How Wholesalers Determine a Fair Cash Offer — And How to Vet One

I've spent enough years on both the repair-pricing side and the acquisitions side to know exactly where sellers get suspicious of a wholesaler's offer — and honestly, a lot of that suspicion is earned, because plenty of buyers hand over a number without ever explaining how they got there. A legitimate offer should be defensible, step by step. Here's what that actually looks like, and how to tell the difference between a buyer showing their work and one just hoping you don't ask.

The Real Formula

Most wholesalers and investor buyers arrive at an offer using some version of:

Offer = (ARV × Target Percentage) − Repair Costs − Wholesaler's Assignment Fee/Investor's Profit Margin

Each piece should be independently verifiable, not just asserted.

Piece 1: ARV, Backed by Real Comps

After Repair Value should come from actual comparable sales — similar homes nearby, ideally sold within the last 3-6 months, adjusted for square footage, bed/bath count, lot size, and finish quality. This is publicly available information (through county records, or a buyer can pull it from MLS data); if a buyer gives you a number without showing you the comps behind it, that's the first thing to ask for.

Piece 2: A Real, Itemized Repair Estimate

A legitimate repair number comes from an actual walkthrough (in person or thorough photos/video) and a line-item breakdown — roof, HVAC, kitchen, flooring, foundation, and so on — not a single round number pulled out of thin air. Ask specifically: "can you show me what's included in that repair estimate?" A buyer who's done real diligence will have an answer ready. One who hasn't will get vague or annoyed.

Piece 3: The Percentage — and Why It Isn't Arbitrary

The target percentage (commonly landing somewhere around 65-75% of ARV before repairs are subtracted, though this varies by market and deal specifics) exists to cover the buyer's holding costs during renovation (taxes, insurance, utility, and loan interest if financed), their eventual selling costs when they resell (agent commissions, closing costs, negotiation room), and their actual profit margin — which is the entire reason they're in this business and able to offer cash with no financing contingency in the first place. If a buyer's percentage seems unusually low with no explanation, ask them to walk you through what it's covering.

A Worked Example, Start to Finish

Say comps put ARV at $250,000. A walkthrough turns up a needed roof ($12,000), full interior update ($20,000), and some foundation work ($8,000) — a $40,000 repair estimate. The buyer works off 70% of ARV:

$250,000 × 0.70 = $175,000 $175,000 − $40,000 = $135,000 offer

If this same buyer is a wholesaler planning to assign the contract, their assignment fee (commonly somewhere in the $5,000-$15,000+ range depending on the deal size and market, though this varies significantly) typically comes out of the end buyer's side of the transaction, not by further reducing what you're offered — ask directly how their fee structure works so you understand whether it affects your number at all.

Why the Same Percentage Doesn't Apply Everywhere

One thing worth understanding before you compare an offer against some number you read online: the target percentage genuinely shifts based on real, local factors, not just how generous or stingy a particular buyer feels like being. In a fast-moving, low-inventory market where resale happens quickly, a buyer can often work with a higher percentage because their holding costs and resale risk are both lower. In a slower market, or on a property type that's harder to resell (a highly specialized layout, a very large or very small home for the area, a rural property with a thinner buyer pool), a buyer typically needs a lower percentage to account for a longer, less certain holding period. Interest rates matter too — a buyer financing their acquisition and rehab costs is more exposed to higher holding costs when rates are elevated, which pushes the math toward a lower percentage than in a low-rate environment. None of this means the percentage is made up — it means it's genuinely sensitive to conditions outside any individual seller's control, which is exactly why comparing your offer to a number you saw quoted for a different market or property type usually isn't a fair comparison.

How to Actually Vet a Buyer's Offer

1. Ask for the comps. Real addresses, real recent sale prices, reasonably comparable properties.
2. Ask for the itemized repair breakdown. Not a total — the actual line items.
3. Do the math yourself. Multiply the ARV by the stated percentage, subtract the repair total, and see if it roughly matches what you were offered.
4. Ask how their fee (if a wholesaler) is structured, and confirm it isn't quietly baked into a lower number without being disclosed.
5. Get more than one offer. Comparing how different buyers answer the same questions above tells you more than any single number does.

What a Legitimate Buyer's Response Looks Like

Someone with nothing to hide will walk you through every piece of this without hesitation — because they've genuinely done the analysis and aren't afraid of you checking their math. Vague answers, pressure to skip the questions, or a number that seemingly appears out of nowhere are the actual warning signs — not the percentage discount itself, which is a normal and explainable part of how this business works.

Getting a Second Opinion Costs You Nothing

If the math still doesn't sit right after walking through it with a buyer, there's no cost or obligation to getting a second or third offer for comparison — legitimate buyers expect this and shouldn't discourage it. A property's numbers are also worth spot-checking against a quick, free online home-value estimate (understanding these automated estimates are rough, not authoritative) just to sanity-check the ARV range you're being quoted before you commit to comparing repair estimates and percentages in detail.

This article is for general informational purposes only and isn't legal or financial advice. Repair costs, market comps, and typical offer formulas vary significantly by region and property — consult a licensed contractor or real estate professional for numbers specific to your property.