Real Estate Wholesale Formula: An Investor's Guide (2026)

Written by

Alex Martinez — Founder & CEO, Real Estate Skills. Has wholesaled and flipped houses for over a decade, personally acquiring 33+ residential investment properties.

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Reviewed by

Ryan Zomorodi — Co-Founder & COO, Real Estate Skills. Reviewed and verified the formula, offer-pricing method, and cash-buyer criteria in this guide before publication.

✓ Updated July 2026 ✓ Fact-Checked 📊 Free Deal Calculator Inside Watch on YouTube

Publication history: Originally published October 18, 2022. Updated July 2026 with a line-by-line breakdown of the wholesale formula, the buyer-criteria offer-pricing method, current fee figures, a reconciled MAO formula, and guidance on when the 70% rule costs you deals. Formula and offer-pricing method verified by Ryan Zomorodi, Co-Founder & COO of Real Estate Skills.

Here's the number that makes or breaks a wholesale deal: your maximum allowable offer. Get it right, and you lock up a property with room to pay yourself and still hand your cash buyer a deal they'll actually take. Get it wrong — even by a little — and your contract sits dead because no investor will touch it, or you win the property and realize too late there's no profit left in it.

That's what the real estate wholesale formula solves. It's a fast piece of math that tells you the highest price you can offer a seller while protecting the spread for everyone downstream. Most beginners overpay because they're bidding on emotion or copying a list price. The formula replaces the guessing with a number you can defend.

Two things to know before we start. First, this is a starting point, not a straitjacket — the standard version everyone teaches (the "70% rule") is a quick filter, and later in this guide I'll show you exactly when it costs you deals and what experienced wholesalers use instead. Second, you don't need to be good at math or own any special software. If you can do a little subtraction, you can run this on any property in a few minutes.

How To Calculate Your Wholesale Offer Price (FAST & EASY)!

Ryan Zomorodi, Co-Founder of Real Estate Skills, walks through how to calculate your wholesale offer price the right way — reverse-engineering from your cash buyer's real numbers instead of a rigid rule.

 

What Is Real Estate Wholesaling?

The step-by-step wholesaling process comes down to being the middleman between a motivated seller and an end buyer — putting a property under contract, then assigning that contract to a cash buyer for a fee, all without putting real money down or ever owning the property.

You research the market for mispriced properties, negotiate a purchase price with the seller, and line up a different buyer at a slightly higher price using a wholesale real estate contract. You clip the difference off the top as your fee. Done well, a wholesaler can move fast enough to go under contract with an end buyer the same day they lock up the property.

And how do you know where to price it so the whole thing works? That's the formula.

What Is The Real Estate Wholesale Formula?

The formula answers a handful of key questions: the maximum allowable offer (MAO) that keeps the deal attractive to your buyer; the offer that still protects your fee after you assign the contract; the after repair value (ARV) of the property; and the rehab and closing costs involved.

There are two ways to write the same formula, and beginners get tripped up thinking they're different. The short version is the one you'll see everywhere:

MAO = (70% × ARV) − Repair Costs − Wholesale Fee

The long version just spells out what that 70% is quietly doing:

MAO = ARV − Fixed Costs − Repair Costs − Wholesale Fee − Desired Profit

They're the same equation. In the short version, multiplying ARV by 70% is a shortcut that bakes in the fixed costs and the desired profit margin in one move — instead of listing them out line by line. Use the short version to move fast. Understand the long version so you know what you're actually accounting for.

Maximum Allowable Offer (MAO)

Same property, same math, but your maximum offer is the flipper's maximum minus what you intend to earn. That gap is your paycheck.

To run it, you start with the after repair value (ARV) — what the property is worth once renovated — and work backward. As long as you pay less than the ARV minus every cost of getting there, you've got room for a deal.

Once you've got your ARV and repair estimate, the formula hands you your maximum allowable offer. You can run it on paper — that's the whole point of the 70% rule, back-of-the-napkin math you can do on your phone. But for a real deal I'm actually going to submit, I don't trust the napkin. I run it through a deal calculator that accounts for every cost down to the dollar, so I know exactly where I can offer and still make my buyer's numbers work. You can grab the same free wholesale deal calculator I use, and if you want to go deeper on the maximum-allowable-offer math itself, we break the whole MAO formula down step by step.

