If you’ve gotten a postcard, a text, or a knock on the door from someone offering to buy your Spokane house for cash, there’s a decent chance you were dealing with a wholesaler — not an actual buyer. Wholesaling is legal and it’s common, but it’s also widely misunderstood, and the difference between a wholesaler and a real cash buyer can be thousands of dollars in your pocket. Here’s what you should actually know.
The Basic Definition
A real estate wholesaler is someone who gets a property under contract with the seller, then assigns that contract to another buyer for a fee. The wholesaler never actually buys your house. They’re a middleman between you and the eventual end buyer (usually an investor or flipper).
Here’s how it typically works:
- The wholesaler contacts you and gets you to sign a purchase contract at a specific price, say $250,000.
- The contract includes the right to assign — meaning the wholesaler can transfer their position as the buyer to someone else.
- The wholesaler shops your contract to their list of investors and finds someone willing to pay, say, $265,000 for the property.
- At closing, the actual investor pays $265,000, you get your $250,000, and the wholesaler pockets the $15,000 difference (called an assignment fee).
The wholesaler never owns your house. They flip the paperwork, not the property.
How It Differs From a Direct Cash Buyer
A direct cash buyer (like us) actually buys your house. We use our own funds, take title in our name, and either hold the property as a rental or renovate it and resell it. We don’t need to find another buyer first because we are the buyer.
Why does this matter to you as a seller? Two big reasons:
Certainty of closing. If a wholesaler can’t find an end buyer in time, the deal can fall apart. You’ve taken your house off the market, packed your stuff, made plans — and then you’re back to square one. A direct buyer doesn’t have that problem because we’re committed at the contract stage.
Net price. A wholesaler has to pay themselves an assignment fee on top of whatever the end investor is willing to pay. That fee comes out of your sale price. A direct buyer doesn’t have a middleman to pay, so the same property usually nets the seller more.
Is Wholesaling Illegal?
No. In Washington state, wholesaling is legal as long as the wholesaler discloses what they’re doing and follows the rules around real estate practice. Wholesalers don’t need a real estate license to assign a contract on their own behalf, but they’re not supposed to market the property itself before they have it under contract.
The problem isn’t legality. The problem is transparency. Many wholesalers present themselves as direct buyers, never mention assignment, and only reveal what’s happening when the seller asks the right questions at closing.
Red Flags to Watch For
If you’re talking to someone who wants to buy your house in cash, here are the warning signs that you’re dealing with a wholesaler rather than a direct buyer:
- They won’t show proof of funds in their own name. Real buyers can produce a bank statement or a proof-of-funds letter. Wholesalers usually can’t because they don’t have the money.
- The contract includes an “and/or assigns” clause. This means the buyer can transfer the contract to anyone. That’s the wholesaler’s tool. A direct buyer rarely needs that language.
- They want a long inspection period before earnest money goes hard. Wholesalers need time to shop your contract. They’ll often want 14 to 30 days to “do their due diligence” — really, they’re marketing your house behind the scenes.
- Tiny earnest money deposits. A direct buyer will usually put down $1,000 to $5,000 in earnest money that becomes non-refundable quickly. Wholesalers often offer $100 to $500 and want it fully refundable.
- They can’t name their title company or attorney. Real buyers have relationships with local title companies. Wholesalers often don’t until they have an end buyer.
- Vague answers about who’s actually closing. If you ask “are you buying this yourself or assigning it” and the answer is anything other than a clear yes or no, that’s your answer.
Are All Wholesalers Bad?
No. There are ethical wholesalers in Spokane who disclose upfront, get fair contracts signed, and connect sellers with buyers who do actually close. For some sellers — especially those in unusual situations — a good wholesaler can add value by finding an end buyer the seller wouldn’t have found themselves.
The issue is the bad ones. The ones who lock up your house at a lowball price, fail to find a buyer, and then either let the contract die (wasting your time) or try to renegotiate downward at the last minute.
How to Protect Yourself
Before you sign anything with a cash buyer:
- Ask point-blank: “Are you the buyer, or are you assigning this contract?”
- Ask for proof of funds in their company’s name.
- Read the contract for any “and/or assigns” language and ask what it means.
- Insist on a real earnest money deposit ($1,000 minimum for a typical Spokane home) that goes non-refundable within a short due diligence window.
- Confirm the title company and call them to verify.
Where We Fit In
Spokane Property Solutions is not a wholesaler. We’re a direct buyer. We use our own funds, we take title in our own name, and we close through local Spokane title companies. We’re happy to show proof of funds before you sign anything. There’s no middleman taking a cut of your sale.
If you want a real, no-pressure cash offer from a direct buyer — not a wholesaler — call us at (509) 720-8429 or visit our cash home buyers page. We’ll give you a free offer within 24 hours, walk through how we got to the number, and you decide what to do from there. If wholesaling is the right move for your situation, we’ll tell you that too.