What Is a Wholesale Real Estate Contract? Assignment vs Double Close Explained

This guide is part of our complete wholesale real estate guide.

Every wholesale deal comes down to a contract. Not the property itself, not the renovation, not the buyer's financing -- the contract. When you wholesale real estate, you are not buying and selling houses. You are buying and selling your position in a purchase contract. Understanding the legal mechanics behind that position is the difference between closing deals confidently and stumbling into mistakes that cost you money or get you sued.

There are two primary ways to structure a wholesale transaction: assigning your contract to an end buyer, or closing on the property yourself and immediately reselling it through a double close. Both are legal. Both work. But they serve different purposes, carry different costs, and fit different situations. This guide breaks down exactly how each works, when to use them, and the contract clauses that protect you.

What is an assignment of contract?

An assignment of contract is exactly what it sounds like: you transfer your rights and obligations under the original purchase contract to a new buyer. You are not selling the property. You are selling your position in the deal. The end buyer steps into your shoes and closes directly with the seller, paying the original contract price plus your assignment fee.

Think of it this way: you sign a contract to buy a property at $120,000. You find a buyer willing to pay $135,000. Instead of closing on the property yourself and reselling it, you assign your contract to the buyer for a $15,000 fee. The buyer closes with the seller at $120,000 and pays you $15,000 separately. One closing, one set of closing costs, one title search. Simple.

How assignment works step by step

1. Get the property under contract. You sign a purchase agreement with the seller. The contract must include "and/or assigns" language after your name, or a separate assignability clause. This is non-negotiable. Without it, you cannot assign.
2. Find your end buyer. Market the deal to your buyer list, post on investor forums, blast to your network. The clock is ticking -- your option period and closing date are hard deadlines.
3. Execute the assignment agreement. This is a separate document from the original purchase contract. It names you as the assignor, the end buyer as the assignee, states the assignment fee, and includes the original contract as an exhibit. Both parties sign.
4. Send to title. The title company receives the original purchase contract plus the assignment agreement. They prepare closing documents showing the seller conveying the property directly to the end buyer.
5. Close. The end buyer brings funds to cover the original purchase price plus your assignment fee. The title company disburses the purchase price to the seller and the assignment fee to you. One closing, done.

What is a double close?

A double close, also called a simultaneous close or back-to-back closing, involves two separate transactions. In the first transaction (the A-to-B), you buy the property from the seller. In the second transaction (the B-to-C), you sell the property to your end buyer. Both closings happen on the same day, sometimes within hours of each other, sometimes within minutes.

The mechanics are straightforward: you close on the property at $120,000. You then immediately sell it to your end buyer at $145,000. You net $25,000 minus closing costs on both sides. The seller only sees what they agreed to sell for. The buyer only sees what they agreed to buy for. Neither party knows what the other paid or received.

How double close works step by step

1. Get the property under contract. Same as an assignment, but you do not need "and/or assigns" language. You are the buyer, and you intend to close.
2. Find your end buyer. Market the deal, just as you would with an assignment. You need your buyer lined up before your closing date.
3. Coordinate with the title company. The title company needs to know this is a double close so they can prepare two sets of documents. Not all title companies will handle double closes, so confirm this upfront.
4. Close A-to-B. You purchase the property from the seller. Funds come from the end buyer's closing (in most cases, the title company uses the end buyer's funds to close your purchase -- this is called transactional funding). Some title companies require you to bring your own funds.
5. Close B-to-C. You sell the property to the end buyer. This can happen simultaneously or the same day. You receive the difference between your purchase price and sale price, minus closing costs.

Assignment vs double close: when to use each

Both structures accomplish the same goal: you profit from controlling a contract. The choice between them depends on four factors.

Fee size and transparency

If your assignment fee is $5,000-$10,000 on a $150,000 property, nobody blinks. That is a reasonable fee for the work you did. But if your assignment fee is $35,000, the seller may feel cheated when they see how much you are making, and the buyer may question whether they are overpaying. A double close keeps your spread private. Neither party sees the other side's numbers.

Contract assignability

Some contracts are not assignable. Bank-owned (REO) properties, HUD homes, and some estate sales use contracts that explicitly prohibit assignment. If the contract says "this agreement is not assignable," you cannot assign it. Period. Your only option is a double close. This is why you should always read the contract before you sign, or better yet, use your own contract with assignability built in.

