the country’s sixth largest state and one of the four Corner States in the southwestern United States – the other three corners include New Mexico, Utah, and Colorado. With nearly 114,000 square miles and a topography that varies from mountainous to desert plains, there are many things to learn about how to wholesale real estate in Arizona.

Arizona was adopted in 1912 and was the last state adopted in the contiguous U.S. The population of the southwestern state exceeded 7.4 million as of July 2023 and has been a favorite retirement destination for decades. The diversity of Arizona’s population includes 27 federally recognized Indian tribe reservations.

The topography of Arizona is as interesting as its history. While the north has pine forests, canyons, mountains, and snowfall, southern Arizona has a desert climate, with hot, arid summers and traditionally mild winters.

Arizona is also home to one of the seven natural wonders of the world – the Grand Canyon.

Phoenix, which is the state capital and cultural center, is also Arizona’s largest city. The median sales price for a home in Arizona (as of February 2024) was $440,400 – a 8.1% increase year-over-year.

However, the markets, which were on fire for about two years, have recently been cooled by the Federal Reserve Bank’s economic policy decisions that include rate increases. The following markets remain the most competitive in Arizona:

• Peoria
• Gilbert
• Tempe
• Chandler
• Glendale
• Scottsdale

What Is Wholesaling Real Estate?

Wholesaling real estate is a short-term investment strategy. Investors have clamored for this type of investment because its short-term nature reduces inherent risks typically found in longer investment strategies. The capital required to begin as a wholesaler is much less than what would be needed in other real estate investment options.

A real estate wholesaler’s objective is to find a property attractively priced, below market value.

Wholesale investment properties tend to have sellers or homeowners who are strongly motivated (usually financial, but not always) to negotiate with a wholesaler for a favorable real estate deal for both. When a wholesaler and seller have executed a purchase agreement, the wholesaler then assigns their equitable rights to another end buyer.

This alternate buyer is usually another real estate investor who specializes in the fix and flip houses side of the business – and the transfer typically happens before the first real estate transaction closes.

How To Wholesale Real Estate In Arizona (9 Steps)

While there are various ways to go about wholesaling real estate in Arizona, here’s our proven nine-step process to help you reach your goals. 

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Before we begin our guide on wholesaling real estate in arizona, we invite you to view our video on How To Wholesale Real Estate Step by Step (IN 21 DAYS OR LESS)!

Host and CEO of Real Estate Skills, Alex Martinez, provides a comprehensive, step-by-step guide for beginners to start wholesaling real estate!

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Now, here's our simple step-by-step process for wholesaling real estate in Arizona:

1. Partner With A Wholesale Mentor
2. Learn Arizona Real Estate Wholesaling Laws & Contracts
3. Understand The Arizona Real Estate Market & Lingo
4. Build A Cash Buyers List
5. Find Motivated Sellers & Distressed Properties
6. Put Distressed Properties Under Contract
7. Assign The Contract To The Cash Buyer
8. Close Deal And Collect Assignment Fee
9. Double Close Or Wholetail When Necessary

Step 1: Partner With A Wholesale Mentor

Mentorship is a tried-and-true method in which an experienced individual (the “mentor”) guides and offers emotional support and motivation as a role model to their protégé (or “mentee”). In addition to providing specific guidance about wholesaling real estate, a wholesale mentor can help a beginner:

• Define and set career goals
• Identify vital resources
• Create and develop contacts, colleagues, and a buyers list, to name a few.

Mentor relationships evolve as the needs of the mentee change. They can be formal or informal types of relationships. Finding a wholesale mentor can accelerate the time it takes you to become successful in your wholesale real estate business.

Step 2: Learn Arizona Real Estate Wholesaling Laws & Contracts

The Arizona Department of Real Estate is the state agency responsible for administering and enforcing the state’s real estate licenses. The ADRE is tasked with approving and monitoring real estate pre-licensing instruction, testing, and continuing education. Arizona’s real estate land license laws are found in Title 32 Professions, Chapter 20 of the Arizona State Legislature - entitled Arizona Real Estate Rules.

