Truth in Wholesaling
The truth behind cash offers.
How to protect your equity and still accomplish your goals.
Someone keeps texting me about buying my house. Is it a scam?
Usually it isn't a scam, but it often isn't a real buyer, either. Many of those calls, texts, and letters come from Wholesaling Contracting to buy a property, then selling or assigning that contract to another buyer for a fee, usually without ever taking ownership. .
A wholesaler signs a contract to buy your home, usually at a discount, and then Assignment of Contract Transferring your rights under a purchase contract to someone else, who then closes on the property in your place. to an investor before closing. The wholesaler's profit is the difference between your price and what the investor pays. Some cash buyers do buy homes with their own money. The sections below show you how to tell the difference.
How do companies that buy houses for cash make money?
By paying you less than your home is worth. An investor needs room for repairs and profit, and when a Wholesaling Contracting to buy a property, then selling or assigning that contract to another buyer for a fee, usually without ever taking ownership. is in the middle, the wholesaler's fee comes out of that same gap.
You don't have to take our word for it. Here is how wholesaling is explained to people learning to do it, quoted directly from industry training and software sites.
"you as the wholesaling real estate investor need to find a deal that's 35-40% below market"
PropertyRadar, "The Pro Guide to Wholesaling Real Estate in 2026"
accessed October 2026
"Wholesalers use bandit signs to target motivated sellers who need to sell homes in their local market and need money fast."
PropertyRadar, "The Pro Guide to Wholesaling Real Estate in 2026"
accessed October 2026
"Sellers facing foreclosure, probate, eviction, or financial hardship are common targets."
Goliath, "Assignment Fees Explained: How Wholesalers Make Their Money"
accessed October 2026
Assignment fees are "typically $5,000 to $30,000+," and in some deals the seller "may not be explicitly aware of the assignment fee structure."
Goliath, "Assignment Fees Explained: How Wholesalers Make Their Money"
accessed October 2026
Not every cash buyer works this way. But when the business model depends on buying well below market, it's worth knowing Market Value The most probable price a property would bring on the open market between a willing, informed buyer and seller. before you sign.
Quotes are reproduced for commentary and education, with links to the original pages. Pages may change after the date accessed.
Is the person offering me cash on my side?
No. The person making the offer is the buyer, on the other side of your deal. They are not your agent, and they don't owe you an Fiduciary Duty A legal duty to act in another person's best interest, including loyalty, confidentiality, and full disclosure. A buyer on the other side of your deal does not owe you this duty. .
A real estate agent who represents you has a Fiduciary Duty A legal duty to act in another person's best interest, including loyalty, confidentiality, and full disclosure. A buyer on the other side of your deal does not owe you this duty. : a legal obligation to put your interests first, including working to get you the best price and terms. A buyer, including a wholesaler, has no such duty. Their job is to get the best deal for themselves.
Some real estate licensees also Wholesaling Contracting to buy a property, then selling or assigning that contract to another buyer for a fee, usually without ever taking ownership. , and they don't always mention their license up front. In New Jersey, a licensee who buys your home must disclose in the contract of sale that they are a real estate licensee (N.J.S.A. 45:15-17). If you learn your buyer is licensed and it wasn't disclosed, you have every right to ask why.
Why is the cash offer so much lower than what I think my house is worth?
Because the offer is built to leave room for someone else's profit. One popular wholesaling guide tells beginners they "need to find a deal that's 35-40% below market."
That room has to cover an investor's repairs and profit, plus a wholesaler's fee if one is involved. All of it comes out of your equity. Before you sign anything, find out what your home would sell for Market Value The most probable price a property would bring on the open market between a willing, informed buyer and seller. . It costs you nothing to know.
How can I tell if a cash buyer is actually going to buy my house?
Your contract will tell you. The quickest way to find out is to have AI read it with you.
Copy the prompt below, paste it into a free assistant like ChatGPT, Claude, or Gemini, then attach your contract or a photo of it. It will flag the warning signs in plain English, using your contract's own wording.
Before you paste, black out: your Social Security number, bank or account numbers, and signatures.
