Plain English: A real estate wholesaler gets your house under contract at a set price, then sells that contract to an investor for a higher price — keeping the difference as their fee. You still get the agreed price. Texas law requires wholesalers to disclose this in writing.
How Wholesaling Works — Step by Step
- Wholesaler contacts you — usually from a mailer, sign, website, or direct call.
- They make you an offer — typically below market value, based on what an investor would want to pay after repairs.
- You sign a purchase contract — this gives the wholesaler the right to buy (or assign the right to buy) your property at the agreed price.
- Wholesaler finds an investor — they market the contract to cash investors, often within their buyer network.
- Contract is assigned — the investor pays the wholesaler an assignment fee (typically $5,000–$25,000) and steps into the contract as the actual buyer.
- Closing happens — you sell to the investor at the price you agreed with the wholesaler. You get what you were promised.
What Texas Law Requires Wholesalers to Disclose
Texas Property Code § 5.0205 requires that anyone who sells or assigns an "option or contract to purchase" real property must disclose in writing that they are selling their interest in a contract — not the property itself. The disclosure must appear in at least 14-point bold font and state:
"NOTICE: The interest you are selling or assigning is the interest you have under a contract to purchase real property. Before agreeing to the sale or assignment of the contract to purchase real property, you should determine the legal effect of the conveyance."
If a wholesaler doesn't provide this disclosure in writing, they're violating Texas law. Always ask for it.
Is Wholesaling Legal in Texas?
Yes, with the disclosure requirement above. Texas does not require wholesalers to hold a real estate license as long as they are selling their contractual interest — not acting as an agent representing others. However, wholesalers who market properties broadly or do multiple transactions may cross into territory that requires a license. This is an evolving area of Texas real estate law.
What It Means for You as a Seller
The key things to understand:
- You get the agreed price — the wholesaler's profit (their assignment fee) comes from the investor, not from you.
- The buyer may change — you signed with the wholesaler but may be selling to someone you've never met.
- Make sure the contract has an earnest money deposit — this protects you if the wholesaler can't find a buyer and walks away.
- Check the closing date and penalties for not performing — some wholesaler contracts have loose timelines that leave you in limbo.
House Cash Option and Wholesaling
We operate as real estate investors. In some transactions we may assign our contractual interest to another investor — and when we do, we provide the Texas § 5.0205 disclosure in writing, every time. You always know exactly what you're agreeing to before you sign anything. Our goal is a clean, fast, honest transaction.
Have questions about how we buy?
We're transparent about our process. Call us or get an offer — we'll walk you through exactly what happens, step by step.
This article is for general informational purposes only and does not constitute legal advice. Texas real estate law is complex — consult a licensed Texas real estate attorney if you have questions about a specific contract or transaction.