MAO Calculator

What Is MAO?

Maximum Allowable Offer (MAO) is the highest price a real estate wholesaler can pay for a property and still create a profitable deal for the end buyer - while protecting their own assignment fee. It's the mathematical ceiling on your offer, not a negotiating target.

The core formula: MAO = (ARV × Rule %) − Repair Costs − Assignment Fee

If you offer above your MAO, you either kill the deal (your buyer won't close), sacrifice your assignment fee, or leave the end buyer underwater - none of which are acceptable outcomes.

Breaking Down the 70% Rule

The 70% rule is the industry standard starting point. It means your end buyer - typically a fix-and-flip investor - should pay no more than 70% of ARV minus repairs. The remaining 30% covers:

• Holding costs - loan interest, taxes, insurance during the rehab period (typically 3–9 months)
• Closing costs - both the purchase and the resale (typically 2–4% each side)
• Carrying risk - cost overruns, market softening, contractor delays
• End buyer's profit margin - their incentive to buy at all (typically 15–20% of ARV)

When the 30% buffer is eaten up by those factors, the buyer's profit disappears and they pass on the deal.

When to Use a Lower or Higher Rule Percentage

60–65% Rule

Use for heavy rehabs, older housing stock, uncertain markets, or sellers who need extra time to move out. More cushion for your buyer = faster close and less risk of deal fallthrough.

70% Rule (Standard)

The default for most residential wholesale deals in mid-tier markets. Works well for light-to-moderate rehabs in markets with predictable ARVs and active buyer pools.

72–78% Rule

Used in competitive markets with low inventory and aggressive buyers (e.g., Phoenix, Dallas, Charlotte suburbs). Some buyers will stretch to 75–78% on cosmetic flips in hot zip codes.

Key rule: Always confirm your buyer's max purchase price before calling a seller back with an offer. Your MAO is only as good as your buyer's actual buybox.

How to Estimate ARV Accurately

ARV (After Repair Value) is the property's projected market value after all repairs are completed. A bad ARV ruins your MAO calculation before you even start.

• Pull comps within 0.5 miles, same bed/bath count, sold within 90 days - this is the MLS/PropStream standard
• Adjust for square footage - use price-per-sq-ft from comps, then apply to subject property
• Discount for busy roads, proximity to commercial, backing to power lines - these reduce ARV 5–15%
• Confirm with your buyer - experienced flippers will give you a realistic ARV for their exit strategy before you lock in your offer

MAO Example Walk-Through

Common MAO Mistakes That Kill Deals

• Using listing price as ARV - Active listings are not comps. Only closed sales set ARV.
• Underestimating repairs by 30–50% - Always walk the property if possible; otherwise add a 15% contingency buffer to your contractor estimate.
• Offering above MAO to "make the deal work" - This creates deals that don't close. Your buyer's walkthrough or appraisal will reveal the true margin, and they'll back out.
• Using a generic 70% rule without market calibration - The right rule percentage depends on your buyer's actual requirements in that specific market.
• Forgetting closing costs in the buyer's calc - Add $3K–$8K for buyer closing costs when estimating whether a deal will close. That comes out of the 30% buffer too.

MAO and Your Cold Calling VA

Your VA qualifies motivated sellers on the phone - but they need clear MAO guidance to pre-qualify leads accurately before you spend time visiting or making offers.

Train your VA to ask for the seller's price expectation before the call ends. If the seller wants $120K and your MAO is $65K, the VA should note the gap and set a callback for a motivated-seller follow-up call, rather than advancing it to a full intake. This protects your time and keeps your pipeline full of workable deals.

A well-configured HighLevel CRM can auto-score leads based on price gap - flagging deals where the seller's ask is within 15% of MAO for priority follow-up. VA Horizon sets this up for every client.