Below are the revised statute's definitions of real estate license levels in Arizona

Real estate broker in Arizona is defined as follows:

An associate broker in Arizona is defined as follows:

A designated broker in Arizona is defined as follows:

A real estate agent or salesperson in Arizona is defined as follows:

However, there are a variety of exceptions to the state’s real estate licensing laws, which include being the owner of the property being sold, among others. These can be found in Ariz. Rev. Stat. § 32-2121.

Effective September 24, 2022, Wholesale Status In Arizona Must Be Disclosed

The real estate investing strategy known as wholesaling has been incredibly popular over the past decade. Some argue that wholesaling, as an investment strategy, infringes upon the practices that require a real estate license. As a result, the state of Arizona’s House Bill 2747 – regarding real estate wholesaling was signed into law by the governor.

The following wholesaling law (Ariz. Rev. Stat. 44-5101) is effective on September 24, 2022.

For the purposes of this Arizona law, real property is defined as follows:

In this new Arizona disclosure requirement, the wholesale players are defined as follows:

The new law notes that prior to any party entering a binding agreement in Arizona:

1. A wholesale purchaser of any Arizona residential real property shall disclose in writing to the seller that the buyer is acting in the transaction as a wholesale buyer.
2. A wholesale seller of any Arizona residential real estate shall disclose in writing to the buyer that the seller is acting in the transaction as a wholesale seller that holds an equitable interest in the subject property. In addition, the wholesale seller must disclose that they may not have the ability to convey title to the subject property.

If the wholesale buyer in Arizona violates the above-noted law, the seller in the transaction:

• Has the option to cancel the real estate contract of sale at any time prior to closing without penalty.
• The seller may keep the earnest money paid (in escrow) at the execution of the contract by the wholesaler purchaser.

If the wholesale seller in Arizona violates the above-noted law, the buyer in the transaction:

• Has the option to cancel the real estate contract (at any time) before closing without incurring a penalty for doing so.
• Shall get a refund of all earnest money paid when signing the real estate contract.

Arizona Real Estate License Reciprocity

Those people who hold a real estate license from another jurisdiction who wish to seek licensure recognition must comply with these state requirements:

• Be an Arizona resident
• Have a current license from another state for at least one year
• Have completed sanctioned real estate education in the other state and passed the state exam.
• An applicant has not had a real estate license revoked or voluntarily surrendered anywhere else.
• An applicant has not had any discipline against them by another regulating agency & there are no open allegations, complaints, or investigations.

Read Also: How To Become A Real Estate Agent In Arizona (5 Steps)

Step 3: Understand The Arizona Real Estate Market & Lingo

The Arizona Association of REALTORS is the largest professional organization that serves the Arizona real estate business market. The Arizona Association of REALTORS (AAR) represents more than 50,000 professionals across the state. The AAR became a member of the National Association of REALTORS (NAR) in 1945. This state organization consists of 14 location associations across the state.

In October 2022, the Arizona Association of REALTORS is releasing an updated residential contract.

The revisions to the residential contract include:

Ultimately, the broader verbiage provides more contractual options to the contract’s parties. Additional FAQs and their answers are provided by the AAR.

The updated documents are available as follows:

• The Residential Resale Real Estate Purchase Contract
• The Residential Buyer’s inspection Notice and Seller’s Response (BINSR)

Finally, note that Arizona is not an attorney-close state.

Although some states require legal representatives to manage a real estate closing, Arizona does not. However, investors and those new to wholesalers should consult with a real estate attorney for those issues and real estate matters for which they have no experience.

Step 4: Build A Cash Buyers List

A cash buyers list is an important facet of a wholesaler’s toolbox. Cash buyers are the end buyers – usually other investors, who are ready to buy distressed properties that need renovation to make them market-ready. A cash buyers list can be bought or developed organically by delving into the local real estate market and its established players.

Either way, the more comprehensive and current a buyer’s list, the smoother a transaction will likely proceed.

