Reference Guide

Real Estate Wholesaling Glossary

Every term you need to know in real estate wholesaling and investing, defined clearly and linked in context. Bookmark this page — it is the reference you will come back to.

ARV (After Repair Value)

The estimated market value of a property after all renovations and repairs have been completed. ARV is the single most important number in a wholesale deal because it determines what an end buyer can pay and still make a profit. It is calculated using comparable sales (comps) of recently sold, renovated properties in the same area with similar characteristics such as square footage, bedroom count, and lot size.

Assignment Contract

A legal agreement that transfers a wholesaler's equitable interest in a purchase contract to an end buyer. Instead of closing on the property themselves, the wholesaler assigns their right to purchase the property to the buyer in exchange for an assignment fee. The assignment contract is attached to the original purchase and sale agreement (PSA) and all original terms carry over to the new buyer.

Assignment Fee

The profit a wholesaler earns for assigning their contract to an end buyer. It is the difference between the wholesaler's contract price with the seller and the price the end buyer pays. In traditional wholesaling, this fee is often hidden or inflated. With flat rate wholesaling, the deal source keeps the full assignment fee and pays only a fixed flat disposition fee.

BRRRR (Buy, Rehab, Rent, Refinance, Repeat)

A real estate investment strategy where an investor buys a distressed property at a discount, rehabs it, rents it out to a tenant, refinances based on the new after repair value, and uses the cash-out refinance proceeds to repeat the process. BRRRR investors are common end buyers for wholesale deals because they need to acquire properties significantly below market value to make the numbers work.

Buy Box

The specific set of criteria an end buyer or investor uses to evaluate potential purchases. A buy box typically includes target markets, property types, price range, minimum ARV, maximum rehab cost, preferred condition, bedroom/bathroom count, and investment strategy. At Flat Rate Wholesale, we match deals to buyer buy boxes for targeted distribution rather than mass blasting.

Cap Rate (Capitalization Rate)

A metric used to evaluate the return on a rental investment property, calculated by dividing the net operating income (NOI) by the property's current market value or purchase price. For example, a property generating $12,000 per year in net income purchased for $150,000 has an 8% cap rate. Higher cap rates indicate higher potential returns but often come with more risk. End buyers focused on buy-and-hold or BRRRR strategies use cap rate as a primary evaluation metric.

Cash-on-Cash Return

The annual pre-tax cash flow from an investment property divided by the total cash invested, expressed as a percentage. Unlike cap rate, cash-on-cash return accounts for financing and measures the actual return on the investor's out-of-pocket cash. For example, if an investor puts $40,000 into a rental property and receives $4,800 in annual cash flow after all expenses including debt service, their cash-on-cash return is 12%.

Chain of Title

The sequential history of ownership of a property as recorded in public records. A clean chain of title means there are no gaps, disputes, or unresolved liens in the ownership history. The title company researches the chain of title during the closing process to ensure the seller has legal authority to transfer ownership and that no encumbrances exist that could affect the buyer.

Closing Statement (HUD-1 / Settlement Statement)

The official financial document prepared by the title company that itemizes all charges, credits, and disbursements for both buyer and seller at closing. It includes the purchase price, prorated taxes, title fees, recording fees, and any other costs. In a transparent wholesale transaction, both parties can see the full closing statement. In traditional wholesaling, blind HUDs are sometimes used to conceal the wholesaler's margin.

Comps (Comparable Sales)

Recently sold properties that are similar to a subject property in location, size, condition, and features. Comps are the foundation of property valuation and are used to determine ARV, rental rates, and fair market value. The most reliable comps are within a half-mile radius, sold within the last 6 months, and within 20% of the subject's square footage. Accurate comps are critical for both deal sources pricing their contracts and end buyers underwriting their offers.

Contingency

A condition written into a real estate contract that must be met before the transaction can close. Common contingencies include inspection, financing, appraisal, and clear title. During the due diligence period, a buyer can typically cancel the contract without losing their earnest money deposit if a contingency is not satisfied. In wholesale transactions, minimizing contingencies makes an offer more attractive to sellers.

