What a wholesaler actually does
A real estate wholesaler does not usually buy your house to keep it. They put it under contract at a low price, then sell that contract to an investor for a fee, often without ever owning the home. Their profit is the gap between what they talk you down to and what the investor will pay. To protect that gap, they price using a fixed formula, and they price to win it every time.
The 70% rule, line by line
The industry-standard formula is called the maximum allowable offer, and its ceiling is 70% of a home's fixed-up value, minus repairs.[1] Here it is on a home worth about $484,000 fixed up:
On a home worth nearly half a million dollars, the machine produces an offer around $264,000. Every dollar between that number and the real value is not lost. It is transferred, from you to the buyer.
Where your equity goes
Look at the three deductions under the 70% ceiling. Repairs are real, but the investor does them and keeps the upside. The assignment fee is the wholesaler's cut for making the introduction. The profit margin is exactly that. Add them up and you are looking at roughly $75,000 that leaves your side of the table on this one house, on top of the 30% haircut the formula started with.
Why the offer still gets accepted
If the math is this lopsided, why do people take it? Three reasons, and none of them is stupidity: