Basic Wholesaling Structure

by | Jan 26, 2023

There are just three parties here: Party A, Party B, and Party C.

Party A is the current property owner.

Party B is the person who makes an offer on that property (the wholesaler).

Party A and Party B come to terms and execute a legally binding contract for the sale of that property. So far so good?

Party B actually does not intend to buy the property. His or her objective is to actually sell the contract.

Party B would like to find another person to buy the sales agreement from him—the contract— and that other person will buy the property. Party B would like to profit from his efforts by identifying a good deal, so he, Party B, sells the contract to Party C.

Party B wholesales the contract for a fee. In other words, Party B charges a wholesale fee to Party C in exchange for Party C purchasing the rights of the buyer. Party C now steps into the buyer role in the sales agreement and executes the transaction, actually buying the property from Party A.

Party C is ultimately the person who purchases the property.

Graphically this looks like:

A to B = original sales agreement

B to C = wholesale deal

A to C = C buys property from A

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