What Is Wholesale Real Estate?
Wholesaling is the process of finding a distressed property, getting it under contract below market value, and then selling that contract to an end buyer — typically a fix and flip investor or landlord — for a fee. You never take title to the property. Your profit is the difference between what you have the property under contract for and what your buyer pays.
That difference is called your assignment fee. Finding it, protecting it, and maximizing it is what wholesale real estate math is all about.
The Wholesale Formula
There are two numbers that matter in every wholesale deal: your Maximum Allowable Offer (MAO) and your end buyer's MAO. Your profit lives in the spread between them.
Your MAO as a Wholesaler
Your MAO = (ARV x 65-70%) minus Estimated Repairs minus Your Assignment Fee
You are solving for the purchase price that leaves enough spread for your buyer to make their target return and still pays you your assignment fee.
Your End Buyer's MAO
Most fix and flip buyers use the 70% rule: they will pay up to 70% of ARV minus repairs. That is your ceiling for the contract price. You need to get the property under contract below that number to create your spread.
Your Assignment Fee = End Buyer's MAO minus Your Contract Price
Step-by-Step Wholesale Deal Analysis
Step 1 — Establish ARV
Pull comparable sales within 0.5 miles, same property type, sold within 90 days, similar square footage and bed and bath count. ARV is what the property will be worth after a full renovation. Be conservative — your buyer's lender will order an appraisal and you need your ARV to hold up.
Step 2 — Estimate Repairs
Walk the property or get a contractor to walk it. Line-item every repair category — roof, HVAC, plumbing, electrical, kitchen, bathrooms, flooring, paint, exterior. Add a 10-15% contingency. Your repair estimate needs to be accurate enough that your buyer trusts it and does not renegotiate after their own inspection.
Step 3 — Calculate Your Buyer's MAO
Use the 70% rule as a baseline: Buyer MAO = (ARV x 70%) minus Repairs. This is the maximum your typical fix and flip buyer will pay. Some buyers use 65% in slower markets or for higher-risk properties.
Step 4 — Build in Your Assignment Fee
Subtract your desired assignment fee from your buyer's MAO to get your maximum contract price.
Your Max Contract Price = Buyer MAO minus Your Assignment Fee
Example Deal
- ARV: $220,000
- Estimated repairs: $45,000
- Buyer MAO (70%): ($220,000 x 70%) minus $45,000 = $109,000
- Desired assignment fee: $12,000
- Your max contract price: $109,000 minus $12,000 = $97,000
If you can get the property under contract at $97,000 or below, you have a $12,000 assignment fee locked in when you sell to your buyer at $109,000.
What Is a Good Assignment Fee?
Assignment fees vary by market, deal size, and the amount of work you put into finding the deal. General ranges as of 2026:
- Entry-level markets: $5,000 to $10,000 per deal
- Mid-tier markets: $10,000 to $20,000 per deal
- High-value markets: $20,000 to $50,000+ per deal
There is no universally correct assignment fee. What matters is that the deal works for your buyer at the contract price. A $5,000 assignment fee on a deal your buyer closes quickly is better than a $20,000 fee on a deal that falls apart because you squeezed too hard.
Protecting Your Spread
Accurate Repair Estimates
The most common reason wholesale deals fall apart is a repair estimate that does not hold up to buyer scrutiny. If your buyer does their due diligence and finds $20,000 more in repairs than you estimated, they will renegotiate or walk. Get accurate numbers upfront.
Defensible ARV
Your buyer will run their own comps. If your ARV is inflated, they will find out. Use the same conservative methodology your buyer would use — recent, nearby, truly comparable sales.
A Truly Motivated Seller
Wholesale math only works when you can acquire the property significantly below market value. That requires a seller who genuinely needs to sell fast and clean — divorce, foreclosure, probate, relocation, or distress. Retail sellers do not produce wholesale deals.
A Deep Buyer List
Your assignment fee is only real when a buyer closes. Build relationships with active fix and flip investors and landlords in your market before you start putting properties under contract. A deal with no buyer is just an expiring contract.
Common Wholesale Mistakes
- Overestimating ARV: Inflated ARV produces a fake spread. Your buyer's due diligence will expose it.
- Underestimating repairs: Low repair estimates make your deal look better than it is. Buyers who get surprised by repair costs do not close — and do not come back.
- Squeezing the spread too thin: Leaving your buyer no room to make their target return means they pass. A $5,000 assignment fee on a deal that closes beats a $15,000 fee on a deal that doesn't.
- No assignment clause in your contract: Make sure your purchase contract includes an assignment clause or is otherwise assignable. Without it you cannot legally sell your contract position.
How Appraize Models Wholesale Deals
Appraize calculates your wholesale MAO automatically using real MLS comps for ARV and line-item repair estimates calibrated to your local market. You see your assignment fee, your buyer's projected return, and how the deal compares across all 8 exit strategies — all in under 30 seconds.
Analyze your next wholesale deal free at Appraize — no credit card required. Get ARV, repair estimates, and your assignment fee in under 30 seconds.
The Bottom Line
Wholesale real estate is a math business. The investors who build consistent income from wholesaling are the ones who run accurate numbers on every deal — ARV from real comps, repairs from real estimates, and assignment fees built into their MAO before they make an offer.
Get those three numbers right and wholesaling becomes exactly what it promises — the fastest way to generate cash in real estate without using your own capital.
