The MAO formula: set your maximum allowable offer in 5 minutes

The MAO formula in one line

Maximum allowable offer is the most you can pay for a house and still leave room for everyone who touches it after you. For a wholesaler the formula is short: MAO = (ARV × 70%) − repair costs − your assignment fee. ARV is the after-repair value, what the place sells for once it is fixed. Multiply that by 0.70, take out the rehab, take out the fee you want. What is left is your ceiling.

Run a real one. ARV of $300,000, repairs of $45,000, a fee of $12,000. So: $300,000 × 0.70 = $210,000, minus $45,000 is $165,000, minus $12,000 leaves $153,000. That is your maximum offer. The seller is free to say no. You are not free to say yes above it, because a dollar over the line hands your end buyer a deal too thin to sign.

What the 70 percent is actually paying for

Nobody legislated the 70 percent. It is a stand-in for every cost your end buyer swallows between buying the house from you and reselling it fixed. Real Estate Skills calls the 30 percent gap a catch-all for buyer profit, closing, holding and financing, rolled into one round number so nobody has to itemize on the hood of a truck (Real Estate Skills).

Look at it from the buyer's chair. A flipper borrows most of the purchase on hard money. New Silver pegged first-position hard money at 8.5 to 12 percent interest in August 2026, plus 1.5 to 3 points, on interest-only terms that run six to twelve months (New Silver). Put a $180,000 loan on the house for five months at 11 percent with two points: about $8,250 in interest and $3,600 in points before a single stud gets touched. Then closing on both ends. Then the resale commission, which since the NAR settlement took effect on August 17, 2024 is negotiated in writing and never set by law, but still costs real money at the closing table. The 30 percent is where all of that has to fit.

A full wholesale deal, line by line

Say you have a tired three-bedroom under contract. Comparable renovated sales down the street closed at $300,000. A contractor walk puts the rehab at $45,000. You want a $12,000 assignment fee, which is squarely in the range most wholesalers quote for a standard single-family assignment. Here is the whole calculation.

Your buyer pays you $165,000, spends $45,000 fixing it, and is all-in at $210,000 on a $300,000 house. That $90,000 gap is what covers their financing, their holding, their closing and their profit. Offer the seller $170,000 instead of $153,000 and you either eat your whole fee or pass a bad deal to a buyer who will remember it. Buyers have long memories.

Where a flat 70 percent is just wrong

Here is the part most MAO guides skip. The 70 percent buffer scales with price, but your buyer's fixed costs do not. Round-trip closing, transfer tax, the first month of holding, a minimum profit a flipper will get out of bed for: those are close to constant whether the house is worth $120,000 or $500,000. So one percentage cannot be right at both ends. It is a dial, not a constant.

Take a $120,000 ARV rowhouse, $20,000 in repairs. At 70 percent the buyer is all-in at $84,000, a $36,000 spread. Sounds fine until you spend it. Round-trip closing and transfer taxes run maybe $6,000. Five months of holding on a $70,000 hard-money loan at 11 percent is roughly $3,200, plus points and utilities. Strip that out and the flipper clears somewhere near $24,000 for a five-month project. Plenty of them pass at that number, which means to make your assignment sell you drop toward 65 percent, and 5 points off a $120,000 ARV is $6,000 straight out of your fee.

Now a $500,000 ARV house, $60,000 repairs. At 70 percent the spread is $150,000. The same fixed costs, call it $25,000 loaded, leave the flipper north of $100,000. A competing wholesaler offering that seller 75 percent still hands the buyer a six-figure profit, and beats your bid by $25,000. Hold 70 percent as a constant and you overpay the cheap deal or lose the expensive one. Price off what the buyer actually needs to net, not a number you memorized.

Flipper MAO and landlord MAO are different numbers

The 70 percent math assumes your buyer resells. A buy-and-hold or BRRRR buyer does not care about resale spread; they care whether the rent covers the loan after a cash-out refinance, usually capped near 75 percent of ARV. Their maximum offer keys off the appraisal that supports that refinance and the rent the property throws off, not a flip margin.