AI review prompt
I'm a homeowner in New Jersey. An investor approached me with a cash offer to buy my home. Please review the contract I've attached and tell me about any red flags I should be concerned with, especially anything that would let the buyer assign or sell this contract to someone else for a fee instead of buying my home themselves. Look for terms like "and/or assigns," "assignee," "assignment of contract," "assignment fee," "equitable interest," "memorandum of contract," "double closing" or "simultaneous closing," "subject to partner approval," "inspection period" or "due diligence period," "at buyer's sole discretion," a small "earnest money deposit," access for "partners" or "contractors," and any right for the buyer to market or advertise the property. For each red flag, quote the exact contract language, explain in plain English what it means for me, and tell me what to ask the buyer about it. Check whether the buyer, or anyone acting for the buyer, is a real estate licensee, and whether the contract discloses that; New Jersey's Real Estate License Act (N.J.S.A. 45:15-17) requires a licensee who buys property to disclose their licensee status to the seller in the contract of sale. Also tell me whether the contract includes the attorney review clause required by N.J.A.C. 11:5-6.2(g) for residential contracts prepared by real estate licensees. Wherever a New Jersey or federal law or regulation applies to a red flag, cite it by name and section, and tell me if you're not certain a citation is current.
Want to check if a buyer is licensed? Search the New Jersey Real Estate Commission's licensee lookup.
AI tools can make mistakes and are not a substitute for a lawyer. Use the answers to prepare questions for a real estate attorney or agent, not to make the final decision.
Prefer to check it yourself? Here's what to look for.
1 Look at the buyer's name. Does it say Assignment Clause ("and/or assigns") Contract language that lets the buyer transfer the contract to someone else. ?
What it can mean
That phrase lets the buyer sell your contract to someone else. The person who signed with you may never be the one who closes.
2 How much is the Earnest Money A deposit a buyer makes when signing a contract to show good faith, usually held in escrow until closing. ?
What it can mean
A very small deposit means the buyer has little at risk if they walk away. Serious buyers usually put real money down, held by a title company or attorney.
3 Can the buyer Right to Cancel A legal right to back out of a signed contract within a set period without penalty. In Pennsylvania, wholesale contracts carry a 30-day right to cancel. , and for how long?
What it can mean
A long Inspection Period The window after signing when a buyer can inspect the property and, under many contracts, cancel. , or a clause like "subject to partner approval," can give the buyer time to shop your contract around. If no one bites, they may cancel or come back asking for a lower price.
4 Has anyone asked to bring "partners" or "contractors" through the house?
What it can mean
Repeated showings after you've signed can be the buyer showing your home to their own buyers.
5 Search your address online. Is your home being advertised by someone you didn't hire?
What it can mean
Wholesalers often market the contract to investor buyer lists and online groups. If your home shows up for sale and you never listed it, ask the buyer to explain in writing.
6 Is the buyer a licensed real estate agent?
What it can mean
Search their name in your state's license lookup (links below the prompt). In New Jersey, a licensee who buys your home must disclose that status in the contract. If they're licensed and it isn't disclosed, ask why in writing.
None of these automatically means something is wrong. Together, they tell you whether the person across the table plans to buy your home, or Assignment of Contract Transferring your rights under a purchase contract to someone else, who then closes on the property in your place. .
What should I ask a cash buyer before I sign?
Ask whether they're buying your home with their own money or planning to sell your contract to someone else, and get every answer in writing.
- Are you buying my home with your own money, or will you Assignment of Contract Transferring your rights under a purchase contract to someone else, who then closes on the property in your place. to someone else?
- Are you a licensed real estate agent, broker, or salesperson? (In Pennsylvania, wholesalers must be licensed. In New Jersey, a licensee who buys your home must disclose that status in the contract.)
- If you plan to assign the contract, how much will you make?
- Where is my Earnest Money A deposit a buyer makes when signing a contract to show good faith, usually held in escrow until closing. held, and when do I get it back if this doesn't close?
- Can you back out if you don't find a buyer?
- Will you put your answers in writing?
- Is there time for me to get an Appraisal An independent opinion of a property's market value, prepared by a licensed or certified appraiser. or talk with an attorney first?