Cost

An assignment has lower transaction costs because there is only one closing. You avoid the second set of title fees, recording fees, and potential transfer taxes. A double close means two sets of everything: two title searches, two sets of closing costs, two recording fees. In Texas, this typically adds $1,500-$3,000 to your costs. In states with transfer taxes, it can be significantly more.

Speed and simplicity

Assignments are simpler. One closing, one title search, fewer documents. Double closes require more coordination with the title company, potentially transactional funding, and tighter scheduling. If you are doing high volume, assignments are faster and easier to scale.

Key contract clauses every wholesaler needs

Whether you are assigning or double closing, the clauses in your purchase contract determine whether the deal works or falls apart. Here are the ones that matter most.

The "and/or assigns" clause

This is the most critical clause for assignment deals. Your name on the contract should read "John Smith and/or assigns" as the buyer. Some wholesalers add a separate assignability paragraph that states: "Buyer shall have the right to assign this contract to a third party without the consent of the seller." Either approach works. Without one of these, you cannot assign the contract.

The option period

In Texas, the option period is a negotiated window (typically 7-14 days) during which the buyer can terminate the contract for any reason by forfeiting a small, non-refundable option fee. This is your safety net. If you cannot find a buyer, if the numbers do not work after deeper analysis, or if the property has issues you did not anticipate, you can walk away during the option period and only lose the option fee. The option fee is usually $10 to $500, paid directly to the seller. This is separate from earnest money.

Earnest money

Earnest money is your good-faith deposit, held by the title company (not the seller). In wholesale deals, earnest money is typically much smaller than in retail transactions -- often $10 to $500. The key distinction: earnest money is refundable during the option period and under certain contingencies. After the option period expires, you generally forfeit your earnest money if you back out without a valid contractual reason.

Inspection contingency

An inspection contingency gives you the right to have the property professionally inspected and to renegotiate or terminate based on the findings. In Texas, the option period serves a similar purpose, but in other states, an explicit inspection contingency is your primary exit mechanism. Make sure your contingency window is long enough to get inspections done and analyze the results.

Closing date

Your closing date should give you enough time to find a buyer and close, but not so much time that the seller gets nervous. For assignments, 21-30 days is typical. For double closes, you may need slightly longer to coordinate two closings. Build in a few extra days as buffer, but remember: sellers prefer fast closings. A 60-day closing date on a wholesale contract raises red flags.

What your contract should look like

A wholesale purchase agreement has the same core structure as any real estate purchase contract. The key sections are:

• Parties. Buyer (you, and/or assigns) and seller, with full legal names and addresses.
• Property description. Legal description plus street address. Get this from the county tax records, not from a Zillow listing.
• Purchase price. The agreed price. Spell it out in words and numbers.
• Earnest money. Amount, where it is deposited (title company), and the deadline to deliver it (usually 3 business days after execution).
• Option fee and period. Amount of the non-refundable option fee and the number of days in the option period (Texas-specific).
• Contingencies. Inspection, financing (if applicable), title, and any other conditions that must be met for closing.
• Closing date. The deadline for closing the transaction.
• Assignability clause. Explicit statement that the buyer may assign this contract.
• Signatures. Both parties sign and date. In Texas, this must be notarized for recording purposes.

In Texas, the standard contract is the TREC 1-4 Family Residential Contract (Resale). This is the form that the Texas Real Estate Commission requires for most residential transactions. You can add an addendum with wholesale-specific clauses (like an explicit assignability clause) as long as it does not conflict with the TREC form.

Common contract mistakes that kill deals

After seeing hundreds of wholesale transactions, these are the mistakes that come up again and again.

Forgetting "and/or assigns"

The most common mistake and the most costly. If your contract does not allow assignment and you planned on assigning, your only options are to double close (which costs more) or renegotiate with the seller to amend the contract (which may not work). Always verify the assignability clause before you sign.