Put numbers on it. A house that rents for $1,600 a month and appraises at $220,000 after repairs supports a cash-out refinance near $165,000 at 75 percent of value. A landlord who can pull most of their cash back out and still cover the mortgage does not need a 30 percent resale spread, so on that same property they may top a flipper's bid by tens of thousands. Their exit is a 30-year loan, not a fast resale. If your buyers list is mostly landlords, running a strict flipper MAO prices you out of deals you could have moved. Know who is on the other end before you pick the formula. And know that the seller side is the harder half to fill; a ranked mailing list like Farmrix does the sourcing you would otherwise do by driving neighborhoods. If you are still building that list, start with the wholesaling basics and grow the buyer side in parallel.

Getting ARV right is most of the answer

Every dollar you miss on ARV moves your MAO by seventy cents, and errors here dwarf anything else in the formula. Guess the after-repair value $20,000 high and your maximum offer is $14,000 too generous before you have made a single other mistake.

Pull sold comparables from the last three to six months, same submarket, similar size and condition after repair, and adjust for the obvious differences. Do not anchor on Zillow's automated estimate or on the seller's opinion of the house down the street. If comps are thin, widen the time window before you widen the geography, because a stale sale on the same block beats a fresh one across a boundary line. Our guides on calculating ARV and the 70 percent rule walk the comp process step by step.

Estimating repairs before you own the deal

Repairs are the second input people fumble. Early on, a rough per-square-foot band gets you close enough to make or kill an offer: light cosmetic work runs lower, a full gut with mechanicals and a kitchen runs several times that. But a band is for triage, not for the contract.

Before you lock a price you can lose money on, get a contractor or an experienced buyer to walk the house, especially the roof, the panel, the plumbing and anything behind a wall. The gap between a $30,000 cosmetic refresh and a $70,000 rehab with a new roof and a re-pipe is exactly the kind of miss that turns a $12,000 fee into a canceled contract and a burned buyer. And a burned buyer stops answering your calls. Build a rehab contingency of 10 to 15 percent into any estimate you make before a professional has seen the house, and hold your MAO to the higher number until they have.

Flex the percentage to what buyers actually earn

The percentage should track the market your buyers sell into, and right now that market is tight. ATTOM reported that homes flipped in 2025 returned a typical gross ROI of 25.5 percent, the lowest since 2008 and down from 32.1 percent the year before, with typical gross profit falling to $65,981 from $77,000 (ATTOM). Flippers completed 297,045 deals, about 7.4 percent of all sales, the fewest since 2020.

When buyer margins compress like that, the buffer has to widen, not hold. In a flat or slow-resale market, price closer to 65 to 68 percent so your assignments still clear. Reserve 72 to 75 percent for markets where renovated homes sell in weeks and buyers are competing for contracts. The number is a dial, and 2026 is not a year to leave it turned up.

Three ways the number quietly goes wrong

The formula is arithmetic, so when it fails it is the inputs that failed. Three do most of the damage.

Comping the wrong condition. ARV is what the house sells for renovated, not what it is worth tired and not the seller's opinion of the block. Pull a comp that was itself a cut-rate flip and you inherit its low ceiling. Pull one from the better side of a dividing street and you inflate ARV by $15,000, which drops straight into a $10,500 overpay.

Forgetting the fee lives inside the offer. A lot of new wholesalers take ARV times 70 percent minus repairs, call that the offer, then try to bolt their fee on when they assign. The buyer already priced the house at 70 percent all-in. Your fee has to come out of the seller's side, which is the whole reason it sits inside the MAO. Leave it out and your $12,000 either disappears or breaks the buyer's math at the closing table.

Treating one percentage as permanent. Worth repeating in cash. At a $500,000 ARV, the gap between 70 and 73 percent is $15,000 of offer room. In a market with three buyers per deal, that is the difference between signing the contract and watching it go to the investor who ran the same formula with a sharper number.

Put a real number on your next three deals

Build the formula into your offer sheet so it runs before emotion does: ARV times your market percentage, minus a contractor-checked repair figure, minus the fee you need. Anything above that line is not an offer. It is a favor to the seller, paid out of your own pocket.

The math only matters if there is a seller across the table, and finding motivated ones is the slow part. That is where the money in wholesaling actually gets made or lost. Farmrix scores every owner in your market on how likely they are to sell in the next 6 to 12 months, ranks them, and mails postcards to the top of that list, so the deals you run MAO on are the ones most likely to say yes. Get the seller first. Then the formula tells you exactly how far you can go.