How to Evaluate a Wholesale Real Estate Deal Before You Sign

Most wholesale deals that fall apart do not fail at closing. They fail at the analysis stage, when a buyer skips the math and relies on the wholesaler's numbers instead of checking them.

Here is a practical framework for evaluating any wholesale assignment before you put up earnest money.

The Five Numbers You Need

1. ARV (After-Repair Value)

This is the property's value in fully repaired condition. The number has to come from closed comparable sales: not list prices, not Zestimates.

Pull comps within 0.5 miles, sold within 90 days, with similar square footage (within 15%) and matching bed/bath count. If your wholesaler cites comps outside those parameters, ask why. A good wholesaler will not flinch at the question.

2. Repair Estimate

Walk the property or send your own contractor before you commit. A repair estimate from a wholesaler who never visited the property is a guess, not a number.

Common underestimates: roof ($8,000 to $18,000 on a 1,500 sq ft structure), electrical panel upgrades ($2,000 to $5,000), HVAC systems ($4,000 to $10,000 per unit), foundation issues (wide range: always scope first). If these items were not itemized in the package, they were probably omitted from the estimate.

3. Assignment Fee

This is what the wholesaler earns for the contract. It is not a hidden cost: a legitimate wholesale operation states it clearly in the deal package. For California off-market deals, a $10,000 to $15,000 fee on a deal with $60,000 to $80,000 of equity is reasonable. If the fee is not disclosed upfront, that is a warning sign.

4. Your Maximum Allowable Offer (MAO)

The formula that keeps you from overpaying:

MAO = (ARV x Target Multiple) - Repair Costs - Assignment Fee - Holding Costs

For fix-and-flip, most experienced buyers target 65% to 70% of ARV. At 70% ARV on a $400k property, with $40k in repairs, a $12k assignment fee, and $8k holding costs, your MAO is $220k. If the contract price is above that, either renegotiate or pass.

For buy-and-hold, replace the ARV multiple with a cap rate check: divide net operating income by your all-in cost (contract price + assignment fee + repairs). A 5% to 6% cap rate is the realistic California wholesale target.

5. Days to Close

Wholesale contracts are time-sensitive. Know your close timeline before you commit. Standard wholesale: 10 to 21 days. Express close: 7 days or less. If you need a financing contingency or a longer inspection window, confirm it fits the contract before signing.

Red Flags in a Wholesale Package

• ARV cited with no comparable addresses or MLS pull dates
• Repair estimate as a single dollar figure with no line items
• Assignment fee buried in an addendum rather than stated on the deal sheet
• A 12-day close deal presented on day 10 with no advance notice
• Comparable sales more than 120 days old in a moving market

None of these are automatic deal-killers, but each one requires a direct question and a direct answer before you proceed.

How We Package Deals at First Claim

Every deal we assign includes documented ARV with closed comp addresses, a line-item repair estimate from a walk-through, and the assignment fee on the first page of the deal sheet. If a number does not hold up to scrutiny, we revise it before sending it out.

Two people checking the math is better than one. We expect buyers to verify our numbers, and a deal that does not survive that scrutiny was not worth bringing to market in the first place.

If you want to join our buyer list and review deals in the Inland Empire or Central Valley, contact us.