Wholesaling risk involved (Texas)

Ok, so after figuring the easiest way to fling myself into REI is to a) just do it and b) start in bird dogging or wholesaling (less risk) I’ve decided this is the best way for me to get started.

I’ve been reading about wholesaling and want to get started. I have however been reading some contradicting posts regarding the risk involved with wholesaling. Some people on here have posted that there is NO risk as long as you have your contracts right and others have posted a flipped coin that it is a very tough market with LOTS of risk. Can someone please elaborate on things I may need to be aware of or if my contracts do indeed cover me and keep me risk free?

Some people have also said that there are differences in procedure being that I’m in TX (dallas) and others have said there is no difference.


This of course depends on your contract and what it states. Not sure what risks you are referring to in Texas, your risk is based on the contract wording.

I means risks in general. In other words, what are any and all risks that are associated with wholesaling IF lets say your contracts are correct (e.g. being sued, losing earnest money, being stuck with a property, not closing, etc, etc…)?

Is there no risks at all if you have the right stipulations in the purchase and assignment contracts?


In general, everytime you enter into contractual agreement with another party you take a risk. The risks you mentioned are the major ones. Now, does it happen frequently? no not really… most sellers just want out or too broke to come after you. But that of course does not eliminate the risk. These risks should not cause you to lose sleep or not invest though.

I see. So is there no clauses or things I can put in my contracts to avoid some or all the risks? I guess I should be talking to my lawyer about this…

You dont need a clause you just need to have the right stuff in your contract and the wrong stuff not in your contract.

Ok cool. I just need to make sure my contracts are good. I just wanted to make sure because I read one post in particular that stated “wholesaling is very risky” and it didn’t seem risky from what I was reading on here.

Thanks for everyone’s feedback.


its not risky, don’t worry

STOP NOW! You’re not ready for this.

There have been tons of books, courses, seminars, etc., etc., on the field of wholesaling. Please do yourself a favor and at least visit your local library to read up on the idea before ‘jumping in’ because you’ve visited a website a few times. Wholesaling is a business. Treat it as such. Learn at least the basics before trying to start it.

Is there risk? YES, there is risk. It’s real estate investing. By investing, there is always risk. If you want to do something with little to no risk of losing money, getting sued, etc. then REI isn’t it.

By your contracts ‘being right’ I’ll assume you mean that your weasel clauses are good. And yes, those clauses can get you out of deals if you have to do so, but they WON’T protect you from lawsuits. You may win your case if your sued and your contracts upheld, but you could still be sued (and have the costs/rep of being so). The best insurance against lawsuits is to be an honest and ethical investor (with alot of insurance). “Weaseling” out of alot of contracts will not get you that rep at all. Be prepared to close on your deals if you make them.


Hardly eliminates risk. Don’t forget there are things called contingency lawyers that only get paid if their client wins. If the seller is broke a contingency lawyer is a free way to try and get money. Let’s not forget, broke also usually means desperate and probably desperate enough to look at a successful investor as an easy payday.

How many of such cases have you heard of in Real Estate?

I meet an attorney in the corner store on yesterday and he is with the firm of fulbright & jaworski. He stated that I would be surprised how much the largest companies in the world get sued. That indicated to me that the larger your company the greater the risk and that could be equal to a greater reward!!! So if you dont ever want to be subject to suits stay in your bedroom by yourself otherwise the risk will be their!

I understand you can get sued. Hell, you can get sued now for just about anything from anybody. I’m more so referring to risks in the sense of a deal going sour, “losing your shirt” in a deal, being stuck with some negative cash flow property, etc…

Well, I’m learning everyday but I’d like to think I do know the basics of wholesaling somewhat. There are a set of steps that you need to follow just like anything else. It also seems like something where no matter how much I read up on, I won’t get the real world experience I need unless I ‘jump in’ and just start trying it.

This kind of brings me to why I asked this question, because I do plan on jumping in. I have begun to look at properties (driving around, online, fsbo.com, etc…) to try to get the feel for the properties and searching. I’ve started to call a list of investors for my buyers list (although so far, I either haven’t had any return calls/emails OR they simply say “we buy everything” haha). This week or next week I’ve got appointments with cpa/lawyer to talk about the best way to setup my LLC for tax reasons, etc…That’s where I am at this point. My goal is to actually be involved/educated enough to start doing wholesaling deals in about 1 months time period.


No one will force you to buy a house you can’t buy, so don’t worry. Just have a 10 or 15 days option period in there, this allows you to cancel the contract during this period without having to provide a reason. TREC contract has it built in.

I usually put 20 days and give the seller $10 for it.

Thanks for the response fadiz. TREC huh? I was thinking to use the contracts that come with KRIS KIRSCHNER wholesaling course.

I’ve looked through the TREC site and I’m not sure which contracts I need. Their list has about 30 different contracts. Can you tell me the names of the contracts? All of the posts I see also just say to download from TREC (without names).


YES. I aggree with you 1000%. Is that the general concensise that if we can’t wholesale then close on it ourselfs? I was already sued on another type deal and was settled out of court, my family can’t take another one.

Do you have a link to this TRAC site? can’t seem to find it.

Here’s the link. Like I said though, I’m not sure which contracts are for wholesaling…


is that for TX only? Wholesaling all you need is P&S and an assigment.

I’m in Texas & this is what I do:

  1. I use the TREC One-Four Family Residential Contract - Resale
  2. To protect myself I either use:
    a. The option portion of the contract (I use this the most) or
    b. An addendum that I wrote that outlines an inspection period
  3. I include in my addendum that the buyer is entitled access to the property.

The contract gets executed, goes to the Title Company, I contact my buyer’s list & show the property to those interested, get it closed, collect the check!