What is a Wholesale Fee?
A wholesale fee (also called an assignment fee or wholesale profit) is the compensation a wholesaler earns for finding, contracting, and selling a real estate deal to an end buyer. In an assignment, the wholesale fee is the difference between the contract price with the seller and the price the end buyer pays. In a double close, it's the difference between the A-to-B purchase price and the B-to-C sale price.
Wholesale fees compensate the wholesaler for the work of finding motivated sellers, negotiating below-market contracts, marketing the deal to qualified buyers, and coordinating the closing. The fee is earned only when the deal closes -- no close, no fee. This performance-based structure means wholesalers carry real risk: they invest time, marketing dollars, and option/earnest money into deals that may not close.
Typical wholesale fee ranges
| Deal Size | Typical Fee | Percentage |
|---|---|---|
| Under $100K purchase | $3,000-$7,000 | 5-10% |
| $100K-$200K purchase | $5,000-$15,000 | 5-10% |
| $200K-$400K purchase | $10,000-$25,000 | 5-8% |
| $400K+ purchase | $15,000-$50,000+ | 3-7% |
These ranges vary significantly by market, deal quality, and the wholesaler's negotiation skill. A deal with a very large spread between contract price and ARV will support a larger wholesale fee. A tight deal may only support a $3,000-$5,000 fee. The key constraint is that the end buyer must still be able to profit after paying your fee -- if the wholesale fee makes the deal unworkable for the buyer, the deal won't close.
How the fee is paid
In an assignment: The wholesale fee is specified in the assignment contract. At closing, the title company distributes funds: the seller receives the original contract price, and the wholesaler receives the assignment fee from the buyer's funds. The fee is visible on the closing statement.
In a double close: The wholesale fee is implicit -- it's the difference between the two transaction prices. The seller sees only the A-to-B price. The buyer sees only the B-to-C price. The fee is not disclosed to either party.
Pricing your wholesale fee
The wholesale fee should be set based on what the market will bear while leaving enough room for the end buyer to profit. A good framework:
- Calculate the ARV using accurate comps
- Estimate repairs
- Calculate the buyer's MAO (ARV x 70% - repairs)
- Your wholesale fee = Buyer's MAO - Your contract price
If this calculation produces a fee that's too low to justify the deal, either your contract price is too high (renegotiate with the seller) or the deal doesn't have enough margin for a wholesale transaction.
Ethics of wholesale fees
Wholesale fees are sometimes criticized, but they represent fair compensation for a real service. The wholesaler found a deal the buyer couldn't have found on their own, negotiated a below-market price, and delivered a vetted opportunity complete with analysis. This is functionally similar to what a real estate agent does -- but faster, more targeted, and often on properties that would never make it to the MLS.
The ethical line is crossed when fees are so large that the deal no longer works for the end buyer, or when the wholesaler misrepresents the condition, comps, or repair estimates to justify an inflated price. Transparency and fair dealing build long-term buyer relationships. Overpriced deals burn them.