Wholesale Deal Analyzer Formula

Understand the math behind the wholesale deal analyzer. Each variable explained with a worked example.

Use the Wholesale Deal Analyzer

Formulas Used

Your Maximum Offer to Seller

maximum_offer = max_offer

Contract Price to End Buyer

contract_to_buyer = max_end_buyer_price

Your Assignment Fee

your_fee = assignment_fee

End Buyer Gross Profit

end_buyer_profit = investor_profit

Offer-to-ARV Ratio

deal_to_arv = arv > 0 ? (max_offer / arv) * 100 : 0

Variables

VariableDescriptionDefault
arvAfter-Repair Value (ARV)(USD)300000
rehab_costEstimated Rehab Cost(USD)35000
investor_profit_pctEnd Buyer Desired Profit(%)15
selling_costs_pctSelling Costs(%)10
assignment_feeYour Assignment Fee(USD)10000
investor_profitDerived value= arv * investor_profit_pct / 100calculated
selling_costsDerived value= arv * selling_costs_pct / 100calculated
max_end_buyer_priceDerived value= arv - rehab_cost - investor_profit - selling_costscalculated
max_offerDerived value= max_end_buyer_price - assignment_feecalculated

How It Works

Wholesale Deal Analysis

Wholesaling involves getting a property under contract at a low price and assigning the contract to an end buyer for a fee, without ever purchasing the property yourself.

Formula

Max Offer = ARV - Rehab Cost - End Buyer Profit - Selling Costs - Assignment Fee

Key Concepts

  • Assignment Fee: Your profit, typically $5,000 to $20,000 per deal
  • End Buyer Profit: The flipper or investor needs enough margin, usually 15-20% of ARV
  • Selling Costs: Commissions, closing costs, and holding costs, typically 8-12% of ARV
  • The deeper your discount, the easier the deal is to assign

    • Making the Numbers Work

    If the max offer is too low for the seller to accept, the deal does not work for wholesale. Not every property is a wholesale candidate.

    Worked Example

    A property with $300,000 ARV needs $35,000 in rehab. The end buyer wants 15% profit and selling costs are 10%. You want a $10,000 assignment fee.

    arv = 300000rehab_cost = 35000investor_profit_pct = 15selling_costs_pct = 10assignment_fee = 10000
    1. 01End buyer desired profit: $300,000 x 15% = $45,000
    2. 02Selling costs: $300,000 x 10% = $30,000
    3. 03Max end buyer price: $300,000 - $35,000 - $45,000 - $30,000 = $190,000
    4. 04Your max offer to seller: $190,000 - $10,000 = $180,000
    5. 05Offer-to-ARV ratio: $180,000 / $300,000 = 60.0%

    Frequently Asked Questions

    How much should a wholesale assignment fee be?

    Assignment fees typically range from $5,000 to $20,000. The fee depends on the deal size and the margin available. On higher-value properties, fees can exceed $30,000. The key is leaving enough profit for the end buyer to want the deal.

    Is wholesaling legal?

    Wholesaling is legal in most states, but regulations vary. Some states require a real estate license to wholesale, and many require disclosure that you intend to assign the contract. Always consult a local real estate attorney before wholesaling.

    What if the seller will not accept my offer?

    If the numbers do not work at your calculated max offer, you should walk away. Overpaying on a wholesale deal can make it impossible to find an end buyer, leaving you stuck. Focus on motivated sellers who have a reason to accept a discount.

    Ready to run the numbers?

    Open Wholesale Deal Analyzer