What MAO actually is
Maximum allowable offer is a ceiling, not a target. It is the highest contract price at which the deal still works for the person who will end up owning the house. For a wholesaler, that person is not you. You are pricing the house on behalf of an end buyer you may not have met yet, and then carving your own fee out of the gap between what the seller accepts and what that buyer will pay.
That framing matters because it changes whose math you are doing. A flipper calculates MAO for themselves. A wholesaler calculates the buyer's MAO first, then subtracts their own fee to get the number they can offer the seller. Skip that second step and you end up with a contract that is a fine deal for a buyer and leaves nothing for you, or a contract with a healthy fee and no buyer willing to pay it.
The two inputs: ARV and repairs
Every MAO formula rests on two estimates. Both are judgment calls, and both are where most bad MAOs come from.
The first is after repair value, or ARV: what the house sells for once it has been fixed up to the standard of the neighborhood. You get it from comps — recent sold properties that are close by, similar in size, age, bed and bath count, and condition after renovation. Sold, not listed. Asking prices tell you what sellers hope for; closed sales tell you what buyers paid.
The second is the rehab cost: what it takes to get the house from its current condition to the condition your comps sold in. This is where newer wholesalers get burned, because the number they guess on a walkthrough is almost always lower than the number a contractor quotes. Roof, foundation, HVAC, electrical, plumbing, and anything involving water get underestimated more than paint and flooring do.
The basic formula
The standard starting point is the 70% rule: a flip buyer should pay no more than 70% of ARV, minus repairs. The 30% that gets left out is not profit. It covers the buyer's holding costs, financing, closing costs on both ends, agent commissions when they resell, and the margin that makes the risk worth taking.
For a wholesaler, add one more line:
- Buyer's MAO = (ARV × 0.70) − repairs
- Your MAO (offer to seller) = Buyer's MAO − your assignment fee
Your assignment fee is whatever you need the deal to pay you. It comes out of the seller's side of the equation, never the buyer's. The moment you add it on top of the buyer's number instead, you are asking the buyer to absorb your fee, and the experienced ones will pass.
Worked example: a straightforward flip
A hypothetical three-bed ranch. Your comps — three renovated sales within half a mile in the last few months, similar square footage — support an ARV of $210,000. A contractor walks it and quotes $38,000: full kitchen, both baths, flooring, paint, and a water heater.
- ARV × 0.70 = $147,000
- Minus repairs ($38,000) = $109,000 buyer's MAO
- Minus your target fee ($12,000) = $97,000 your MAO
You can offer the seller up to $97,000. Contract it at $90,000 and you have room: either you keep the extra as fee, or you price the deal to your buyers below their ceiling and it moves faster. Contract it at $105,000 and you are looking at a $4,000 fee or a buyer paying above their own ceiling — and buyers paying above their ceiling are the ones who back out during inspection.
Worked example: when 70% is the wrong number
Now a hypothetical duplex in a neighborhood where the buyers are landlords, not flippers. Landlords do not plan to resell, so they do not need to cover resale commissions and closing costs — but they do need the rent to cover the mortgage, taxes, insurance, maintenance, and vacancy with something left over. Their ceiling comes from the rent, not from ARV.
Say the rental buyers in that area want the property to cash flow after all expenses at whatever they would finance it at, and their numbers say they will pay up to $128,000 all-in, repairs included. Repairs are $22,000. Their purchase ceiling is $106,000. Subtract a $10,000 fee and your MAO is $96,000 — regardless of what 70% of ARV says. If the 70% math gives you a higher number, the 70% math is wrong for that deal, because no one who would actually own the property is using it.
This is why the percentage moves. In expensive markets where price points are high, buyers often accept a higher percentage because the absolute dollars of profit are larger. In cheap markets, the fixed costs of a flip eat a bigger share of a smaller number, so buyers want a lower one. Rental buyers in strong rent markets may pay more than the 70% rule allows; buyers of heavy rehabs usually pay less.
Creative finance changes the math entirely
On subject-to and seller-finance deals, the buyer is not paying cash at a discount — they are taking over or receiving financing. What makes the deal work is the payment, the rate, the balance, and the equity, not a percentage of ARV. A subject-to deal at close to full value can be excellent if the existing loan has a low rate and the rent comfortably exceeds the payment. Run those on cash flow and entry cost, and see how they are presented on our subject-to deals page.
Build MAO backwards from your buyers
The formula gets you a number. Your buyers tell you whether it is the right number. The most reliable way to set MAO is to know, before you make the offer, what the people who actually buy in that area pay for that kind of house in that condition.
That is what a buy box is for. If you know that three of your active buyers want three-bed houses in a given set of zip codes, under a certain price, with light to medium rehab, you can check a new lead against their criteria before you call the seller. If the house fits nobody's box, a perfect MAO calculation does not help you, because there is nobody to sell it to.
Ask your buyers directly what they paid on their last few purchases and what they would have paid for the one they passed on. That conversation will calibrate your percentage faster than any rule of thumb. And make sure the buyers you are calibrating against are real: if a buyer has never closed a purchase, their stated ceiling is a guess, not data. Checking closed purchases in deed records — covered in our guide on how to verify a cash buyer — keeps your MAO anchored to what buyers actually pay.
Where MAO calculations go wrong
- Using list prices as comps. Active listings tell you what sellers want. Only sold comps tell you what the ARV is.
- Pulling comps from across a boundary — a highway, a school district line, a different subdivision — where values do not carry over.
- Comping a renovated house against unrenovated sales, or the reverse.
- Guessing repairs from photos. Walk it, or bring someone who can price a roof and a foundation from the ground.
- Adding your fee on top of the buyer's price instead of subtracting it from your offer.
- Applying one percentage to every deal type. A rental, a heavy rehab, and a creative-finance deal each have their own ceiling.
- Negotiating up to MAO instead of opening below it. MAO is the most you will pay, not your first offer.
Your fee lives in the gap
Once you have MAO, everything you negotiate below it is room — room for a bigger fee, or room to price the deal so it sells the same day. Both are worth something. A wholesaler who consistently contracts below MAO gets a reputation for clean deals, and clean deals are what keep buyers opening your emails. The deeper breakdown of how that gap turns into income is in how much wholesalers make.
If the math works but you would rather not run dispo yourself, you can submit the contract to Buy Box Cartel: $0 upfront, with a success fee only when the deal closes. The deal goes in front of investors who browse and make offers for free — including 3,418 deed-verified cash buyers, meaning investors whose purchases can be pointed to in the public deed record. And if you want to run the numbers yourself before you call the seller, the Pro plan ($19.99/month) includes a deal checker alongside the buyer-finding tools.
The formula takes two minutes. The inputs take the real work: honest comps, a real repair number, and buyers whose ceilings you have confirmed. Do those three things and the number you write on the contract is one a buyer will actually pay.