To calculate a wholesale price in real estate, multiply the property’s after repair value by 0.70, then subtract estimated repair costs, holding expenses, and your wholesale fee. The result is the maximum price you can offer the seller and still leave enough room for your end buyer to profit. On a home worth $300,000 fully renovated that needs $50,000 of work and $5,000 in carrying costs, a wholesaler charging a $10,000 assignment fee would offer no more than $145,000.
The formula in one line:
Maximum Offer = (After Repair Value × 0.70) − Repair Costs − Holding Costs − Wholesale Fee
Each variable in that equation deserves its own careful analysis. Getting even one wrong can kill the deal at the negotiating table or wipe out the profit at closing.
Nail Down the After Repair Value
After repair value is what the home would sell for today in fully renovated condition. It’s the number with the biggest dollar impact on your offer, so it gets the most scrutiny. You build it from comparable sales: recently closed properties similar in size, style, and location to the subject property after renovation.
Fannie Mae’s appraisal guidelines call for comparable sales that closed within the last 12 months, with a minimum of three closed comparables reported in the sales comparison approach.1Fannie Mae. B4-1.3-08, Comparable Sales Most experienced wholesalers aim for three to five strong comps to build a defensible number.
Geography matters, but rigid rules like “one mile or less” oversimplify the analysis. In dense urban neighborhoods, half a mile might capture plenty of sales. In rural markets, you may need to pull comps from 10 or 15 miles away because that’s where the best indicators of value are. What matters is matching physical characteristics: square footage, bedroom and bathroom counts, lot size, and condition.
Adjustments are where this gets tricky. If your best comp has a finished basement and the subject property doesn’t, subtract value from that comp to account for the difference. If your subject has a two-car garage and the comp has a single, adjust upward. These adjustments should mirror the market. Look at what finished basements or extra garages actually sell for in that neighborhood, not what a contractor would charge to build one.
Focus on renovated properties when pulling comps, not other distressed sales. You’re trying to figure out what the home will be worth after your end buyer finishes the rehab, so the comp set should reflect that finished condition.
Estimate Repair Costs Honestly
Repair estimates are where deals live or die. Overestimate and you’ll offer so low the seller walks. Underestimate and your investor backs out during inspection, or closes and loses money. Aim for an honest, slightly conservative number.
Start with the major systems. A roof replacement, foundation repair, or new HVAC system can each run into five figures. Plumbing and electrical upgrades in older homes are similarly expensive, especially when the work requires opening walls. Once the structural and mechanical picture is clear, move to the cosmetic scope: kitchens, bathrooms, flooring, paint, and fixtures. Those finish items drive the after repair value, so skimping there defeats the purpose of the flip.
For a full interior renovation that guts the property down to studs, costs in 2026 typically run $60 to $150 or more per square foot depending on the market and finish level. A 1,500-square-foot house needing a complete overhaul might cost $90,000 to $225,000 before carrying costs. Cosmetic refreshes such as paint, carpet, appliances, and minor kitchen and bath updates come in much lower, often $15,000 to $40,000 for the same size home. Most wholesale deals fall somewhere between these extremes.
Always add a contingency of 10% to 15% above your line-item estimate. Hidden problems like mold behind walls, outdated wiring, or water damage under flooring show up constantly during demolition. Investors who have been burned by surprise costs will discount your deal if the repair estimate looks too tight.
Add the Holding Costs
While the investor owns the property and renovates it, bills keep coming. Property taxes, homeowner’s insurance, and utilities are the baseline. If the investor financed the purchase with a hard money loan, common for flips, monthly interest payments add up fast, often 1% to 2% of the loan amount per month. A $150,000 hard money loan at 12% annual interest costs $1,500 a month in interest alone.
Renovation timelines for most flips range from three to six months. A property with $2,000 in combined monthly holding costs held for five months adds $10,000 to the total project budget. Permit and inspection fees vary widely by jurisdiction but can add another $1,000 to $5,000 depending on the scope. All of these costs reduce the price an investor can afford to pay you for the contract.
Apply the 70% Rule
The 70% rule is the industry’s standard guardrail for flip profitability. It says an investor should pay no more than 70% of a property’s after repair value, minus repair costs. That 30% margin covers the investor’s profit, closing costs on both the acquisition and resale, real estate agent commissions on the eventual sale, and a buffer for the unexpected.
On a property with an after repair value of $300,000, the 70% rule sets the investor’s maximum all-in budget at $210,000. If repairs cost $50,000 and holding costs are $5,000, the investor can afford to pay $155,000 for the property and still have room for profit and transaction costs.
The 70% figure isn’t sacred. In hot markets with fast-turning inventory, some investors work at 75% because they can sell quickly and reduce holding costs. In slower or riskier markets, experienced flippers drop to 65% for extra cushion. Your job as the wholesaler is to know what your buyers actually require. If the investors on your list consistently demand 65% deals, pricing at 70% means your phone won’t ring.
