What is the purpose of a wholesaler in a real estate transaction?

by Brent Wilk

A real estate wholesaler acts as a middleman who finds deals and connects sellers with buyers, typically without ever owning the property long-term.

Here’s the purpose broken down clearly:

1. Find Off-Market or Distressed Properties

Wholesalers focus on motivated sellers—people facing foreclosure, divorce, inherited property issues, or needing a quick sale.
They often find deals before they hit the MLS, which creates opportunity.

2. Lock in a Below-Market Price

The wholesaler negotiates a purchase contract with the seller at a discounted price.
This is usually done through a purchase agreement with assignment rights.

3. Assign the Contract to an Investor

Instead of buying the property themselves, the wholesaler:

Finds a real estate investor (often a cash buyer)
Assigns the contract to that buyer for a fee

👉 The difference between:

Contract price with seller
Price paid by the investor

= Wholesaler’s profit (assignment fee)

4. Provide Value to Both Sides

A good wholesaler solves problems for both parties:

Seller:
- Quick sale
- No repairs needed
- Flexible closing
Buyer (Investor):
- Access to discounted deals
- Saves time on deal sourcing

Example

Wholesaler gets a house under contract for $200,000
Assigns it to an investor for $215,000
Keeps $15,000 assignment fee

Important Notes

Wholesalers typically never take ownership of the property
They must follow state laws (some states regulate wholesaling more strictly)
Ethical wholesalers are transparent about their role

Bottom line:

The purpose of a wholesaler is to source discounted real estate opportunities and match them with investors, earning a fee for facilitating the deal.