Why the 70% rule doesn't set your assignment fee

What is the 70% rule in wholesaling?

The 70% rule is a rule of thumb that an investor should pay no more than 70% of the after-repair value (ARV) minus the repairs. On a house worth $300,000 fixed up that needs $50,000 of work, the rule says a buyer should pay no more than $160,000.

It started as a quick screen for fix-and-flip investors: a way to throw out deals with no room in them before spending time on the numbers. New to assignment fees? Start with the complete guide to wholesale assignment fees.

If you're new, here's what the pieces mean. The ARV (after-repair value) is what the house will sell for once it's fully fixed up, based on recent sales of similar fixed-up houses nearby. Repairs are what it will cost to get it there. The 70 percent rule says an investor should pay no more than 70% of that ARV, minus the repairs. The 30% it keeps back is meant to cover the investor's buying, holding and selling costs and their profit — roughly, and all in one number.

That simplicity is exactly why the 70% rule wholesaling formula spread: you can run it on your phone in the driveway. The question this guide answers is what it can and can't tell you about your fee.

What is the 70% rule formula for wholesaling?

The 70% rule formula for wholesaling is: MAO = (ARV × 70%) − repairs − assignment fee, where your maximum allowable offer (MAO) is the most you offer the seller. You calculate it in three steps:

1. Multiply the ARV by 70%: $300,000 × 70% = $210,000.
2. Subtract the repairs: $210,000 − $50,000 = $160,000 — the most a buyer should pay under the rule.
3. Subtract your assignment fee: want $10,000? Then $160,000 − $10,000 = $150,000 is the most you offer the seller.

It's fast enough to do on your phone. Notice what went into step 3, though.

Each step matters. The first two steps (ARV × 70% − repairs) estimate what a flipper might pay. The third step is where wholesalers come in: subtracting a fee to find the most they can offer the seller. That third step is the 70% rule MAO — the maximum allowable offer the rule produces. Notice that the fee you subtract is one you choose. The formula doesn't tell you whether it's right.

How do you calculate the 70% rule?

Here's how to calculate the 70% rule, step by step, on any deal — and how to check it against your market. A 70% rule calculator does exactly the first four steps. The sample deal: ARV $300,000, repairs $30,000, your contract $140,000.

1. Find the ARV.
   Recent renovated sales of similar houses nearby point to $300,000.
2. Multiply by 70%.
   $300,000×0.70=$210,000
3. Subtract the repairs.
   That’s the most a flipper should pay under the rule.

   $210,000−$30,000=$180,000
4. If you’re wholesaling, subtract your fee.
   Want $10,000? $180,000 − $10,000 = $170,000 is the most you’d offer the seller. With a $140,000 contract, the rule implies a fee of $180,000 − $140,000 = $40,000.
5. Check the 70% against your market.
   Take recent investor purchases nearby and work out (price + repairs) ÷ ARV for each. Here the middle is 72.83%, not 70%. $300,000 × 72.83% − $30,000 = $188,500, so buyers here pay $8,500 more than the rule says. How to find the purchases: how to determine your assignment fee from real buyer data.

Does the 70% rule include your assignment fee?

Yes — wholesalers subtract an assignment fee when they use the 70% rule to set their offer. But the formula doesn't work that fee out: you supply it. Your fee is an input you pick, and the formula just moves your offer to the seller to make room for it. Same house, same ARV, same repairs — four different fees give four different offers:

So "I used the 70% rule to set my fee" really means "I picked a fee and the 70% rule set my offer." The fee itself was a guess. See how to calculate your assignment fee.

Where should your assignment fee come from?

Your assignment fee should come from the gap between your contract price and what a real buyer will pay: assignment fee = the buyer's price − your contract price. The 70% rule is just one way of guessing the buyer's price — and buyers don't all pay the same.

Say you're under contract for $145,200. One buyer finances with hard money and hires out every repair; they can pay $161,300. Another pays cash and owns a construction crew; they can pay $168,450. A third plans to rent it long term; they'll go to $174,900. Same house, same contract — and your fee could be $16,100, $23,250 or $29,700 depending on which buyers you actually have. The 70% rule can't tell you which of them exist near you, or how many.

