Reference

Real estate wholesaling glossary

Plain-English definitions of the terms wholesalers, flippers and lenders use every day.

70% rule: A rule of thumb that a buyer should pay no more than 70% of ARV minus repairs. Wholesalers also subtract their fee. Learn more →
After-repair value (ARV): The estimated market value of a property after planned renovations, based on renovated comparable sales. Lenders size fix-and-flip loans off ARV. Learn more →
Assignment fee: What the end buyer pays the wholesaler to take over the contract — the wholesaler's profit in an assignment.
Assignment of contract: Transferring your rights as buyer under a purchase agreement to another buyer for a fee. You never take title. Learn more →
Comps (comparable sales): Recent sales of similar nearby properties used to estimate value. For ARV, use renovated comps. Learn more →
Double close: Two back-to-back closings: the wholesaler buys the property (A-to-B) and resells it to the end buyer (B-to-C), usually the same day. Learn more →
DSCR loan: A rental-property loan qualified on the property's rental income (debt service coverage ratio) rather than the borrower's personal income.
Earnest money deposit (EMD): The good-faith deposit a buyer puts down when signing a purchase agreement, typically held by a title company, attorney or escrow agent.
End buyer: The investor who ultimately buys the property from (or takes the assignment from) the wholesaler — usually a flipper or landlord.
Equitable interest: The interest a buyer holds in a property once under contract, before closing. Several states regulate marketing an equitable interest to the public. Learn more →
Hard money loan: A short-term, asset-based loan from a private lender, commonly used by flippers to buy and renovate properties quickly. Learn more →
Holding costs: Expenses of owning a property during the rehab and sale: taxes, insurance, utilities, HOA dues and loan interest.
Loan-to-ARV (LTARV): Loan amount divided by the after-repair value. Fix-and-flip lenders often cap loans around 70–75% of ARV.
Loan-to-cost (LTC): Loan amount divided by total project cost (purchase plus rehab). 100% LTC means the lender funds the full purchase and rehab.
Maximum allowable offer (MAO): The highest price a wholesaler can pay a seller and still sell the contract to an end buyer for their fee after the buyer's costs and profit. Learn more →
Points: Upfront lender fees expressed as a percentage of the loan amount. One point equals 1% of the loan.
Proof of funds (POF): Documentation that a buyer has the cash or financing to close, often requested by sellers and listing agents before accepting an offer.
Rehab draw: A staged reimbursement of renovation costs from the lender after an inspection confirms work is complete.
Transactional funding: A very short-term loan that funds the wholesaler's A-to-B purchase in a double close, repaid from the end buyer's funds at the second closing.
Wholesaler disclosure: A written notice, required in a growing number of states, telling the seller and/or end buyer that the wholesaler intends to assign or resell the contract. Learn more →
Wholesaling: Putting a property under contract and selling that contract position to an end buyer, either by assignment or by a double close, without renovating the property yourself. Learn more →