Set Your Wholesale Fee
Your wholesale fee, also called an assignment fee, is what you earn for finding the deal, negotiating the purchase contract, and connecting the seller with an end buyer. Some wholesalers charge a flat amount, commonly $5,000 to $15,000 per deal. Others target a percentage of the contract price, often in the 5% to 10% range. On higher-value properties, a percentage-based fee can grow large enough to break the deal, which is why many experienced wholesalers switch to a flat fee on bigger transactions.
The fee gets subtracted from the investor’s maximum purchase price. If the investor’s ceiling is $155,000 and you want a $10,000 assignment fee, the highest price you can offer the seller is $145,000. Push your fee too high and the deal won’t work for the buyer. Set it too low and you’re leaving money on the table for the amount of work involved.
Work Through a Full Deal
Here’s how the formula plays out on a concrete example. You’ve identified a distressed three-bedroom home in a neighborhood where renovated comparables sell for $300,000.
- After repair value: $300,000, based on four comparable sales within the last 12 months
- 70% of ARV: $300,000 × 0.70 = $210,000
- Estimated repairs: $50,000 for new roof, HVAC, kitchen and bath remodel, flooring, and paint
- Holding costs: $5,000 for four months of taxes, insurance, and utilities
- Wholesale fee: $10,000
Maximum offer to seller: $210,000 − $50,000 − $5,000 − $10,000 = $145,000
If the seller accepts $145,000, you sign a purchase agreement at that price. You then assign the contract to your end buyer for $155,000: the $145,000 purchase price plus your $10,000 fee. At closing, the title company collects $155,000 from the buyer, sends $145,000 to the seller, and pays you the $10,000 difference. The investor walks in at $155,000 with $55,000 in planned renovation and holding costs, landing at $210,000 total, exactly 70% of the $300,000 after repair value.
Run this math backward to stress-test any deal. If the after repair value turns out to be $280,000 instead of $300,000, the 70% threshold drops to $196,000, and the investor’s maximum purchase price falls to $131,000 after the same costs. That’s a $14,000 swing from a $20,000 miss on valuation, which is why getting the after repair value right matters more than any other step.
Adjust the Formula for a Double Closing
The calculation above assumes a straight assignment: you sign a purchase agreement with the seller, then transfer your contractual rights to the end buyer for a fee. You never take title. The buyer closes directly with the seller, and your fee comes out of the proceeds. One closing, one set of title fees.
A double closing works differently. You actually purchase the property from the seller in one transaction, then immediately resell to your end buyer in a second transaction, sometimes on the same day. You briefly hold title, which means two full sets of closing costs: title insurance, escrow fees, recording fees, and transfer taxes paid twice. Wholesalers using double closings often rely on transactional lenders who provide short-term funding, typically charging 1% to 2% of the loan amount for a few hours of use.
Double closings exist for situations where assignment doesn’t work. Some sellers refuse to allow assignment. Some end buyers use lenders that won’t fund an assigned contract. A double closing also keeps your fee private, since in an assignment both the seller and buyer can see exactly what you’re making.
If you plan a double closing, add those extra closing costs and transactional lending fees to the expense side of the formula before setting your offer price. Ignoring them turns a profitable deal on paper into a break-even deal at the closing table.
Factor In Taxes on What You Keep
The offer price is one calculation. What you actually take home is another. The IRS treats wholesaling as an active trade or business, not a passive investment. Assignment fees and double-closing profits are ordinary income taxed at your regular income tax rate, not the lower long-term capital gains rate. You report this income on Schedule C.
On top of income tax, you owe self-employment tax on your net wholesaling profits. The self-employment tax rate is 15.3%, broken into 12.4% for Social Security and 2.9% for Medicare.2Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax The Social Security portion applies to net self-employment earnings up to $184,200 in 2026.3Social Security Administration. Contribution and Benefit Base The Medicare portion has no cap, and an additional 0.9% Medicare surtax kicks in on self-employment income above $200,000 for single filers or $250,000 for married couples filing jointly.
Because wholesaling income is dealer income, you cannot use a 1031 exchange to defer taxes on your profits. That tool is reserved for investment properties held for rental or appreciation, not inventory bought and sold in the course of business. Set aside 25% to 40% of every assignment fee for taxes, depending on your bracket, and the numbers you calculated at the offer stage will still make sense in April.
One Legal Boundary to Respect
The pricing formula assumes you have the legal right to assign a contract, and that right isn’t automatic everywhere. A growing number of states have passed wholesaling-specific legislation. Some require written disclosures to the seller explaining that you’re a wholesaler and intend to assign the contract. Others require a real estate license to publicly market an equitable interest. At least one state limits unlicensed wholesalers to a single transaction per year before triggering licensing requirements, with criminal misdemeanor penalties for exceeding that threshold. Several states have extended their rules to cover double closings.
Before doing your first deal in any state, check whether that state has a wholesaling-specific statute. At minimum, look for three things: whether you need a license or registration, whether you must provide a written disclosure to the seller, and whether there are limits on how many deals you can do without a license. Skipping this step can turn a well-priced deal into an unenforceable one.