How to Calculate MAO (Maximum Allowable Offer)

What MAO means and why it matters

MAO, or Maximum Allowable Offer, is the highest price a wholesaler can offer a seller while still leaving enough spread for the end buyer to renovate, hold, or resell at a profit, and for the wholesaler to earn a fee. Offer above your MAO and the deal will not sell to a cash buyer. Knowing your MAO before you negotiate is what keeps a wholesaler from tying up contracts nobody will buy. The term is defined further in our MAO glossary entry.

The MAO formula

The standard wholesaling formula is:

MAO = (ARV x 0.70) minus estimated repairs minus your wholesale fee

Each input matters:

• ARV (After Repair Value): what the home is worth fully renovated, based on comparable sales. This is the foundation, so it has to come from real comps, not a Zestimate. See after repair value.
• The percentage: 70 percent is the common convention because it leaves the end buyer roughly 30 percent of ARV to cover purchase costs, holding, and profit. In hot, low-inventory markets buyers may accept 75 or even 80 percent. In slower or higher-risk markets, 65 percent is safer.
• Estimated repairs: a realistic rehab budget. Underestimating repairs is the most common way new wholesalers blow a deal.
• Your wholesale fee: the assignment fee you intend to earn, subtracted so your offer still leaves the buyer their margin.

A worked example

The numbers below are an illustrative example, not a guaranteed result. Assume:

• ARV from comps: $300,000
• Estimated repairs: $40,000
• Target wholesale fee: $15,000

Step by step: $300,000 times 0.70 equals $210,000. Subtract $40,000 in repairs to get $170,000. Subtract your $15,000 fee to get a Maximum Allowable Offer of $155,000. That is your ceiling. You can and should try to get the property under contract below $155,000, which widens both your fee and the buyer margin.

Common mistakes that break the math

• Inflated ARV: using the highest comp on the street instead of the realistic median pulls the whole offer too high.
• Light repair estimates: always budget for what the home actually needs, including the items you cannot see on a quick walkthrough.
• Ignoring the local percentage: 70 percent is a starting point. Confirm what your cash buyers actually pay before you anchor to it.
• Forgetting the fee: if you do not subtract your assignment fee, you leave yourself no room to get paid.

How MAO fits the wholesaling workflow

MAO is the bridge between a qualified lead and a signed contract. Your cold callers and acquisition team gather the property condition and price expectation, you build an ARV from comps, and the MAO formula tells you the number to negotiate toward. To learn how the lead gets to that point, see the cold calling guide and the wholesaling virtual assistant roles that feed the pipeline.