How to Analyze a Wholesale Deal: MAO & Assignment Spread

Analyzing a wholesale deal means answering six questions in order: what is the property realistically worth after repairs (the ARV), what will those repairs cost, what will it cost the end buyer to finance, hold and resell it, what profit does that buyer require, what is the most the buyer can therefore pay — and, only then, what can you contract the property for so that the spread between your price and the buyer’s covers your assignment fee.

The central principle: a wholesale deal works only if the end buyer’s economics still make sense after your assignment fee is added. You are not selling a property — you are selling a deal, and a deal is only worth buying if the numbers survive the buyer’s own underwriting. Every formula in this guide exists to keep that test honest.

What Is Wholesale Deal Analysis?

A wholesaler typically gets a property under contract, finds an investor buyer, and — where the transaction structure and applicable law permit — assigns or otherwise disposes of the contractual interest, earning an assignment fee for the work of finding and negotiating the deal. How wholesalers make money, in one sentence: they are paid the gap between what they contracted the property for and what an end buyer will pay for that contract.

Which means wholesale analysis is really two analyses stacked: the end buyer’s underwrite of the property, and your underwrite of the spread. Skip the first and the second is fiction — a contract nobody’s numbers support is not an asset, it is an obligation with your name on it.

Wholesale vs Fix and Flip: Whose Numbers Are Whose

The two strategies touch the same house and split the economics differently. In a fix and flip, the investor buys the property, funds and manages the rehab, carries it for the whole project, sells it renovated, and earns the project profit — and bears the project risk. In a wholesale, the wholesaler contracts the property, identifies the end buyer, assigns the contractual interest where permitted, and earns the assignment fee; the end buyer then runs the flip (or rental) and earns its profit.

The distinction that keeps analyses honest: the wholesaler’s profit is not the same thing as the end buyer’s projected flip profit. They are two different numbers, earned by two different parties, for two different kinds of work — and the wholesaler’s fee comes out of the room the buyer’s numbers leave, which is why the buyer’s underwrite comes first.

Estimate the ARV

After-repair value (ARV) is the estimated market value of the property after the planned renovation is complete. Even though the wholesaler will never swing a hammer, the analysis still runs on the end buyer’s ARV — because the buyer’s maximum price is derived from it, and every serious buyer will check it themselves.

A defensible estimated ARV comes from comparable-sales analysis: recently closed sales of genuinely similar properties — same type, similar size and bed-and-bath count, same micro-location, comparable post-renovation condition and finish level — recent enough to describe the current market. An estimated ARV built from asking prices or dissimilar comps does not just weaken your analysis; it evaporates the moment a real buyer runs the comps properly, usually along with your credibility.

Estimate the Rehab — Even Though You Won’t Do It

The end buyer’s rehab budget drives what the end buyer can pay, so the wholesaler needs a defensible repair estimate: structural issues, roof, HVAC, electrical, plumbing, kitchen, baths, flooring, paint, exterior, permits, and a contingency for what the walls are hiding. The walk-through and due diligence that inform it are the wholesaler’s work product as much as the contract is.

Precision honesty matters here. A wholesaler who has not opened a wall should not quote a repair number to the dollar — false precision reads as either inexperience or salesmanship, and experienced buyers price both accordingly. An honest range with visible assumptions beats a confident wrong number every time.

What Is MAO? Two Formulas, Two Parties

Maximum allowable offer (MAO) is the highest price a party can pay while preserving the assumptions and profit target built into their analysis. The trap in wholesale conversations is that two different parties each have one, and the same three letters get used for both. Keep them separate:

End-buyer MAO

End-Buyer MAO = Net Sale Proceeds − Rehab − Financing and Holding Costs − Required Profit

This is the most the rehab investor can pay for the property. Net sale proceeds means the ARV minus the buyer’s selling costs — under this article’s convention, selling costs live on the proceeds side, and the buyer’s acquisition-side closing costs are folded into the financing-and-holding line to keep the example compact. State your own convention explicitly; a formula that silently drops a cost category produces a MAO that is confidently wrong.

Wholesaler maximum contract price

Wholesaler Maximum Contract Price = End-Buyer Purchase Price − Desired Assignment Fee

This is the most the wholesaler can contract the property for while preserving the target fee — assuming the end buyer pays at most their MAO. The two formulas chain: the buyer’s MAO caps the buyer’s price, and the buyer’s price minus your fee caps your contract. Everything in wholesale analysis is downstream of that chain.

The 70% Rule for Wholesalers

MAO ≈ (ARV × 70%) − Repairs

The famous shortcut approximates an end buyer’s ceiling in one line, and as a thirty-second screen it is useful. As underwriting it is incomplete: it ignores the buyer’s financing and carrying costs, buries selling costs and required profit inside one opaque haircut, applies the same margin to every market, price point and project complexity, and says nothing about duration. In the worked example below the shortcut happens to land exactly on the wholesaler’s maximum contract price — a coincidence of that example’s assumptions, not a rule, and a good illustration of why the full chain is worth computing: the shortcut cannot tell you when it happens to be right.

Use it to triage which properties deserve the full analysis. Never present it as the analysis — and it is not DealWorthIt’s methodology either.

Assignment Fee vs Assignment Spread

Two related terms, worth keeping precise. The assignment fee is the amount paid to the wholesaler for assigning the contractual interest, where the transaction structure and applicable law permit that structure. The assignment spread, as an educational modeling term, is:

Assignment Spread = End-Buyer Price − Wholesaler Contract Price

In a simple assignment the two are the same number. In practice, transaction costs, closing adjustments and alternative structures (such as double closings, where used) mean the wholesaler’s actual net can differ from the simple spread — model the structure you are actually using, not the tidy version of it.

How the Assignment Fee Affects the End Buyer

In a simple assignment structure, the buyer’s basis is your contract plus your fee:

End-Buyer Acquisition Price = Wholesaler Contract Price + Assignment Fee

Which exposes the mechanism most new wholesalers miss: every dollar of fee raises the buyer’s basis by a dollar, and a fee large enough to push the buyer’s acquisition price above their MAO destroys the buyer’s target return — at which point sophisticated buyers renegotiate or walk, and unsophisticated buyers close and then tell everyone who did it to them. The fee cannot be analyzed in isolation. Wholesale underwriting is not finding a cheap property; it is finding a spread the buyer’s numbers can carry.

Build the Wholesale Deal Backwards

The disciplined workflow runs from the exit to your offer:

1. Estimate a realistic ARV from closed comparable sales.
2. Estimate the rehab honestly, contingency included.
3. Estimate the end buyer’s selling, financing and holding costs.
4. Set the profit or return a real buyer in your market requires.
5. Calculate the end-buyer MAO from those inputs.
6. Decide the assignment fee the deal and your work justify.
7. Calculate your maximum contract price: buyer price minus fee.
8. Compare that ceiling with what the seller will actually accept — the deal exists only if they overlap.
9. Stress-test the ARV, the rehab and the seller price before you sign anything.

Notice what is absent: nowhere does the workflow start from “what can I get it for.” Deals built forward from a cheap-looking price are how contracts end up with no buyer; deals built backward from a real buyer’s numbers are how assignments close.

A Worked Wholesale Example

A complete hypothetical chain — every number is a fictional example assumption chosen for arithmetic clarity, not a typical value. The buyer’s selling costs are set at 8% of ARV for this example, and the buyer’s closing costs ride inside the financing-and-holding line:

1. End-buyer MAO: $276,000 of net proceeds − $45,000 rehab − $15,000 financing and holding − $36,000 required profit = $180,000.
2. Wholesaler ceiling: $180,000 buyer price − $15,000 desired fee = $165,000 maximum contract price.
3. The actual contract at $160,000 sits $5,000 under the ceiling, so a buyer paying their full MAO produces a $180,000 − $160,000 = $20,000 spread — the target fee plus the room.
4. Check the buyer’s side: contract $160,000 + $20,000 fee = a $180,000 acquisition basis, exactly the buyer’s MAO. The deal closes with the buyer’s assumptions intact — which is the whole test.

Seller-Price Sensitivity

The spread lives between the buyer’s ceiling and the seller’s floor, so watch it compress as the contract price climbs — buyer price held at the $180,000 MAO, all else constant:

Five thousand dollars of seller negotiation is the entire difference between a comfortable deal and a broken one — which is why the maximum contract price is a number you compute before the negotiation, not a story you tell after it.

ARV Sensitivity

Every dollar of ARV miss flows through the buyer’s proceeds into their MAO, and from there straight into your ceiling — selling costs recomputed at 8% of the actual ARV, everything else constant:

A ten-percent ARV miss moves the wholesaler’s ceiling down by $27,600 — far more than most spreads. If the contract was signed against the optimistic number, the deal is now unassignable at anything like the target fee. ARV discipline is not the buyer’s problem; it is the wholesaler’s inventory quality.

Rehab Sensitivity

The repair estimate moves the chain the same way — every dollar of underestimated rehab is a dollar off the buyer’s MAO and your ceiling:

At a twenty-percent rehab miss, the base contract of $160,000 leaves a $171,000 − $160,000 = $11,000 spread — under this example’s target. Buyers re-inspect, re-estimate and renegotiate; a wholesaler whose numbers survive the buyer’s sharpening is the one whose deals close.

What Is a Good Assignment Fee?

There is no single “good” assignment fee for every wholesale deal. What a fee can be depends on the end buyer’s economics above all, and then on the property’s price point, the rehab’s risk and complexity, how liquid the buyer market is, how deep the seller discount runs, transaction costs, your business model and volume, and the rules and transaction structures available where the deal sits.

The one test that always applies: the fee only works if the end buyer’s numbers still work with the fee inside them. A fee the deal supports is yours to negotiate; a fee the deal cannot carry is a contract you will be releasing. Judge fees against the spread the chain actually produces, not against what another wholesaler in another market said they made.

Common Wholesale-Analysis Mistakes

• Overestimating ARV, or building it from asking prices and dissimilar comps instead of closed sales
• Underestimating rehab — or quoting a precise repair number no inspection supports
• Using the 70% rule as the entire analysis instead of the screen it is
• Confusing the end-buyer MAO with the wholesaler’s maximum contract price — two formulas, two parties
• Ignoring the buyer’s financing and holding costs because they are not your costs
• Choosing the assignment fee before understanding the buyer’s economics
• Assuming every buyer works to the same profit target — targets vary by buyer, market and strategy
• Never stress-testing the ARV, as a scenario, before signing
• Ignoring title or transaction constraints until they surface at closing
• Marketing a deal before the economics are understood — buyers remember whose numbers hold up
• Presenting estimated rehab or estimated ARV as guaranteed figures

Wholesale vs Fix and Flip vs Buy and Hold

Same house, three businesses. The fix-and-flip underwrite is the deep version of the buyer math this article leans on, the buy-and-hold rental model covers the operating strategy, and the single-family investing guide holds all three side by side.

A Note on Legal and Compliance Boundaries

Wholesaling, contract assignment, the marketing of equitable interests, licensing requirements and required disclosures vary by state and by transaction structure. Some structures common in one state are restricted or regulated differently in another, and the rules change. This article explains deal economics; it is not legal advice, and it makes no claim about the enforceability or availability of any structure anywhere. Before wholesaling in a market, understand its rules from qualified local sources.

How DealWorthIt Analyzes a Wholesale Deal

DealWorthIt’s single-family workflow treats wholesale as its own analysis, not a flip calculator with a fee bolted on. You enter the contract price, the estimated ARV, the repair estimate and the assignment fee — and the model returns the assignment spread and the maximum fee the deal still supports, which is this article’s chain run for you: the buyer’s side and your side, reconciled. Every assumption stays editable, so the lower-ARV and higher-rehab cases from the sensitivity tables are re-runs, not rebuilt spreadsheets.

The research feeds the inputs: ownership, mortgage and equity, tax and assessed values, sales and MLS history and sales comparables are available on the property itself, so the estimated ARV and the repair conversation start from records — and the finished analysis can be shared as a report with your end buyer, which is precisely the audience whose scrutiny the numbers must survive. DealWorthIt does not find or guarantee a buyer, draft contracts, determine the legality of a structure in your state, or guarantee any ARV, rehab figure or fee; the assumptions are yours, and they stay visible.

Analyze a wholesale deal — or start with the strategy fundamentals in the single-family investing guide.

Final Takeaway

Wholesale analysis is the end buyer’s underwrite with one extra line. Build it backwards — a comped ARV, an honest rehab, the buyer’s real costs and required profit — to the end-buyer MAO; subtract the fee the deal justifies to get your maximum contract price; and only then negotiate, stress-testing the ARV, the rehab and the seller price before you sign. The wholesalers who last are not the ones who find the cheapest contracts; they are the ones whose deals still work after the buyer checks the math.