Contract Price

The agreed-upon purchase price between the seller and the buyer (or wholesaler) as specified in the purchase and sale agreement. In a wholesale transaction, the contract price is the amount the wholesaler has agreed to pay the seller. The difference between this price and what the end buyer ultimately pays determines the wholesale spread.

Daisy Chain

A situation where multiple wholesalers are involved in the same deal, each adding their own markup or assignment fee before the property reaches the end buyer. For example, Wholesaler A contracts the property at $80K, assigns to Wholesaler B at $90K, who then assigns to the end buyer at $105K. Daisy chains inflate the final price, reduce the end buyer's margin, and are a sign of an inefficient disposition process.

Disposition

The process of marketing and selling a wholesale contract or property to an end buyer. Disposition involves creating a marketing package, distributing to qualified buyers, managing offers, and coordinating through closing. It is the sell-side of a wholesale operation. At Flat Rate Wholesale, disposition is our core service — we handle the entire sell-side for a flat fee with full transparency into every step.

Distressed Property

A property that is in poor physical condition, under financial distress (such as pre-foreclosure, tax delinquency, or code violations), or where the owner is motivated to sell below market value due to personal circumstances. Distressed properties are the primary source of off-market wholesale deals because the discount required by investors is more achievable when the seller has urgency or the property needs significant work.

Double Close (Simultaneous Close)

A closing method where the wholesaler actually purchases the property from the seller (A-to-B transaction) and then immediately resells it to the end buyer (B-to-C transaction), often on the same day. Double closes are used when the wholesaler wants to conceal the spread from both parties, or when the contract does not allow assignment. Double closes cost approximately 3% more in closing fees because there are two full sets of closing costs. With flat rate wholesaling, full transparency eliminates the need for double closes in most cases.

Due Diligence Period

A contractually agreed-upon timeframe during which the buyer can inspect the property, review title, verify financials, and assess the deal before committing to close. If issues are discovered during due diligence, the buyer can typically cancel the contract and receive a refund of their earnest money deposit. In wholesale transactions, this period is also used by the end buyer to conduct their own inspection and underwriting after accepting an assigned contract.

EMD (Earnest Money Deposit)

A deposit made by the buyer to demonstrate good faith and serious intent to purchase a property. The EMD is typically held by the title company in escrow and is applied toward the purchase price at closing. If the buyer defaults outside of any contingency protections, the seller may be entitled to keep the EMD as liquidated damages. In wholesale deals, both the wholesaler (to the seller) and the end buyer (to the wholesaler or title company) typically provide earnest money.

End Buyer

The final purchaser of a wholesale property who intends to actually close on the deal, take title, and execute their investment strategy — whether that is fix and flip, BRRRR, buy and hold, or owner financing. The end buyer is distinct from a wholesaler because they are not looking to resell the contract. At Flat Rate Wholesale, we maintain a vetted network of qualified end buyers with verified proof of funds.

Equitable Interest

The legal right a buyer acquires when they enter into a binding purchase and sale agreement to buy a property, even before the deal closes. Equitable interest gives the buyer an enforceable claim on the property and is what makes wholesale assignment contracts legal — the wholesaler is selling their contractual right to purchase, not the property itself. This is a fundamental legal concept that underpins the entire wholesale transaction structure.

Escrow

A neutral third-party arrangement where funds, documents, or other assets are held until all conditions of a transaction are met. In real estate, the title company or escrow agent holds the earnest money deposit and manages the distribution of funds at closing according to the closing statement. Escrow protects both buyer and seller by ensuring no money changes hands until all contractual obligations are fulfilled.

Fix and Flip

An investment strategy where a buyer purchases a distressed property at a discount, renovates it, and resells it at or near its after repair value (ARV) for a profit. Fix and flip investors are among the most active end buyers in wholesale markets. Their profitability depends on accurate ARV calculations, reliable rehab cost estimates, and acquiring properties at or below MAO (maximum allowable offer).

