What Is a Real Estate Wholesaler?
What Every Bay Area Homeowner Needs to Know
If someone has offered to buy your house with a "cash offer," there's a good chance they're not actually buying it at all. They may be a wholesaler — and understanding how wholesaling works could save you tens of thousands of dollars.
How Real Estate Wholesaling Works
Real estate wholesaling is a practice where someone — the wholesaler — puts your house under contract at a set price, but has no intention of actually buying it themselves. Instead, they privately market your property to other investors at a higher price, pocketing the difference as profit. This is done through what's called an "assignment" or a "double escrow."
Here's how it typically plays out: A wholesaler contacts you — often through those "We Buy Houses" mailers, bandit signs, or online ads — and makes what seems like a reasonable cash offer. You sign a purchase agreement, thinking you've found your buyer. But behind the scenes, the wholesaler immediately starts shopping your property to their list of actual investors, looking for someone willing to pay significantly more than what they offered you.
The spread between what the wholesaler contracted with you and what the end investor pays can be enormous — often $20,000 to $100,000 or more on Bay Area properties. That's money that should have gone to you, the homeowner.
A Real-World Example of Wholesaling in Action
Wholesaler Offers You
$500,000
They sign a purchase contract with you at this price, claiming they're the buyer.
Wholesaler Finds Investor
$560,000
They privately market your home to real investors and find one willing to pay more.
Wholesaler Profits
$60,000
The wholesaler pockets the spread — money that should have gone to you.
Why Wholesaling Is Bad for Homeowners
You're Leaving Money on the Table
The wholesaler's entire business model depends on getting your house under contract for as little as possible. The lower they can get your price, the bigger their profit when they flip the contract. You're not getting the best price — you're getting the lowest price the wholesaler thinks you'll accept.
They Almost Never Tell You the Truth
This is perhaps the most troubling aspect of wholesaling. Almost all wholesalers present themselves as the actual buyer. They don't tell you they plan to assign your contract or use a double escrow. They don't disclose that they're marketing your property to other investors at a higher price. This lack of transparency is, frankly, deceptive — and it's bad for consumers.
Your Sale Can Fall Apart
If the wholesaler can't find an investor willing to pay enough to make a profit, they'll often back out of the deal — leaving you back at square one after weeks of wasted time. Many wholesalers include escape clauses in their contracts that let them walk away with no consequences.
Many Aren't Even Licensed
In California, acting as an intermediary in real estate transactions typically requires a real estate license. Many wholesalers operate without one, which means they're not subject to the same ethical standards, disclosure requirements, and consumer protections that licensed agents and brokers must follow.
Red Flags You're Dealing with a Wholesaler
The Better Way: Let Investors Compete for Your Property
The wholesaler model exists because there's a disconnect between homeowners and real investors. Wholesalers insert themselves as middlemen, profiting from that gap. HouseFlipDude eliminates the middleman entirely by connecting you directly with multiple competing investors.
Selling to a Wholesaler
- One lowball offer from someone who may not be a real buyer
- Wholesaler profits from the spread — money you should keep
- No transparency about what your property is really worth
- Risk of deal falling through if they can't find an end buyer
- Wholesaler's goal: buy as low as possible
HouseFlipDude Marketplace
- Multiple real investors compete to buy your property
- Competition drives the price up — not down
- Full transparency — you see competing offers and choose the best one
- Every investor in our network is vetted and has proof of funds
- Our goal: get you the highest price through competition
Think of It Like This
Imagine you're selling a car. Would you rather accept the first offer from one buyer who's planning to immediately resell it for a profit? Or would you rather have multiple buyers compete against each other, driving the price up to what your car is actually worth? That's the difference between a wholesaler and HouseFlipDude. We're the marketplace that puts the power back in your hands.
How to Spot the Difference
Many of the "We Buy Houses" companies you see advertising — from national franchises like "We Buy Ugly Houses" to local operations like "John Buys Bay Area Homes" — may be legitimate investors, but many operate as wholesalers. Their entire focus is to acquire your property for the lowest possible price, because their profit depends on the spread between what they pay you and what the property is actually worth to an end buyer.
Even when these companies are legitimate direct buyers (not wholesalers), you're still only getting one offer from one company whose goal is to pay as little as possible. There's no competition, no price discovery, and no way to know if you're leaving money on the table. With HouseFlipDude, you eliminate that uncertainty by letting multiple investors compete.
Questions to Ask Any "Cash Buyer"
Are you the actual buyer, or will you be assigning this contract to someone else?
Can you provide proof of funds showing you personally have the money to close?
Do you hold a California real estate license? What's your DRE number?
Will the name on the purchase contract be the same entity that closes?
Have you ever assigned a contract or used a double escrow?
Skip the Wholesalers.
Get Competing Offers Instead.
Don't settle for one lowball offer from someone who may not even be a real buyer. Submit your property info and let our network of vetted, funded investors compete to buy your house for top dollar.
Get Competing Offers Now
Takes 60 seconds. No obligation. No wholesalers.