A wholesale deal collapsed at the title company and the numbers explain why it was always going to
The assignment fee on the deal was 22,000 dollars on a 140,000 dollar contract, with the end buyer expecting to close at 162,000 and resell to a retail buyer at 215,000. On paper that spread looks like it works. What collapsed it was the ARV. The wholesaler had pulled comps from a ZIP code adjacent to the subject property, not the subject ZIP, because the subject ZIP had almost no recent sales. The end buyer ran his own comp pull four days before closing and landed at 194,000, not 215,000. At 194,000 ARV, with a standard 70 percent acquisition threshold, his ceiling was 135,800. The contract was at 140,000. He walked.
The failure point was not the fee size. It was that the wholesaler had sold an ARV, not a contract. When a wholesaler presents comps, those comps are an assertion about what your exit looks like, and if you accept them without running your own pull you have outsourced the most consequential number in your underwriting to someone whose incentive is to close, not to protect your margin.
The second thing that sank it was days on market for the assignment itself. The wholesaler had a 21-day assignment window and spent 14 of those days on a buyer who passed. The remaining seven were not enough time for a second buyer to do real diligence. A deal that might have closed with a realistic ARV and a 30-day window died because the clock and the comps were both wrong.
A flat earnest money deposit from the wholesaler was 1,000 dollars. That is the skin in the game on a 22,000 dollar fee. Knowing that, what due diligence would you expect a wholesaler to actually complete before they tie up a property?
