What Is Real Estate Wholesaling? What Maryland Homeowners Should Know Before Signing

You may have received a letter or call from someone who wants to buy your house “as-is, for cash,” and the contract they send says the buyer can assign it. That is usually a wholesale deal. This guide explains how it works, what it can mean for your price, and what Maryland law requires, so you can decide whether it fits your situation.

How a wholesale deal works

1. Contract. A buyer (the wholesaler) signs a contract to buy your house at a set price, usually as-is.
2. Assignment. Before closing, the wholesaler finds an investor and assigns the contract to them in exchange for an assignment fee. Sometimes the wholesaler closes on the house and resells it instead.
3. Closing. The end buyer closes with you at a title company at your contract price. The assignment fee is normally paid by the end buyer, not by you; check the contract to be sure.

Benefits and tradeoffs

A house in good condition, with time to sell, will usually net more on the open market. A wholesale or other direct sale tends to fit houses that need major work, inherited houses, or rentals with difficult tenants. The repair-and-list vs. as-is comparison helps you put numbers on both paths, and how cash buyers set their prices explains the math behind most investor offers.

What Maryland law requires

Real Property §10-715 applies to owner-occupied homes of one to four units. A “wholesale buyer,” someone who signs a contract with the owner in order to assign it for a fee, must disclose to the owner in writing, before signing, that the contract may be assigned. If the buyer doesn’t give that notice and then assigns the contract, the owner may cancel it without penalty at any time before closing. The law also requires the wholesaler to tell the end buyer, in writing, that it holds only an equitable interest in the property. It does not apply to court-ordered sales under Maryland Rule 14-215.

This is a summary, not legal advice. If you have questions about a contract you have been offered, have a Maryland real estate attorney review it before you sign.

If you are behind on your mortgage

If you live in the home and the mortgage is at least 60 days in default, Maryland’s Protection of Homeowners in Foreclosure Act (PHIFA) applies to any sale. You can cancel the contract within 5 days after signing (the statutory notice form says 5 business days), and before you sign, the purchaser must give you a written notice that shows the total consideration that the homeowner, the purchaser and any foreclosure consultant will receive, directly or indirectly.

A wholesale sale is not the right first step for most owners in this position. Talk to a free housing counselor through Maryland HOPE (877-462-7555) about every option before you sign anything with any buyer. The Maryland foreclosure help guide and our PHIFA guide for sellers explain where to start.

Questions to ask any buyer before you sign

• Will you close on the house yourself, or may you assign the contract? Is that in writing?
• How much is the earnest money deposit, and is it held by the title company?
• Is there an inspection or due diligence period, and can you cancel during it?
• What happens if you can’t close by the contract date?
• Who pays the closing costs, transfer taxes and recording fees?
• Which title company will handle settlement?

Maryland House Pros, operated by Maryland Private Capital, has 25 years of experience buying houses in Maryland. We make written, no-obligation offers, pay the seller’s closing costs, and can close in as little as 10 business days when the title is clear. Ask us these same questions, and compare our answers with anyone else’s.