Step 5: Find Motivated Sellers & Distressed Properties

The digital real estate landscape provides a variety of sources to find motivated sellers and distressed properties that offer wholesale opportunities. Sites dedicated to real estate, like Redfin or Zillow, offer incredible amounts of current data, plus potential wholesale deals. Check out meetups and podcasts dedicated to real estate wholesaling.

Lender foreclosure or REO lists or off-market properties for other sources of wholesale real estate deals in Arizona. And note that a potential wholesale deal can be a rental property, multifamily property, or even single-family owner-occupied.

Read Also: Finding Motivated Seller Leads: Free & Paid Tactics

Step 6: Put Distressed Properties Under Contract

When you find a property worthy of consideration, the next step is to negotiate with the seller to determine the details of the wholesale real estate deal. However, before executing a wholesale real estate contract (with very real legal consequences), it is important to analyze or assess the quality of the potential investment.

Experienced wholesalers will eventually create the criteria on which to base an investment decision. But until then, it is best to rely on some proven metrics to demonstrate the viability to profit from the wholesale deal.

How To Determine If A Property Is Investment Quality

Real estate wholesalers and flippers typically depend on dual investment metrics to determine if a potential property is of investment quality. How they use these metrics depends on their investment objectives.  

The 70% Rule: This investment metric notes that an investor should pay no more than 70% of the property’s ARV – After Repair Value. The ARV is the anticipated market value of the property – accounting for the expected renovations and updates to make it market-ready.

The Maximum Allowable Offer (MAO): The MAO Formula is a calculation that accounts for the repair costs and expenses required to bring a property to market. Most often, an MAO will be less than an ARV due to the existence of required repairs.

Consider this example which should help clarify:

1. A motivated wholesaler is able to negotiate a $260,000 purchase price for a property. However, with some research, the wholesaler determines that the property, after renovation, could be sold for $450,000 - also known as the ARV. Based on these criteria, a fix and flip real estate specialist (the likely buyer of a wholesale property) will be willing to be willing to pay the MAO. But, how do you find the MAO?
2. Secondly, calculate what 70% of the ARV or 70% of $450,000. 0.7 x $450,000 = $315,000
3. Then, calculate the MAO for the investor by subtracting anticipated renovation costs of $315,000. For example, $315,000 - $35,000 = $280,000. The MAO would be $280,000

Therefore, a wholesaler in Arizona could generate a quick $20,000 profit (MAO of $280,000 - $260,000) in the real estate transaction noted above.

Read Also: Estimating Rehab Costs: (Ultimate) Investor's Guide

Step 7: Assign The Contract To Cash Buyer

A wholesaler’s goal is to assign their Equitable Rights to a new buyer. Ideally, an Arizona wholesaler attempts to assign the right to purchase the property BEFORE the first contract closes. This conclusion to a wholesale deal is the fastest and least costly. The risk is reduced because the wholesaler never actually takes legal title or possession of the property.

Remember that a real estate wholesaler’s right to purchase the property (granted by the Doctrine of Equitable Conversion) is the ONLY legal, and marketable wholesalers can sell/market without first obtaining a real estate license in the state.

The legal instrument used to assign the wholesaler’s equitable rights is an Assignment of Contract, which stipulates that the new end buyer now has the legal right to buy the subject property, according to the contract’s provisions.

Step 8: Close Deal And Collect Assignment Fee

The assignment document changes the buyer from the wholesaler (the ‘assignor’) to the new end buyer (the ‘assignee’). The new buyer, disclosed by the Assignment of Contract, closes with the original seller.

The Arizona wholesaler’s profit or also known as the assignment fee is the difference between the price in the original and assigned purchase agreement.

Step 9: Double Close Or Wholetail When Necessary

There are times when unexpected events arise, and a wholesaler needs to close the first contract prior to assigning their equitable rights to another buyer. If this should happen (and it does), the wholesaler must have the ability to close (in other words, the capital to fund the deal) and meet the terms of the original legal agreement before selling the property to another buyer.

Should the wholesaler take the title, even if temporarily, they will do what is known as a "Double Closing". Technically, the Double Close requires additional closing costs but does so by providing additional protection. Remember that in the double close, the wholesaler takes the title and, when selling, is truly the owner of the property– someone who would not need of a real estate license in Arizona.