Stop Guessing. Calculate Your Exact Offer In Seconds.

The wholesale formula only works if your inputs are right, and back-of-the-napkin math is where deals go to die. If your ARV or repair number is off by even a few percent, your assignment fee vanishes. Download our free Deal Calculator — the same one I use on every deal — to reverse-engineer your Maximum Allowable Offer, factor in the costs the 70% rule glosses over, and lock in your spread before you ever make an offer.

Rehab Costs

The fastest way I estimate cosmetic rehabs is a dollar-per-square-foot rule I get from my actual cash buyers. Depending on the market and the buyer, that runs anywhere from about $35 a square foot in many areas up to $65 or more in high-cost metros like San Diego — so a 1,500-square-foot cosmetic fixer might pencil out around $50,000 to $60,000. The number isn't universal; the move is to ask the buyers you work with what their per-foot number is, then multiply. Big-ticket items — a new roof, a cracked slab, failed HVAC — get added on top of the cosmetic base, not blended in.

Underestimate repairs and you can turn a good-looking deal into one your buyer walks away from at the closing table. If you pay $300,000 for a property that only supports a lower resale, no renovation saves it — you'll still lose money and post a poor return on investment. That's why the buffer matters — and if you want to estimate like a pro, work through our full guide to estimating rehab costs.

Don't Let A Missed Repair Wreck Your Offer

Your rehab number is a direct input into the formula — get it wrong and the whole offer is wrong. Download our free Scope of Work Template to itemize every repair, from roof to foundation, so the number you feed into your MAO is built on real line items instead of a round-number guess.

Wholesale Fee

The wholesaler earns a fee for connecting the seller to the end buyer, and you bake that fee into the formula from the start. Starting out, a fee of $3,000 to $5,000 on a simple residential flip is a fine win; as you build relationships and take on bigger deals, $10,000 to $15,000 per transaction becomes normal, and on strong commercial real estate or high-equity deals, fees of $25,000 to $50,000-plus are real. Whatever you charge, it goes into the MAO equation before you make the offer — never as an afterthought.

Where Does The 70% Come From & What Does It Mean?

The 70% rule says your MAO shouldn't exceed 70% of the ARV (before subtracting repairs and your fee). It's the standard, but it's a dial, not a fixed law — every investor has a different risk tolerance, and the right number moves with the market.

If you want a quick rule that's more competitive than the standard 70%, here's what I actually do: bump it to 80%. Run the same formula — 80% of ARV, minus repairs, minus your fee — and you'll land on a higher, more aggressive offer that cash buyers are far more likely to accept in a normal or competitive market. You give up a little cushion, but you win more of the deals you chase, and a deal you win at a slim margin beats a deal you lose on paper.

Think of it as a dial, not a fixed number. In a hot market with fast resale and deep buyer demand, 80% or even 85% keeps you competitive. In a soft or declining market — where your comps might be stale by closing and properties sit longer — drop to 65% to protect against a value slip before the deal closes. And if you're lowering the percentage, it's usually to give yourself extra cushion against the elevated construction and borrowing costs that have stuck around in recent years — labor, materials, and financing all cost more than they used to, and that compression comes straight out of your buyer's margin. The table below is your starting calibration; adjust from there based on your actual buyer pool and how fast homes are moving in that specific zip code.

Why The 70% Rule Alone Loses Deals

Here's the problem, stated plainly. The 70% rule bakes in one fixed assumption about your buyer's margin. Some buyers do want that. Plenty don't. And a rigid rule can't tell the difference — so it quietly costs you the competitive deals.

Ryan Zomorodi, Co-Founder of Real Estate Skills, breaks this down in the walkthrough above using a real San Diego property. The after-repair value came in around $775,000, repairs about $70,000, and he wanted a $20,000 assignment fee. Run the strict 70% rule and you get an offer of roughly $452,500. That's the number a beginner submits — and it's the number that gets beaten.

Because here's what happens when you actually analyze the deal the way the end buyer does. Ryan's cash buyers in that market will take a deal that nets them a solid profit at closer to a 10% return, not 30%. Reverse-engineer from their real criteria instead of a blanket rule, and the same property supports an offer around $560,000 — over $100,000 higher — while still leaving the buyer a profit they'll happily take and still paying the wholesaler the same $20,000 fee. Two wholesalers, same property, same fee. One offers $452k on autopilot and loses. One offers $560k on purpose and wins.

