Understanding real estate wholesalers in Phoenix

How does an assignment actually work?

In a standard Arizona purchase, the buyer signs a contract, then closes and takes title. In a wholesale transaction, the buyer instead assigns the contract to an end buyer before closing, collecting an assignment fee that is typically the difference between the contract price and what the end buyer pays. Legal title never passes to the wholesaler, and the closing usually happens once, between the original seller and the end buyer, with the assignment fee paid out through escrow.

Arizona contract rights are generally assignable unless the contract forbids it, which is why the assignment clause matters so much: it decides who is obligated to close, who collects the fee, and what the seller can enforce if the end buyer does not perform. Read it, and have it reviewed, before you commit.

What does Arizona's disclosure law require?

Under A.R.S. section 44-5101, before entering into any binding agreement, a wholesale buyer must disclose in writing to the seller that it is a wholesale buyer, that is, someone who intends to assign the contract rather than close on it. On the other side, a wholesale seller, someone who holds only an equitable interest and never legal title, must disclose that in writing to the end buyer. The law also creates the remedy: if the required disclosure is not made, the seller can cancel before closing without penalty and keep the earnest money, and a wholesale seller in violation must refund the buyer's earnest money.

Two practical notes. First, the disclosure must be in writing and happen before the binding agreement, so its absence in your paperwork is itself a signal. Second, this article is education about the statute, not legal advice; the statute and your own attorney are the authorities.

What should a seller verify before accepting any offer?

• The written wholesale-buyer disclosure, present before any binding agreement.
• Proof of funds, in writing, for both the named buyer and any assignee who will close.
• The assignment terms, including the fee, the closing obligation, and the deadline.
• Whether the forms are standard Arizona forms or custom paperwork written for the deal.
• Your own net number, compared against what other selling routes would leave you.

When should you consult a real estate attorney?

The honest trigger list: non-standard contract forms drafted by the buyer, significant non-refundable earnest money, waived contingencies or inspections, an assignment or assignment fee structure, or any pressure to sign faster than you can read. Each of these deserves an independent read before you sign, and an attorney is the person to give it. This article is not legal advice, and the cost of a review is small next to the cost of a contract you do not understand.