So, in the first transaction, the Arizona wholesaler is the buyer, but in the subsequent transaction, the wholesaler is now the seller.

Another benefit offered by the double-close exit strategy is that the wholesaler’s profit is not disclosed to the seller or anyone else involved.

What Is "Wholetailing?"

Wholetailing is also another wholesaling method which is a combination of a fix and flip and a standard wholesale deal. In wholetailing, you’ll take ownership of the property, do some renovations, and then re-list the property shortly thereafter on the market.

Wholetailing is often a desirable exit strategy because you can access a larger pool of buyers when you re-list the property on the MLS. These buyers typically use financing and are generally less sensitive to pricing as compared to cash buyers.

Is Wholesaling Real Estate Legal In Arizona?

Wholesaling is legal in Arizona if wholesalers comply with the new real estate legislation that went into effect on September 24, 2022. This new law requires the following of wholesalers working in Arizona -

• Someone buying a residential real property as a wholesaler shall disclose in writing to the seller that they are acting in the transaction as a wholesale buyer.
• Someone selling a residential real property as a wholesaler shall disclose in writing to the buyer that they are acting in the transaction as a wholesale seller that holds an equitable interest in the subject property. In addition, the wholesale seller must disclose that they may not have the ability to convey title to the subject property.

If the law is violated, the seller:

• Has the option to cancel the real estate contract of sale – at any time prior to closing – without penalty.
• May keep the earnest money deposit paid at the execution of the contract by the wholesaler purchaser.

If the law is violated, the buyer:

• Has the option to cancel the real estate contract (at any time) before closing without incurring a penalty for doing so.
• Shall get a refund of all earnest money paid when signing the real estate contract.

 With a simple disclosure statement made with your initial offer, wholesaling is completely legal in Arizona.

How Much Do Real Estate Wholesalers Make In Arizona?

According to Rocket Mortgage's public data records, the average payment for a real estate wholesale fee is usually 5% - 10% of the total property price nationwide.

Wholesaling is self-employment. There’s no set hourly wage or salary involved. Instead, the amount of money that can be made depends on how many deals are closed, resulting in assignment fees, net profits made from double closings, or any other profits made through real estate deals.

Do You Need A License To Wholesale Real Estate In Arizona?

No. Arizona real estate wholesalers, if they comply with real estate and license laws, can work without obtaining a real estate license.

In addition, to comply with the new and existing laws in Arizona, wholesalers will generally benefit if they use sound business techniques and principles to accomplish their wholesale objectives -

• Your actions and choices must be transparent and disclosed to comply with the new law.
• Your actions must be from a place of integrity.
• You should proactively manage each party to the contract’s expectations. 

Read Also: Can A Realtor Wholesale Property?

Is Wholesaling In Arizona Easy?

Wholesaling real estate, like most real estate investment types, requires skill and patience. However, wholesaling can be done with less money, which essentially opens the investment to many interested investors who were previously boxed out if they only had limited funds to use.

Wholesaling is also short-term, which reduces some risks but does not eliminate them. Wholesaling is easy – once you understand the lay of the land and the rules of the game. You can go it alone or join forces with those who have already learned the hard (but avoidable) lessons. Modern wholesaling mentorship such as the Pro Wholesaler VIP Program offers a convenient way to ready yourself for the Arizona wholesale market.

The Pro Wholesaler VIP Program is designed for the modern entrepreneur to learn the basics and how to help new real estate wholesalers avoid the pitfalls typically found by beginners. It is 100% online and is used for local and virtual real estate wholesaling.

Read Also: How To Find Off-Market Properties In Arizona

Final Thoughts On Wholesaling In Arizona

Many experienced real estate investors first began by dabbling in the wholesale market and trade. The limited capital allows you to test the market (and your own ability) without large liabilities and risks. Plus, wholesalers are constantly evolving and learning new insights and trends within this specific slice of the real estate market.

Check out our brand new free training on how we help investors all across the country wholesale and flip houses from the MLS using only a laptop and a cell phone.