That's the whole point. The 70% rule is a quick filter to see if a deal is worth a second look. It is not the offer. The offer comes from a sharper question: what will my cash buyer actually pay for this property?

The Pro Method: Reverse-Engineer From Your Buyer

Experienced wholesalers don't start with a percentage. They start with the buyer. The method is three moves:

First, know your cash buyer's criteria before you ever make an offer. There are two numbers that matter, and you get them by asking — literally asking the buyer, or learning it from deals you've done with them. One is the minimum net profit in dollars they need on a deal. The other is their minimum deal ROI — the profit expressed as a percentage of what they put in. Both have to clear.

Second, start with the end in mind. Nail the ARV first, subtract the real costs the buyer will carry — repairs, holding, financing, resale costs — and find the price where the buyer still hits their criteria. That price, minus your fee, is your offer to the seller.

Third, adjust to win. If the seller needs a little more, you have levers before you ever touch your buyer's margin: re-check your repair estimate, and if it's tight, flex your own fee. A wholesaler who drops from a $10,000 fee to a $5,000 fee can raise the offer by $5,000 and still get paid. It's better to make $5,000 on a deal that closes than $10,000 on a deal that dies. Momentum beats greed, especially early.

Different buyers, different numbers — and this is exactly why one rigid percentage can't work. Fix-and-flippers want the biggest discount, which is why they're the ones quoting the 70% rule. Buy-and-hold landlords will usually pay more for the same property, because they're collecting rent for years, not flipping for a quick gain. Land developers analyze it differently again. In practice, the investors wholesalers actually sell to sit anywhere from about 60% to 85% of ARV minus repairs, depending on their model. Your job is to find out where your buyer sits — not to assume everyone wants 30% off.

Net Profit vs. Deal ROI: The Two Numbers Your Buyer Actually Cares About

Here's why one number isn't enough. Net profit is just the dollars left after everything — purchase, repairs, holding, resale costs. Deal ROI is that profit measured against how much cash the buyer had to put in. A deal can look great on one and terrible on the other. Say a project nets $2,000 in profit. Sounds like a win — it's positive, right? But if the buyer had to sink $188,000 into the deal to make that $2,000, their return is about 1%. They could park that same money in a high-yield savings account, do zero work, take zero risk, and beat it. No investor takes that deal.

Flip it around and the same logic protects the buyer on big-dollar deals too. A $50,000 profit is exciting until you learn the buyer had to tie up $1.2 million to earn it — thin enough that many investors would rather pass and keep their capital free. That's why they watch the percentage, not just the dollars.

So when you're reverse-engineering your offer, you're not solving for one target — you're solving until both your buyer's minimums are satisfied. One real fix-and-flip buyer I've worked with won't touch a deal under $25,000 net profit and 15% deal ROI. Both boxes, every time. Once you know your buyer's two numbers, you dial your offer price up or down until the deal clears both — and that price, minus your fee, is what you offer the seller. (Every buyer's criteria differ, and these figures are illustrative, not a guarantee of any return.)

Wholesale Real Estate Formula Example

Let's say you're walking around Jacksonville, Florida on vacation and notice a handful of properties for sale on your street. You like the market and want to check whether there's profit potential for wholesaling in Florida. Here's how you run the numbers.

First, Calculate The ARV

The property is a 3-bedroom, 2-bathroom ranch-style house in average condition. You reach out to a Realtor on Zillow and run a comparable analysis of the surrounding market. You find that similar properties — or real estate comps — have recently sold for $300,000. Using the 70% rule, you'd be willing to offer a maximum of $210,000 (70% × $300,000) before discounting rehab costs and your fee.

Your ARV is the number everything else hangs on — get it wrong and every downstream figure is wrong too. It's what the property will sell for after it's fully renovated, and you find it with comps: recently sold, renovated properties similar to yours. My quick criteria, refined over years of doing this: sold in the last 6 months, within a half-mile, same city and zip, same bed-and-bath count, and within about 20% of your property's square footage. Apples to apples — a three-bed, two-bath, 1,100-square-foot house gets compared to other three-bed, two-baths around that size, not a five-bed across town. One habit that's saved me from bad comps: pull each one up on Google Maps and actually look — a comp that sold low might be backing onto railroad tracks, and now you know why. That's the fast version; comping well takes practice, and it's the single most important skill to get right, so if you want the full method, we go deep in our guide to calculating ARV.

Your ARV Is Only As Good As Your Comps

Overestimating the ARV is the fastest way to blow up a wholesale deal — an inflated resale number makes every figure downstream look better than it is. Download our free Comp Criteria Cheatsheet: the exact checklist I use to pull clean, defensible comps and land an ARV your cash buyer will actually agree with.

Next, Estimate Rehab & Repair Costs

Looking at the photos, you believe the house needs updated carpets and a new kitchen to turn it into a solid rental or flip. You estimate that at $25,000. But because the market is challenging, you add a 10% buffer for cost overruns, bringing your overall rehab budget to $27,500 ($25,000 + 10%).

Calculate Your Desired Assignment Fee

Since this is your first foray into the wholesale market, you're happy with a modest profit. You'd be satisfied with a $10,000 fee to compensate you for your effort.

Putting it all together:

If you can get this property under contract for $172,500 or lower, you've got yourself an attractive deal. Now you look at your buyer's list, find a cash buyer or rehabber looking for investment properties, and make the connection between the seller and the end buyer.

Pre-Offer Checklist: Before You Submit Any MAO

Run through every item below before submitting an offer. If you can't check all eight boxes, your MAO isn't ready.

Real Estate Wholesale Formula: What To Keep In Mind

The formula gives you a ballpark MAO — it deliberately leaves out title company fees, recording taxes, insurance, hard money lenders' fees, and holding costs. That's not a flaw; it's a quick-filter tool for scanning deals fast, not a full underwriting model.

What The 30% Actually Covers

Here's the cleanest way to see it. Say a property will be worth $100,000 once it's fixed up — that's the ARV. The 70% rule says your buyer's all-in cost should land at $70,000. If repairs run $20,000, the buyer can pay $50,000 for the house, spend $20,000 fixing it, and be all-in at $70,000 on something worth $100,000. That $30,000 gap between all-in cost and finished value isn't free money. It's what has to absorb everything the simple formula didn't list.

And that list is longer than beginners expect. When your cash buyer runs the same property through a real analysis, they're accounting for financing costs, front-end closing costs when they buy, holding costs while they renovate — property taxes, insurance, utilities, month after month — back-end closing costs and real estate commissions when they resell, and finally their own profit. Stack all of that up and it's routinely 25% to 30% of the ARV. The 70% multiplier is a shortcut that says "leave enough room for all of it" without making you itemize every line.

That's why the formula works as a quick filter and fails as a final answer. The 30% is an average cushion. On a specific deal, in a specific market, with a specific buyer, the real costs might need more room or less — which is the whole reason pros reverse-engineer from the actual numbers instead of trusting the multiplier.

One thing worth burning into memory, because it's where the wholesaler-versus-flipper line lives: you, the wholesaler, don't pay any of those costs. No financing, no holding, no commissions. Your cash buyer carries all of it. Your job is only to make sure your offer leaves enough room that your buyer can carry it and still hit their number — because if it doesn't, they walk, and your deal is dead. You're not solving for your costs. You're solving for theirs, then subtracting your fee.

Common Mistakes When Using The Wholesale Formula

The math itself is simple. The execution is where most beginners fall apart. These are the most costly errors investors make when applying the wholesale formula — and exactly how to avoid them.

Overestimating The ARV

The hardest part of the entire formula isn't the math — it's the comparable analysis. Beginners consistently pull comps from the wrong radius, compare properties with different square footage, or use sales data that's 12 months old in a shifting market. An inflated ARV makes every number downstream look better than it actually is. Your MAO will be too high, your end buyer will reject the contract, and you'll have wasted weeks of effort on a dead deal.

The fix is ruthless comp discipline. Use only closed sales within 0.5 miles, within 200 square feet, and within the last 90 days. When in doubt, use the lowest comp — not the average.

Underestimating Rehab Costs

Most beginners fail here because they estimate rehab costs from photos instead of a physical walkthrough. A property can look cosmetically rough in pictures but hide a failed HVAC system, outdated electrical panel, or foundation issue that adds $20,000–$40,000 to the budget overnight. If those costs weren't in your MAO calculation, your end buyer's margins evaporate, and the deal dies.

Always add a minimum 10%–15% contingency buffer on top of your scope estimate — exactly as shown in the Jacksonville example above. For properties built before 1978, budget an additional line item for lead paint and asbestos testing.

Ignoring Holding Costs & Closing Fees

The standard MAO formula doesn't include title fees, transfer taxes, insurance, or lender fees. That's by design — it's a quick-filter tool, not a full underwriting model. The mistake is forgetting to account for these costs entirely. In high-tax states like New York or New Jersey, transfer taxes and attorney fees alone can add $5,000–$8,000 to the transaction that nobody budgeted for.

Before finalizing any offer, run a separate closing cost estimate for your specific state and county. Add that number as an additional line item in your MAO calculation alongside rehab costs and your assignment fee.

Locking In One Percentage Regardless Of Market

Applying a rigid 70% rule in every market and every condition is the most common strategic error experienced wholesalers see in beginners — and it's the exact trap we covered earlier. A 70% offer in a rural tertiary market with a thin buyer pool and 120-day average days-on-market is almost always too high. The same 70% in a high-demand urban market with a deep cash buyer list might actually be leaving money on the table.

Treat the percentage as a dial. Use the Market Condition Adjustment Table above as your baseline, then adjust further based on your specific buyer pool depth, local days-on-market data, and your own cost-of-capital before committing to any offer price.

How Do You Figure Wholesale Real Estate Fees?

Wholesale fees are the final input of the formula. While many wholesalers charge $10,000 to $15,000 per transaction on average, plenty have made close to six figures on a single deal. It all comes down to how much meat is on the bone for the end buyer.

If a wholesaler identifies a property that can be renovated, expanded, and resold or leased at a strong margin, they can command a larger fee. A good rule of thumb: wholesalers have room to charge up to about 50% of the end buyer's projected profit. So if the end buyer stands to make $50,000 off a distressed property flip, a wholesaler can potentially charge up to $25,000 for the deal.

Just remember what you learned earlier: the fee is a lever, not a fixed target. If flexing it down a few thousand dollars is the difference between a closed deal and a dead one, especially when you're building momentum, take the smaller fee and the win.

Real Estate Wholesale Formula FAQs

Your Next Step

Don't let this sit as theory. Here's what to actually do: pick one real listing in your market right now — a distressed property, something that needs work. Run the quick 70%-rule number on it first to see if it's even worth a second look. If it clears that filter, go find out what your cash buyer would really pay: nail the ARV from sold, renovated comps, subtract the repairs your buyer would carry, and reverse-engineer the price that hits their criteria. Then subtract your fee. That's your offer.

If you don't have a cash buyer yet, that's your real first step — because the whole method depends on knowing what someone will actually pay. Line up two or three, learn their two numbers, and you've turned a formula into a repeatable way to price every deal you touch.

Final Thoughts On The Real Estate Wholesale Formula

The real estate wholesale formula is how you stop guessing and start pricing deals with confidence. But remember the two-layer lesson of this guide: the 70% rule is your quick filter — fast, defensible, good enough to decide whether a property deserves a closer look. The pro move is what comes next: reverse-engineering the real offer from what your cash buyer will actually pay.

Master the fast version to move quickly, and the sharp version to win the deals worth winning. Do both, and you'll rarely look at a property again without knowing, within minutes, exactly where you can offer.

About The Author

Alex Martinez

Founder & CEO, Real Estate Skills

Alex Martinez is the Founder & CEO of Real Estate Skills. With more than a decade of investing experience and 33+ residential properties acquired, he has personally wholesaled and flipped houses across the country and generated over $12 million in revenue. Through Real Estate Skills, Alex and his team have helped thousands of students learn how to analyze deals, calculate their offers correctly, and close profitable real estate transactions.

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Real Estate Skills is not a law firm, and the information in this article is provided for educational purposes only — it does not constitute legal, tax, or financial advice. Wholesale real estate figures, fees, and market conditions vary by state and change over time, and all investing carries risk — past results do not guarantee future outcomes. The deal examples shown are real but illustrative, and are not a promise of any particular return. Always consult a licensed real estate attorney and your own tax and financial advisors before entering into any contract or transaction.