For a beginner, the practical takeaway is simple: the 70% rule can tell you whether a lead is worth a closer look, but your fee has to come from what real buyers near you will pay. The 70% rule assignment fee — the number you get by subtracting your contract price from the rule's buyer price — is a guess dressed up as math. Sometimes it's close. Often it isn't, in either direction.

What does the 70% rule calculate — and what doesn't it?

The 70% rule calculates a rough buyer price and a rough offer from two numbers: the ARV and the repairs. Everything that decides your fee is outside it:

It applies the same percentage to every deal, while real buyers don't. It doesn't know:

• Your market. Investors in some areas routinely pay well under 70% of value; in others, more.
• Your price range. Fewer buyers shop at higher prices, so the same percentage can mean plenty of buyers on a $300,000 house and almost none on a $600,000 one.
• Your buyers. Their budgets, their top prices for a house like this, how much repair work they'll take on.

So the rule can be right on one deal and wrong in either direction on the next — and it never tells you which.

Can the 70% rule make you leave money on the table?

Yes — the 70% rule leaves money on the table when buyers near you pay more than the rule assumes. On the example deal — ARV $300,000, contract $140,000, repairs $30,000:

Can the 70% rule make you overprice a deal?

Yes — the 70% rule overprices a deal when buyers near you won't pay what the rule allows — even when the numbers still work on paper. Take a house worth $600,000, under contract for $250,000, with no repairs:

Market it with the rule's fee and you'd get silence, then cut the fee anyway. See can an assignment fee be too high?

Why do investors pay more or less than 70%?

Investors pay more or less than 70% of value because their costs, their competition and their plans differ from market to market and house to house. Repairs, how long a flip takes, what selling costs, how many investors chase the same houses, and whether they flip or rent all move the number.

That's why the useful number isn't a rule — it's what investors near you actually paid. In the sample area, investors typically paid about 64% of a house's value, not 70%. In your area it might be 58% or 76%. Recorded purchases tell you; a rule of thumb can't.

This is also why experienced wholesalers argue about whether to use 65%, 70% or 75%. They're all noticing the same thing: the right percentage changes from market to market and deal to deal. The honest answer is that no fixed percentage is right everywhere — the number that matters is the one investors near you are actually paying.

Should wholesalers still use the 70% rule?

Yes — wholesalers should still use the 70% rule, as a quick first screen. Screening, pricing a deal and setting your fee are three different jobs:

• Screening: is this lead worth a closer look? The 70% rule is fine for this — if a deal fails it badly, move on.
• Pricing the deal: what are the real numbers? That takes a real ARV, real repairs and the buyer's actual costs.
• Setting your fee: what will buyers near you actually pay? That takes what investors here actually bought and who's still buying at each price.

The rule does the first job well. Using it for the other two is where the money goes.

Here's how to use it well as a beginner: run the 70 percent rule on every new lead in seconds. If the seller's asking price is far above what the rule allows, the deal probably has no room — move on or renegotiate. If it passes, do the real work: find the ARV from real comps, estimate repairs properly, and check what buyers near you actually pay before you set your fee or your offer.

For the full manual method — investor comps instead of a fixed percentage — see how to determine your assignment fee from real buyer data.

Is the 70% rule MAO the same as a real MAO?

No. The 70% rule MAO is one estimate of your maximum allowable offer — the most you can offer the seller. A real MAO starts from what buyers near you will actually pay, then subtracts the fee you need. On the sample deal (ARV $300,000, repairs $30,000), buyers pay up to $187,800. With a $15,000 fee, the real MAO is $172,800; the 70% rule MAO is $165,000 — $7,800 lower. That gap can be the difference between winning and losing the contract. See MAO vs. assignment fee.

What should you use instead of the 70% rule?

Instead of the 70% rule, use what buyers actually do. A 70% rule calculator only gives you the rule's number faster; it can't give you a fee buyers will pay. On every deal:

1. Look at what investors near you actually paid for houses like this one, as a share of value.
2. Count who's still buying at each price — budgets, top prices, repair limits.
3. Check the buyer's profit after their costs to buy, hold and resell.
4. Choose your fee inside the range that passes both.

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