# Maximum Allowable Offer (MAO) Calculator The 70% rule for wholesaling, shown next to an itemised offer built from the end buyer real costs and profit. --- - **Canonical URL:** https://dothecalculation.com/calculators/maximum-allowable-offer-calculator - **Category:** Real Estate & Property - **Publisher:** Do The Calculation (https://dothecalculation.com) - **Cost:** Free, no account or sign-up required - **Privacy:** Runs entirely in the browser; inputs are never sent to a server - **Methodology:** https://dothecalculation.com/methodology --- ## Maximum Allowable Offer: the 70% Rule, Itemised The screening formula every wholesaler uses, shown next to the itemised version built from the end buyer's real costs and required profit — so you can see which one is actually binding. - 70% rule MAO with the assignment fee carved out - Itemised MAO from selling, holding, closing costs and target profit - The end buyer's profit at your offer, which is what gets the deal assigned ## Quick Answer — What Is the Maximum Allowable Offer Formula? The standard wholesaling formula is the **70% rule**: \(\text{MAO} = (\text{ARV} \times 70\%) - \text{Repairs} - \text{Your Fee}\). The 70% leaves the end buyer roughly 30% of after-repair value to cover their purchase costs, holding, and profit. • **Rule MAO** = ARV × Rule % − Repair Costs − Assignment Fee • **Itemised MAO** = (ARV − Selling Costs − Holding − Repairs − Target Profit − Fee) ÷ (1 + Buyer Closing %) • **Recommended Offer** = the lower of the two **Worked example:** a property with a **$320,000** ARV needing **$45,000** of repairs, with a **$12,000** assignment fee. The 70% rule gives **$320,000 × 0.70 = $224,000**, less **$45,000** of repairs, less the **$12,000** fee — a **maximum allowable offer of $167,000**, or **52.19% of ARV**. Itemised from the buyer's side — **8%** selling costs (**$25,600**), **5 months** of holding at **$900** (**$4,500**), **2%** buyer closing costs, and a **12%** target profit (**$38,400**) — the answer is **$190,686**. The 70% rule is the tighter of the two here by **$23,686**, so **$167,000** is the number to offer. This is **investor math for distressed acquisitions**, not a tool for buying a house to live in. Repairs at **14.06% of ARV** is a substantial rehab, and both formulas assume you can actually execute it at that number. ## How to Use This Calculator: A $320,000 ARV Deal Start with **after-repair value**, and start honestly. ARV is what the property sells for **finished**, supported by comparable sales of renovated properties in the same submarket — not the listing price of unrenovated stock and not what the seller thinks it is worth. Every error in ARV is multiplied by 0.70 and lands straight in your offer. Build it properly with the [after-repair value calculator](/calculators/after-repair-value-calculator). **Repair costs** are the second-largest source of error and they run one way: over. Use contractor bids where you can and a scope-based estimate where you cannot; the [property flipping rehab budget calculator](/calculators/property-flipping-rehab-budget-calculator) breaks the scope down line by line. A $45,000 estimate that turns out to be $60,000 removes $15,000 from someone's profit, and if you have already assigned the contract that someone is your buyer — once. **The assignment fee is your compensation** and it is carved out of the offer, not added to it. At $12,000 the wholesaler offers **$167,000** and the end buyer pays **$179,000** for the contract. Typical assignment fees run in the low thousands to the mid five figures depending on the spread and the market. Setting it too high does not make you more money; it makes the deal undesirable and unassignable. The **buyer profit** output is the one that decides whether your deal moves. At the rule MAO the end buyer's projected profit is **$62,560** on an all-in cost of **$281,600** against a **$320,000** ARV. That is a deal a flipper will take. If that number comes out thin, your offer was too high regardless of what the formula said — and the [house flipping calculator](/calculators/house-flipping-calculator) is the tool your buyer will be running on it. ## A Second Example: A Smaller Deal at 75% Percentages move with market conditions. In a hot market with fast resales, investors sometimes accept **75%** or even **80%**; in a slow or falling one, **65%** is closer to safe. Take a **$185,000** ARV with **$22,000** of repairs, an **$8,000** fee, **4 months** of holding at **$650**, and the same 8% selling costs and 12% target profit — at a **75%** rule. The rule MAO is **$185,000 × 0.75 = $138,750**, less **$22,000** and **$8,000**, giving **$108,750** — **58.78% of ARV**. The