I already signed with a cash buyer. Can I back out?
In Pennsylvania, often yes: if the deal is a Wholesale Transaction Pennsylvania's legal term for promoting the sale or purchase of an interest in a 1 to 4 unit home with the intent to transfer that interest for a fee, without taking title. , the law gives you 30 days to cancel. In New Jersey, it depends on your contract, because the state has no wholesaling law yet.
In Pennsylvania
Act 52 of 2024 (Senate Bill 1173), in effect since January 4, 2025, amended the Real Estate Licensing and Registration Act and covers homes with one to four units.
A license is required.
Anyone who contracts for a home intending to assign or sell that contract for a fee, without taking title, is now treated as a real estate broker or salesperson and must be licensed.
The contract has to say so.
A wholesale contract must prominently state that it is a Wholesale Transaction Pennsylvania's legal term for promoting the sale or purchase of an interest in a 1 to 4 unit home with the intent to transfer that interest for a fee, without taking title. , and that you have the right to get an Appraisal An independent opinion of a property's market value, prepared by a licensed or certified appraiser. , talk with an agent who isn't affiliated with the wholesaler, or speak with an attorney, before or after you sign.
You have 30 days to cancel.
You can cancel until midnight on the 30th day after you sign, or until closing, whichever comes first. You owe no damages for cancelling, and you can't be asked to give up this right.
Your money comes back.
Any payment you made must be refunded within ten business days after the wholesaler receives your cancellation notice. If a contract is missing the required statements, you can cancel any time before closing.
The law does not require a wholesaler to tell you how much they will make on your contract. You can always ask.
In New Jersey
As of October 2026, New Jersey has no law written specifically for Wholesaling Contracting to buy a property, then selling or assigning that contract to another buyer for a fee, usually without ever taking ownership. . Assembly Bill A4278 , introduced February 19, 2026, would require a real estate license for wholesale transactions and give consumers who buy a home through one a 30-day right to cancel. It is still in committee.
If your contract was prepared by a real estate licensee, it should include a three-business-day attorney review period (N.J.A.C. 11:5-6.2(g)), which gives you and your attorney time to review it after signing. Use it.
If you've signed and want out, talk with a real estate attorney right away. Deadlines matter.
Is it ever smart to take a cash offer?
Yes. Sometimes speed, certainty, or a home's condition make a cash sale the right call. The key is knowing what you're giving up and comparing it to your other options.
We'll lay out every path side by side so you can see what each one nets you, and you choose.
Why did Pennsylvania pass a law about this?
Because homeowners, often longtime owners and families who had just inherited a home, were being pressured into selling for far less than their homes were worth.
The problem was first documented in Philadelphia. Starting around 2018, the legal aid group Community Legal Services reported more homeowners being pressured to sign agreements selling their homes below value, after repeated calls, texts, letters, and door knocks offering cash "as is."
Philadelphia responded first. A city law that took effect in February 2021 required Wholesaling Contracting to buy a property, then selling or assigning that contract to another buyer for a fee, usually without ever taking ownership. to be licensed, required written disclosures to sellers, and created a Do Not Solicit list. Within about a year, roughly 2,300 homeowners had signed up.
In 2024, the state followed with Act 52. Its sponsor, Sen. Greg Rothman, said wholesaling had grown "often at the expense of the most vulnerable," and that the law would make sure homeowners are fully informed of their rights.
Sources: The Philadelphia Inquirer, Nov. 19, 2020 and Mar. 29, 2022 ; Pennsylvania Senate Republicans, July 3, 2024 ; Community Legal Services ; North Penn Legal Services, Feb. 14, 2025
This page is general information, not legal advice, and is not an offer to buy or sell any property. Laws change, and this summary may not reflect every requirement or the most recent amendments. For advice about a specific contract or situation, consult a licensed real estate attorney. The Property Exchange Group at Real Broker, LLC is a real estate team, not a law firm. Information current as of October 2026.
Sources: Pennsylvania Act 52 of 2024 (SB 1173) ; New Jersey Assembly Bill A4278 (2026 to 2027 session) ; N.J.A.C. 11:5-6.2