Maximum allowable offer (MAO) = after-repair value × your buyer's percentage (usually 70%) − repair costs − your assignment fee. For a home with a $250,000 ARV, $40,000 of repairs and a $10,000 fee, MAO is $250,000 × 0.70 − $40,000 − $10,000 = $125,000.
Calculate your maximum allowable offer
The MAO formula
- ARV (after-repair value): what the home will sell for once it's renovated, based on recent sold comparables nearby.
- Buyer's %: the share of ARV your cash buyers will pay before repairs. It builds in their profit, holding, financing and selling costs.
- Repairs: the full renovation cost, priced the way your buyer would price it.
- Assignment fee: your profit as the wholesaler.
- Other costs: anything else you'll pay, such as closing costs on a double close.
Is 70% the right number?
The 70% rule is a starting point. In high-priced or competitive markets, flippers often pay 75–80% of ARV. In slower or riskier areas, or for heavy rehabs, 60–65% is common. The right number is whatever your actual buyers pay, so ask them and use that.
Rentals are different: landlords often value a property on rent and cash flow, not ARV.
Estimating repairs
A per-square-foot estimate by condition is fine for a first pass, and it's what the calculator uses until you type your own number. Before you sign a contract, walk the property and price the expensive systems separately: roof, HVAC, foundation, electrical, plumbing, windows. Underestimating repairs is the most common reason wholesale deals fall apart.
Using MAO with sellers
MAO is your ceiling, not your opening offer. Ask the seller for their lowest acceptable price first. If it's below your MAO, you have a deal and room to negotiate. If it's far above, the lead isn't a wholesale deal today, however motivated the seller sounds. See how to qualify motivated seller leads.
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Frequently asked questions
What is MAO in real estate?
MAO stands for maximum allowable offer: the most an investor or wholesaler can pay for a property and still make the deal work. It's usually calculated as ARV × 70% minus repairs, minus the wholesaler's fee.
How do you calculate MAO for wholesaling?
Multiply the after-repair value by the percentage your cash buyers pay (often 70%), then subtract repair costs, your assignment fee and any other costs. For $250,000 ARV, $40,000 repairs and a $10,000 fee: $175,000 − $40,000 − $10,000 = $125,000.
What is the 70% rule?
The 70% rule says investors should pay no more than 70% of a property's after-repair value minus repairs. It's a rule of thumb; buyers in some markets pay more or less.
Should I offer the seller my MAO?
No. MAO is your ceiling. Start lower, or better, ask for the seller's lowest acceptable price first and compare it to your MAO.
Keep reading
Estimates only. Confirm ARV with recent sold comps and repairs with a walkthrough before you make an offer. Not financial advice.