How to Wholesale a House
This guide walks you through wholesaling one house from the moment you find the lead to the moment your assignment fee hits your bank account. No theory, no fluff, just the practical steps and decisions you will face on a single wholesale deal.
Phase 1: The lead
You received a call from a homeowner who got your direct mail piece. He inherited his mother's house 8 months ago and has been paying the mortgage, taxes, and insurance on a vacant property he does not want to keep. The house is a 3-bed/2-bath, 1,400 sqft single-family built in 1985. He says it needs "a lot of work" and he would take $95,000. The property is in a working-class neighborhood where renovated homes sell for $180,000-$200,000.
This is a promising lead. Inherited property, motivated timeline, vacant, needs work. Time to analyze.
Phase 2: The analysis
Step 1: Estimate the ARV
Pull comparable sales of renovated 3-bed/2-bath homes within 0.5 miles that sold in the last 6 months. You find four:
- Comp 1: 3/2, 1,350 sqft, sold $185,000 (3 months ago)
- Comp 2: 3/2, 1,500 sqft, sold $198,000 (2 months ago)
- Comp 3: 3/2, 1,380 sqft, sold $190,000 (5 months ago)
- Comp 4: 3/2, 1,420 sqft, sold $192,000 (4 months ago)
Adjust for size differences at $30/sqft. Comp 2 is 100 sqft larger, so adjust down $3,000 to $195,000. Median of adjusted comps: $190,000. Conservative ARV: $190,000. See ARV calculation guide and comps guide for detailed methodology.
Step 2: Estimate repairs
You visit the property (or get photos/video from the owner). Assessment:
- Kitchen: Needs full remodel (cabinets, counters, appliances): $18,000
- Bathrooms (2): Needs vanities, fixtures, tile: $8,000
- Flooring: Carpet and vinyl throughout, needs LVP: $5,000
- Paint: Interior and exterior: $5,000
- HVAC: 25 years old, needs replacement: $7,000
- Roof: Recently replaced (5 years ago): $0
- Landscaping: Overgrown, needs cleanup: $2,000
- Contingency (15%): $6,750
Total estimated repairs: $51,750 (round to $52,000). See repair estimation guide.
Step 3: Calculate the numbers
ARV: $190,000
Buyer's MAO (70% rule): $190,000 × 0.70 − $52,000 = $81,000
Seller's asking price: $95,000
Problem: Seller wants $95,000 but buyer MAO is $81,000
At $95,000, there is no room for your fee within the 70% rule. You need to either negotiate the seller down or reassess your repair estimate. If repairs are closer to $40,000, the buyer's MAO increases to $93,000. You would need the seller at $83,000 to earn a $10,000 fee.
Phase 3: The negotiation
Call the seller back with your analysis: "Based on the comparable sales and the repair work needed, I can offer $82,000. I know that is below your asking price, but the house needs significant work and my buyers price based on the renovation costs."
The seller counters at $88,000. You agree at $85,000, which gives you room for a $6,000-$8,000 assignment fee depending on how aggressively you price it to buyers. Not the biggest fee, but a solid deal that will close.
Phase 4: The contract
Sign a purchase agreement with the seller at $85,000 with these terms:
- Assignment clause included
- 10-day inspection contingency
- $1,000 earnest money to title company
- 25-day closing date
- Property sold as-is
Deposit the $1,000 earnest money with your title company within 3 business days. See contract template guide.
Phase 5: Marketing to buyers
Create your deal package. Include the address, photos, property specs, your asking price ($93,000 = $85,000 contract + $8,000 assignment fee), ARV ($190,000), repair estimate ($52,000), and projected buyer profit ($24,000-$30,000 depending on actual repairs and selling costs).
Blast to your buyer list within hours of getting the contract signed. Email and text your entire list. Call your top 5 most active buyers directly. Post in local investor Facebook groups.
Within 36 hours, you have 4 interested buyers. Two schedule property walkthroughs. One makes a verbal offer at $91,000. You counter at $93,000. They accept.
Phase 6: The assignment
Execute the assignment of contract with your buyer at $93,000. They deposit $3,000 non-refundable earnest money with the title company. Send the original purchase agreement and assignment agreement to your title company.
The title company orders a title search, prepares the closing documents, and coordinates the closing date with all parties.
Phase 7: The close
On closing day (Day 23), the buyer brings $93,000 plus closing costs to the title company. The title company distributes: $85,000 to the seller, $8,000 to you, and the buyer receives the deed. Your $1,000 earnest money is credited toward the buyer's payment.
Total time from first seller call to money in your account: 23 days. Total money out of pocket: $1,000 earnest money (refunded at closing). Net profit: $8,000.
What you learned from this deal
This was a solid but not spectacular wholesale deal. The numbers were tight because the seller's price was close to the buyer's MAO. In future deals, you will negotiate harder or walk away when the spread is too thin. You will also refine your repair estimates by getting contractor feedback after your buyer completes the renovation.
An $8,000 fee earned in 23 days with $1,000 at risk is an excellent risk-adjusted return. Scale this to 2-3 deals per month and you are earning $16,000-$24,000/month, which exceeds most full-time salaries.
Related articles
- Wholesale Real Estate: Ultimate Guide
- Wholesale Real Estate Step by Step
- How to Start Wholesaling Real Estate
- Real Estate Assignment Fee Explained
- How to Find Cash Buyers (Complete Guide)