Wholesaling is finding a discounted property, putting it under contract with the seller, and then passing that contract to another investor for a fee. In an assignment the wholesaler never owns the property. The profit is the gap between the seller’s contract price and the price the end buyer pays, collected as an assignment fee or through a double closing, where the wholesaler briefly buys and resells.
Maximum offer to seller = (ARV × 70%) minus repairs minus your fee
A house needs $30,000 of work and would be worth $200,000 fixed up, its after-repair value (ARV). A flipper using the 70% rule starts at $200,000 × 70% = $140,000, takes off $30,000 of repairs and will pay at most $110,000. If you want a $10,000 fee, your offer to the seller tops out at $100,000. You contract at $100,000, assign to the flipper at $110,000 and collect $10,000 at closing. The 70% is a rule of thumb, and some buyers use a different percentage.
The most common mistake is inflating the ARV or lowballing repairs. Experienced buyers run their own numbers, and a contract nobody will buy leaves the seller stranded and your earnest money at risk. Rules also vary by state, and some states require a license or specific disclosures, so check the requirements where you operate before marketing a contract.