Option period too long or too short

Too long (30+ days) and the seller gets suspicious. Why do you need a month to inspect a property you claim to want? Too short (3-5 days) and you do not have enough time to run your numbers and find a buyer. The sweet spot in Texas is 7-14 days. This gives you enough time to analyze the deal, get inspections if needed, and start marketing without alarming the seller.

Non-refundable earnest money

Never agree to non-refundable earnest money without an option period or contingency that protects you. If the deal falls apart and your earnest money is non-refundable, you are out that money with nothing to show for it. In Texas, the option period protects you -- you can terminate for any reason and only lose the option fee (not the earnest money). In other states, make sure your contingencies cover you.

Using the wrong contract form

In Texas, using anything other than the TREC 1-4 for residential resales can create legal issues. Some wholesalers use generic contracts downloaded from the internet. These contracts may not comply with state law, may not be accepted by title companies, and may not hold up in court. Use the standard form for your state and add your wholesale-specific terms via addendum.

Not having a title company lined up

You need a title company that understands wholesale transactions. Not every title company does. Some will refuse to handle assignments. Some will not do double closes. Find a wholesale-friendly title company before you start putting deals under contract. Ask other investors in your market for referrals.

Texas-specific notes

Texas has some unique features that make it particularly wholesaler-friendly.

• TREC 1-4 Contract. The standard residential purchase contract in Texas. It is a fill-in-the-blank form that covers all the essentials. Paragraph 11 covers the option period (unique to Texas). Get familiar with every paragraph.
• Option fee. Typically $10-$500, paid directly to the seller within 3 days of execution. This is non-refundable but gives you the right to terminate the contract during the option period for any reason. Think of it as the price of your exit ramp.
• Option period. Usually 7-14 days. During this time you can terminate without cause and only lose the option fee. Your earnest money is refunded. After the option period expires, your earnest money is at risk if you default.
• No transfer tax. Texas does not have a state transfer tax on real estate sales. This makes double closes significantly cheaper than in states like New York, California, or Pennsylvania where transfer taxes can add thousands in costs.
• Disclosure requirements. Texas requires sellers to provide a Seller's Disclosure Notice. As a wholesaler, you are not the seller (you are assigning the contract), so this obligation stays with the original seller. In a double close, however, you technically become the seller in the B-to-C transaction, so consult with an attorney about disclosure obligations.

Before you sign any contract, run your numbers. Know your ARV, your repair costs, and your maximum allowable offer. The contract locks you in -- make sure the deal works first.

Assignment agreement vs purchase contract

This is a point of confusion for new wholesalers. The assignment agreement is a separate document from the original purchase contract. The purchase contract is between you and the seller. The assignment agreement is between you and your end buyer. Both documents are required for an assignment closing.

The assignment agreement should include: your name (assignor), the buyer's name (assignee), the assignment fee amount, a reference to the original purchase contract, a statement that the assignee accepts all obligations under the original contract, and signatures from both you and the buyer. Some title companies have their own assignment forms. Ask your title company before drafting your own.

Protecting yourself in every transaction

Contracts are legal documents with real consequences. Here are the non-negotiable protections you should have in place for every wholesale deal.

• Option period or inspection contingency. Always have an exit ramp. Never get locked into a contract with no way out.
• Title contingency. The deal should be contingent on the seller having clear, marketable title. If there are liens, judgments, or title defects, you need the right to walk away.
• Earnest money held by a third party. Your earnest money goes to the title company, never directly to the seller. If the deal falls apart, you want a neutral party holding your money.
• Realistic closing date. Give yourself enough time to perform, but not so much that you look like you are stalling. 21-30 days for assignments, 30-45 days for double closes.
• Written records. Document everything. Texts, emails, phone call notes. If a dispute arises, you want a paper trail.

The best way to avoid contract problems is to know your numbers before you sign. Run your comps, estimate your repairs, calculate your maximum allowable offer, and make sure the deal has enough margin for everyone to win. A solid deal on a solid contract closes itself. A bad deal on a perfect contract still falls apart.

Related articles

• The Complete Guide to Wholesale Real Estate
• How to Calculate Your Maximum Allowable Offer
• How to Calculate ARV Step by Step
• How to Estimate Repair Costs Without a Contractor
• How to Find Buyers for Your Wholesale Deal
• How Much Earnest Money Do You Need for a Wholesale Deal?

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