Wholesale, Wholetail, Assignment – What’s the Difference?

Wholesale, Wholetail, Assignment - What's the Difference?

Investors often discuss wholesale, wholetail and assignment without knowing the differences between these buying/selling techniques. Especially when discussing them together, it’s easy to become confused. Let’s clear that up.

What is Wholesale?

With wholesale, you buy a property for a low purchase price, mark it up, and sell it to an investor who will be able to rehab and resell it for their own profit. The skill here is learning to negotiate your buying price low enough that there is room left for the next buyer to also make money.

Normally you do nothing to a wholesale property after you purchase it other than sell it to the next buyer – no fix up, no repairs.

What is Wholetail?

Wholetail is very much like wholesale but you do a little bit of work to the property to make it more attractive to rehabbers. This includes things like:

  • cleaning out trash
  • cleaning up landscaping
  • replacing a leaking roof
  • making sure the property is structurally sound

With a wholetail, you might even bring it up to meet FHA buying requirements which means it must be functional – all mechanical systems must work. FHA requires that HVAC, electrical and plumbing systems work and that there is some life left in the roof. But, you don’t do the interior details like carpet, paint or plumbing fixtures so it still doesn’t sell to the typical retail buyer.

What is Assignment?

With both a wholesale and a wholetail, the purchase transaction is very much the same as any retail purchase in that you close on the property with an attorney or title company and you go on title as owner.

With an assignment, you do not close on the property; you do not purchase the property, you never own it. You deal only with the purchase and sale agreement which is the document you’re assigning. You, as the assignor, simply transfer the signed contract to the assignee.

You sign a contract to buy from the seller, then find someone who will buy the property for more and assign the contract to them for the higher price.

Wholesale – buy at a really low price, mark it up a little bit, resell to someone who’s going to renovate and sell it on the retail market

Wholetail – same as wholesale but you do a small amount of work before you sell it to the rehabber

Assignment – you don’t buy the house, you just deal with the contract, the purchase and sale agreement – get it under contract and assign the contract to someone for more than you agreed to pay for the house

Questions? Comments? Do you use these strategies?

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2 Comments

  1. Great questions, Kevin:
    Of course it depends on the property and the timing. When we can buy and assign the contract (assignment), its obviously faster but usually less profitable.
    When we close on the deal (wholesale), we can then clean it out, sweep it out, maybe cut back some bushes to make it look a little better and make a lot more profit. Because it looks so much better – its amazing I know – but we can raise our asking price.

    Our deals are typically all cash and there is no agent or commission involved. If there is an agent, our profit needs to be higher to cover that expense, so we just figure it in along with all the other associated costs of doing business.

    Good luck to you and keep those questions coming!

  2. Hi Karen,
    My wife and I are brand new to real estate investing, and are brand new to your website. Really are enjoying your blogs by the way! We have been hearing from other experienced real estate investors who we believe are confused on the difference between wholesales and assignments as they think they are the same thing.

    What would you say is a benefit to do a wholesale instead of an assignment? If you are doing a wholesale and close on the deal then resell the house to a rehabber, would you have to pay closing costs/agent commissions for when you sell to the rehabber? Where for assignments you would just assign the contract and don’t have to deal with those extra costs as you don’t take ownership.

    We have a lot to learn, and are looking forward to reading more of your blogs as we start our journey and commitment to real estate investing.

    -Kevin

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