Every new real estate wholesaler learns the acronym in their first week: MAO — Maximum Allowable Offer. It's the single most important number in the entire deal-evaluation process because it tells you the highest price you can offer a motivated seller and still leave enough profit for your end-buyer.
Get the MAO right and your deals make everyone money. Get it wrong — even by a few thousand dollars — and you either lose the deal to another wholesaler or get stuck with a contract no cash buyer wants.
This guide covers the MAO formula, three worked examples with real numbers, and the single most common mistake that kills new wholesalers' deals.
The MAO formula
The standard wholesaling formula is:
Where:
- ARV = After Repair Value (what the house would sell for fully fixed up)
- 0.70 = the "70% Rule" — cash buyers typically want to pay no more than 70% of ARV so they have room for repairs, holding costs, resale costs, and profit
- Repairs = your estimate of what it will cost to bring the house to ARV condition
- Your Fee = your assignment fee (what you make for finding and contracting the deal)
Why 70%?
The 70% multiplier accounts for everything the cash buyer has to pay out of the gap between their purchase price and resale price:
- Holding costs (insurance, utilities, interest) during the flip — typically 3–5% of ARV
- Resale costs (agent commission, closing costs, concessions) — typically 8–10% of ARV
- Their profit — typically 10–15% of ARV
Sum those up and you're at 21–30% of ARV. 70% leaves room for everything before repairs.
Example 1: Simple rehab
The property:
- 3BR/2BA single-family in Phoenix, AZ
- ARV: $350,000 (based on three comparable sales in the last 90 days)
- Repairs needed: $35,000 (kitchen, flooring, paint, minor HVAC)
- Your fee: $10,000
MAO calculation:
- $350,000 × 0.70 = $245,000
- $245,000 − $35,000 = $210,000
- $210,000 − $10,000 = $200,000
So the maximum you should offer the seller is $200,000. If you can contract the house at $195,000, you have a $5,000 buffer and a $10,000 fee. Good deal.
Example 2: Heavy rehab
The property:
- 4BR/3BA single-family in Houston, TX
- ARV: $280,000
- Repairs needed: $80,000 (foundation work, full gut kitchen, roof, HVAC, flooring)
- Your fee: $12,000
MAO calculation:
- $280,000 × 0.70 = $196,000
- $196,000 − $80,000 = $116,000
- $116,000 − $12,000 = $104,000
Your max offer is $104,000. The seller wants $150,000. You're $46,000 apart — this deal probably doesn't work for you at those numbers, but it tells you exactly where the conversation has to go.
Example 3: Low-rehab, high-ARV market
The property:
- 3BR/2BA townhouse in San Diego, CA
- ARV: $800,000
- Repairs needed: $25,000 (mostly cosmetic)
- Your fee: $20,000
MAO calculation:
- $800,000 × 0.70 = $560,000
- $560,000 − $25,000 = $535,000
- $535,000 − $20,000 = $515,000
In high-price markets, you can sometimes go above 70% because cash buyers compete aggressively. Some experienced California wholesalers use 75% or even 80% in hot neighborhoods, knowing their end-buyers will still make it work.
The single most common MAO mistake
The biggest mistake new wholesalers make is underestimating repair costs. They walk a house, see some cosmetic issues, and put $15,000 in the repairs field. Three weeks later, their cash buyer inspects and finds a cracked slab, a failing roof, and outdated wiring — actual repair cost $55,000. The deal dies.
Rules of thumb for quick repair estimates:
- Paint and flooring only: $10,000–$15,000 for an average 1,500sf home
- Cosmetic rehab (kitchen, bath, paint, flooring): $25,000–$40,000
- Mid-level rehab (add HVAC, roof, some structural): $40,000–$70,000
- Heavy gut rehab: $70,000–$120,000+
- Foundation, termite, or mold issues: add $10,000–$30,000 each
When in doubt, use the high end of the range. Pad your estimate by 20%. An extra $5,000 in your MAO that saves the deal is worth more than winning a contract you can't assign.
How to estimate ARV accurately
ARV is harder than it looks. Zillow estimates are often off by 15–25% on distressed properties. The professional approach:
- Pull 3–5 comparable sales from the last 90 days
- Filter for same subdivision, similar square footage (±15%), same bed/bath count
- Adjust for condition — your subject will sell at the same price as comps only if fully renovated
- Adjust for time — if the market is shifting, weight recent comps more
- Use the low-to-median of that range as your ARV for a conservative MAO
Tools like PropStream, BatchLeads, and ReadyDeals pull comps automatically. But cross-check with Zillow, Redfin, and your MLS access (if you have it).
When the 70% rule breaks
There are situations where the 70% rule doesn't apply cleanly:
- Rental markets — cash-flow buyers care about cap rate, not ARV multiplier
- BRRRR buyers — they'll pay higher than 70% if the refinance math works
- Creative financing / subject-to deals — the math is completely different
- Luxury markets — percentage drops to 65% in high-carrying-cost areas
Know your buyer. Call your top 3 cash buyers and ask: "What's your maximum percentage of ARV?" Most will tell you honestly — 65% conservative, 70% typical, 75% aggressive.
Using MAO on the phone
A good wholesaling workflow calculates MAO in real-time as you're on the phone with a seller. You hear "ARV is around $350K, needs about $35K in work," and your dialer automatically shows you $200K MAO. You can then negotiate intelligently without whiteboarding in the middle of the call.
ReadyDeals includes a server-side MAO calculator on every lead page. You enter ARV, repair estimate, and your fee, and it spits out MAO instantly. Tied to the pipeline so it's always at hand during callbacks.
Bottom line
MAO is the most important number you'll calculate as a wholesaler. Get the ARV right by pulling 3–5 recent comps. Get the repairs right by being pessimistic. Get the fee right by knowing what your end-buyers will pay. Multiply by 0.70 and subtract.
That's the entire job. Everything else — the scripts, the marketing, the lists — all flow from having MAO correct.