Deal or No Deal

The house

After-repair value (ARV)

What it sells for fixed up. Back it with sold comps, not Zillow.

Repair estimate

Walk it or get a contractor bid. Guessing low kills deals.

Seller's price

What the seller will actually sign at today.

Wholesale fee you want

What you want to make if you assign the contract.

Change the rules

Wholesale

Your buyer's max, as a share of ARV

What your cash buyers pay, as a share of ARV, minus repairs. The old rule of thumb is 70%. In a lot of California markets buyers pay 75% to 80%.

Flip

Least profit you would flip it for

Selling costs

Commissions, closing, concessions. Percent of ARV.

Cost to buy and hold

Closing, loan points, interest, taxes, utilities. Percent of the price you pay.

Repair contingency

Novation

Most the seller can get, as a share of ARV

Seller price plus repairs should come in at or under this.

Repair limit for a novation

Light, cosmetic work only. Paint, flooring, cleanup.

Selling costs

Agent commissions and closing. Percent of ARV.

Make the call.

Put in the house and hit the button. I'll run it as a wholesale first. If the numbers don't work there, it moves to a flip. If there's not enough room for a flip, it checks a novation. If nothing works, you get the number to counter at, or the word walk.

Deal

1
Wholesale
Most you can sign at
Your buyer pays up to
Your fee at their price
2
Flip
Most you can pay
Profit at their price
3
Novation
Most the seller can get
Your spread at their price

Educational estimate, not advice. A novation means selling the house on the open market for the seller under a written agreement, with a licensed agent. Wholesaling and novation rules vary by state. If the owner is in foreclosure, California adds strict rules (Civil Code 1695 and 2945). Have a real estate attorney review your paperwork.

How it thinks

Every house has more than one way out. Most people only check one.

Wholesale. Your buyer pays up to 75% of the ARV minus repairs. Set this to what your buyers actually pay. Take your fee off that, and you have the most you can sign the contract at.
Flip. If the wholesale fee is too thin, it checks whether the house still works as a flip. That means the ARV minus selling costs, repairs plus a cushion, the cost to buy and hold, and the least profit you’d take.
Novation. If there isn’t enough room to flip, it checks a novation. The seller’s price plus repairs has to come in at or under 90% of the ARV, and repairs have to stay light. If the house needs more than $10,000 of work, a novation is off the table.
No deal. If nothing works, you get the highest price that would work, so you know where to counter. If there isn’t one, walk.

Before you trust the answer

Your ARV decides everything. Pull sold comps from the last six months, close by, same size and condition. Not the list price. Not Zillow.
Repairs are always more than you think. Walk the house. If you can, bring a contractor.
Change the rules to fit your market. Open “Change the rules” and set your buyer’s percentage, your minimum flip profit, and your costs.

The fine print

This is an educational estimate, not legal, tax, or financial advice. Wholesaling and novation rules are different in every state. A novation means selling the house on the open market for the seller, with a licensed agent and a written agreement. If the owner is in foreclosure, California has strict rules (Civil Code 1695 and 2945). Have a real estate attorney review your contracts.