What Is Maximum Allowable Offer (MAO)?
Also known as: MAO
Maximum Allowable Offer (MAO) is the highest price a wholesaler or investor can offer on a property and still leave enough margin for repairs, the end buyer's profit, and their own fee.
Maximum Allowable Offer (MAO) is the highest price a wholesaler or investor can offer on a property and still leave enough margin for repairs, the end buyer's profit, and their own fee.
Maximum Allowable Offer (MAO) explained
MAO keeps you disciplined. It is the ceiling on what you can pay a seller, calculated backward from the ARV so that every party in the deal still makes money. Going above your MAO is how wholesalers end up with contracts no cash buyer will take.
The most common starting point is the 70% rule: take 70% of ARV, then subtract estimated repairs and your wholesale fee. The 70% leaves room for your buyer's profit and holding costs. In hotter markets investors sometimes flex to 75% or higher, and in slower markets they tighten it. Whatever percentage you use, the MAO is the number you must not exceed when negotiating.
MAO = (ARV × 0.70) − Estimated Repairs − Wholesale FeeExample
On a property with a $280,000 ARV, $40,000 in repairs, and a target $10,000 fee: MAO = (280,000 × 0.70) − 40,000 − 10,000 = $146,000. That is the most you should offer the seller.
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