Flat Fee Wholesaling / Flat Rate Wholesaling

A wholesale disposition model where the company handling the sell-side charges a fixed, predetermined fee rather than taking a variable percentage or maximizing the spread. Unlike traditional wholesaling where the wholesaler's profit is the entire spread (often $10K-$30K+), flat rate wholesaling separates the disposition service from the deal profit. The deal source keeps the upside and pays a transparent fee for marketing, buyer matching, and closing coordination. Learn how flat rate wholesaling works.

Gross Rent Multiplier (GRM)

A quick valuation metric for rental properties calculated by dividing the property's purchase price by its gross annual rental income. A property purchased for $120,000 that rents for $1,200 per month ($14,400 annually) has a GRM of 8.3. Lower GRMs indicate a better price relative to rental income. While less precise than cap rate (because it does not account for expenses), GRM is useful for quick initial screening of rental investment opportunities.

Hard Money Lender

A private or non-institutional lender that provides short-term loans secured by real estate, typically used by fix and flip investors and BRRRR investors who need fast funding that traditional banks cannot provide. Hard money loans have higher interest rates (typically 10-14%) and shorter terms (6-18 months) but can close in days rather than weeks. Many end buyers use hard money to purchase wholesale deals because speed of closing is critical.

Highest and Best Offer

A request from a seller or their representative for all interested buyers to submit their strongest offer by a specific deadline, typically used when multiple offers have been received. In wholesale disposition, calling for highest and best creates competitive bidding among end buyers and can drive up the final sale price, benefiting the deal source.

Inspection Period

A designated window of time within the due diligence period during which the buyer has the right to physically inspect the property, hire professional inspectors, and assess the condition. The inspection period is when the end buyer verifies the property's actual condition, identifies needed repairs, and confirms their rehab cost estimate. Findings during inspection can lead to price renegotiation or contract cancellation.

Investor-Friendly Title Company

A title company experienced in handling wholesale transactions including assignments, double closes, and transactional funding. Not all title companies will process wholesale deals, so having one that understands these transaction types is essential. An investor-friendly title company streamlines the closing process and can handle the unique documentation requirements of wholesale transactions.

JV (Joint Venture) Deal

A partnership arrangement where two or more parties collaborate on a wholesale deal, splitting responsibilities and profits. Common JV structures include one party sourcing the deal (acquisition) and another handling disposition, or one party providing the EMD while the other manages the transaction. JV splits are typically negotiated per deal, with common arrangements being 50/50 or based on each party's contribution. Flat rate wholesaling offers a more predictable alternative to JV arrangements for disposition.

Key Principal

The individual who personally guarantees a loan or investment, bearing primary responsibility for the financial obligation. In real estate investing, the key principal is often the person whose credit, net worth, and experience qualify the deal for financing. When end buyers submit proof of funds, the key principal is the individual whose assets are being verified.

Lien

A legal claim against a property that must be satisfied (paid off) before the property can be transferred to a new owner with clear title. Common liens include mortgage liens, tax liens, mechanic's liens, and judgment liens. The title company identifies all liens during the title search, and they are typically paid from the seller's proceeds at closing as shown on the closing statement.

Lock-Up Period

The timeframe after a contract is signed during which the property is exclusively committed to the buyer and cannot be marketed to other parties. In wholesale transactions, this is the period between contract execution and either closing or contract cancellation. A deal source should know their lock-up period to ensure the disposition timeline aligns with their contract terms.

MAO (Maximum Allowable Offer)

The highest price an investor or wholesaler should pay for a property while still achieving their target profit margin. The standard MAO formula is: MAO = ARV x 70% - Repair Costs - Wholesale Fee. For example, if the ARV is $200,000, repairs are $30,000, and the wholesale fee is $5,000, then MAO = ($200,000 x 0.70) - $30,000 - $5,000 = $105,000. The 70% factor provides margin for the end buyer's profit, closing costs, and holding costs.

Marketing Package

A comprehensive document or presentation prepared during disposition that provides end buyers with all the information they need to evaluate a wholesale deal. A professional marketing package typically includes property photos, address and property details, ARV analysis with comps, repair estimates, rental analysis, asking price, and contract terms. At Flat Rate Wholesale, we build detailed marketing packages for every deal and show deal sources exactly what was sent to buyers.

Motivated Seller

A property owner who has a compelling reason to sell quickly and/or below market value. Motivating factors include foreclosure, divorce, inheritance, job relocation, deferred maintenance, tax delinquency, code violations, or landlord fatigue. Identifying motivated sellers is the foundation of real estate wholesaling because these situations create the price discount necessary for the deal to work for all parties — the seller, the wholesaler, and the end buyer.

Net Proceeds

The amount of money a seller or deal source actually receives after all fees, costs, and deductions are subtracted from the sale price. Net proceeds are calculated by taking the sale price and subtracting closing costs, title fees, prorated taxes, any liens, and the wholesaler or disposition fee. The closing statement provides the exact net proceeds figure. With flat rate wholesaling, deal sources can predict their net proceeds more accurately because the disposition fee is fixed.

NOI (Net Operating Income)

The annual income generated by a rental property after subtracting all operating expenses, but before accounting for debt service (mortgage payments), capital expenditures, and depreciation. NOI is calculated as gross rental income minus vacancy, property management, insurance, taxes, maintenance, and utilities (if owner-paid). NOI is the numerator in the cap rate formula and is a critical metric for investors evaluating rental properties.

Off-Market Deal

A property that is available for sale but not listed on the MLS (Multiple Listing Service) or any public marketplace. Off-market deals are sourced through direct-to-seller marketing such as direct mail, cold calling, driving for dollars, and skip tracing. The majority of wholesale deals are off-market because properties listed on the MLS are typically priced at or near market value, leaving insufficient margin for wholesale transactions.

Offer Price

The price an end buyer proposes to pay for a wholesale deal. The offer price should be informed by the buyer's own analysis of ARV, repair costs, holding costs, and target profit margin. In a transparent disposition process, all offers are disclosed to the deal source so they can make an informed decision about which buyer to accept.

Proof of Funds (POF)

Documentation that verifies a buyer has the financial resources to close on a property. Proof of funds typically consists of a bank statement, a letter from a hard money lender, or verification of a line of credit. Sellers and wholesalers request POF to ensure they are working with a qualified end buyer who can actually perform. At Flat Rate Wholesale, we require proof of funds from all buyers on our list to maintain deal quality.

Purchase and Sale Agreement (PSA)

The binding legal contract between a buyer and seller that outlines the terms and conditions of a real estate transaction. The PSA specifies the purchase price, earnest money amount, closing date, contingencies, and any special terms. In wholesaling, the PSA between the wholesaler and seller is the foundational document — it creates the equitable interest that allows the deal to be assigned or double closed.

Rehab Cost Estimate (Repair Estimate)

A detailed projection of the total cost to renovate a property to its target condition, whether for retail sale (flip) or rental readiness. A thorough rehab estimate breaks costs down by category: roof, HVAC, plumbing, electrical, flooring, kitchen, bathrooms, paint, exterior, and landscaping. Accurate rehab estimates are essential for calculating MAO and underwriting deals. Overestimating creates opportunities; underestimating creates losses.

REO (Real Estate Owned)

Property that has been foreclosed on and is now owned by the lending institution (bank, credit union, or government agency) after failing to sell at a foreclosure auction. REO properties are often sold below market value as the lender is motivated to remove the asset from their books. While REOs can be sources of off-market deals, they typically require working directly with the lender's asset management department and may have longer timelines.

Reverse Wholesale

A wholesale strategy where the investor identifies a buyer and their buy box first, then finds a property that matches their criteria. This is the opposite of the traditional approach where the deal is found first and then marketed to buyers. Reverse wholesaling reduces the risk of not finding a buyer because demand is confirmed before the property is put under contract.

Skip Tracing

The process of locating the contact information (phone numbers, email addresses, mailing addresses) of property owners who may be difficult to reach, such as absentee owners, inherited property holders, or owners with outdated public records. Skip tracing services aggregate data from multiple databases to provide accurate contact information. It is a fundamental tool in real estate wholesaling for reaching motivated sellers of off-market properties.

Spread (Wholesale Spread)

The difference between the wholesaler's contract price with the seller and the price the end buyer pays. In traditional wholesaling, the entire spread is the wholesaler's profit and is often hidden from both parties. In flat rate wholesaling, the spread goes to the deal source minus only the flat disposition fee — a fundamentally different and more transparent model.

Subject Property

The specific property being analyzed, marketed, or transacted in a real estate deal. All comparable sales, ARV calculations, repair estimates, and investment analysis are performed relative to the subject property. In a marketing package, the subject property is presented with all relevant data so end buyers can evaluate it against their buy box criteria.

Title Company

A third-party company that facilitates real estate closings by researching the chain of title, ensuring clear ownership, holding escrow funds, preparing the closing statement, and issuing title insurance. In wholesale transactions, using an investor-friendly title company is important because not all title companies are willing to handle assignments or double closes.

Title Insurance

An insurance policy that protects the buyer and/or lender against financial loss resulting from defects in the title, liens, or other encumbrances that were not discovered during the title search. Title insurance is a one-time premium paid at closing. Owner's title insurance protects the buyer, while lender's title insurance protects the mortgage holder. It is standard practice for the title company to issue title insurance as part of the closing process.

Transactional Funding

A type of short-term financing used specifically for double close transactions, where the lender provides 100% of the funds needed for the A-to-B purchase with the understanding that the B-to-C sale will happen the same day or within a few days. Transactional funding is typically more expensive than hard money on a per-day basis but is designed for ultra-short hold periods. The fee is usually 1-2% of the loan amount for a same-day transaction.

Under Contract

The status of a property that has an executed purchase and sale agreement between buyer and seller, meaning it is committed to a transaction but has not yet closed. A property that is under contract cannot be sold to another party unless the existing contract is cancelled or expires. In wholesaling, getting a property "under contract" is the first critical step before disposition can begin.

Vacant Property

A property that is unoccupied, with no tenants or owner residents. Vacant properties are often indicators of motivated sellers and are a primary target list for wholesale acquisitions. Extended vacancy can lead to deferred maintenance, vandalism, code violations, and increased carrying costs for the owner — all factors that increase motivation to sell at a discount.

Wholesale Deal / Wholesaling

A real estate transaction strategy where a person (the wholesaler) contracts to buy a property from a seller, typically at a below-market price, and then sells or assigns that contract to an end buyer for a profit before actually closing on the property themselves. The wholesaler acts as a middleman who connects motivated sellers with investors. The two primary methods are assignment and double close. Learn more about how real estate wholesaling works.

Wholetail

A hybrid strategy between wholesaling and retail sales where the investor puts a property under contract (or purchases it), performs light cosmetic repairs — such as paint, cleaning, landscaping, and basic updates — and then lists it on the MLS at a higher price. Wholetailing captures more profit than a straight wholesale assignment but requires less renovation than a full fix and flip. It works best with properties that are structurally sound but cosmetically dated.

Yield

The income return on an investment, typically expressed as an annual percentage. In real estate, yield can refer to rental yield (annual rent divided by property value), total yield (including appreciation), or cash-on-cash return. Institutional end buyers often evaluate wholesale deals based on target yield thresholds, making it an important metric when pricing properties for disposition to rental-focused investors.

Now That You Know the Terms

See how flat rate wholesale disposition works in practice — transparent pricing, full visibility, and a flat fee that never changes.

See How It Works Submit a Deal