The direct answer
A wholesale assignment spread is the end buyer’s price minus the contracted purchase price. Net modeled wholesale profit deducts the transaction, marketing and other costs supplied. The calculation does not establish that a contract can legally be assigned or that a buyer will close.
Define the transaction amounts
Specify whether the figures represent an assignment structure or another resale arrangement. The simple model subtracts two prices to calculate a spread; it does not account for two separate closings unless the relevant costs are entered. A contract’s assignability, disclosure terms and local requirements are separate questions that need review before relying on the arithmetic.
To apply the approach to an editable scenario, use the Wholesale Real Estate Calculator. For the neighboring question, explore Maximum Allowable Offer Calculator.
Deduct the costs of creating and closing the transaction
Marketing and lead costs can consume part of the gross spread, as can closing expenses and other transaction costs. Enter costs that belong to this deal and explain any allocation from a broader marketing budget. Amounts already deducted from a supplied net fee should not be deducted again. The model excludes income tax and does not decide whether a fee arrangement is permitted.
Test the closing and price assumptions
A proposed end-buyer price is an assumption until the transaction is completed. Review lower buyer proceeds and additional costs as sensitivity cases. A positive spread does not measure the likelihood of finding a buyer, the enforceability of the agreement or the cash needed while the deal is pending. Keep the cost of unsuccessful transactions in view when assessing a broader business process.
Worked example
A $200,000 end-buyer price against a $185,000 contracted purchase price gives a $15,000 gross spread. Deducting $1,500 closing costs, $1,000 marketing and $500 other costs leaves $12,000 modeled net profit before investor income tax.
Open Wholesale Real Estate Calculator and test your assumptions →
Common mistakes and limitations
An assignment spread is not a referral commission on a broker’s compensation base. Mixing the two fee bases can materially change the calculation and interpretation.
Wholesale real-estate legality and licensing rules vary by jurisdiction; calculator is numerical only and does not provide legal advice.
Frequently asked questions
Does the tool check assignment rights?
No. It calculates supplied amounts and does not evaluate the contract or applicable legal requirements.
Can gross spread be positive while net profit is negative?
Yes. Closing, marketing and other costs can exceed the difference between the two prices.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- Appraisal Institute — Basic Formulas — Income CapitalizationIncome/cap-rate/value relationships, gross income multiplier and debt-coverage formula references.
Read our editorial policy for the scope of these educational methods.