itemised MAO is **$113,137**, so once again the rule is the binding constraint, this time by only **$4,387**. That narrowing gap is worth noticing. At 70% on the first deal the rule was $23,686 tighter than the itemised calculation; at 75% here it is $4,387 tighter. **Push the percentage a little further and the rule stops protecting the buyer at all** — at roughly 77% on this deal the two converge, and above that the rule would permit an offer that leaves the end buyer below a 12% profit margin. The rule of thumb is a proxy for the itemised math, and proxies stop working when you tune them. The buyer's projected profit at this offer is **$26,675** on a **$162,800** all-in cost. Smaller deals carry proportionally more fixed cost, which is exactly why they need the same margin percentage rather than a smaller one. ## Why the 70% Rule Works, and When It Does Not **The 30% that the rule holds back is not profit** — it is everything the end buyer spends that is not the purchase price or the rehab. Closing costs on the way in, holding costs while the work happens, agent commissions and closing costs on the way out, and finally a margin for the risk of the whole exercise. On the first example those items total roughly $34,000 before any profit at all. **The rule breaks in predictable places.** On very high-value properties, 30% of ARV is far more cushion than the actual costs require, so the rule is over-conservative and you will lose deals to investors doing the itemised math. On very low-value properties, fixed costs consume more than 30% and the rule is not conservative enough. On heavy rehabs, longer timelines mean more holding cost than the rule's flat allowance contemplates. And in a falling market, the ARV itself is the assumption that fails. **The itemised version exists to check the rule, not to replace it.** When the two agree, you have a normal deal. When the itemised number is much higher, the rule is leaving money on the table and a competitor will outbid you. When the itemised number is *lower* than the rule — which happens on small deals, long rehabs, or high-commission markets — the rule is dangerous and you should follow the itemised figure. This calculator always recommends the lower of the two for exactly that reason. **Wholesaling has legal constraints that arithmetic does not cover.** Assigning a purchase contract is regulated differently across jurisdictions, several require disclosure of your position as an assignor, and some restrict unlicensed wholesaling activity outright. Get the contract and the disclosure right before worrying about the spread. For the investor's own analysis of the same property, the [BRRRR calculator](/calculators/brrrr-calculator) covers the rent-and-refinance exit, and the [house flipping guide](/blog/property/house-flipping-guide) walks through ARV, the 70% rule, and profit margin end to end. ## Limitations This calculator is arithmetic on estimates, and the two estimates that matter most — after-repair value and repair cost — are both outside it. ARV drawn from optimistic comparables or a rehab budget drawn from a walkthrough rather than bids will produce a confident-looking maximum offer that is simply wrong. Neither the rule nor the itemised version can protect against bad inputs; they only propagate them. It models a single assignment or a straightforward flip. It does not handle double closings and their extra transaction costs, transactional funding fees, wholesale deals assigned to a buy-and-hold investor whose economics differ entirely from a flipper's, subject-to or seller-financed acquisitions, or properties with title defects, liens, occupancy issues, or code violations that must be cleared before resale. Any of those changes the number materially. Holding costs are entered as a flat monthly figure over a fixed period, which understates the risk asymmetry: timelines slip in one direction. Financing costs for the end buyer are not modelled separately at all — a flipper using hard money at double-digit rates plus points has a materially higher cost base than the itemised calculation assumes, which is another reason to leave the buyer more margin rather than less. This is a general educational tool, not investment or legal advice; wholesaling is regulated differently by jurisdiction, and you should consult qualified professionals before contracting. ## Related Calculators Get the inputs right before trusting the output: the [After-Repair Value Calculator](/calculators/after-repair-value-calculator) builds ARV from comparables, and the [Property Flipping Rehab Budget Calculator](/calculators/property-flipping-rehab-budget-calculator) breaks the repair estimate down by scope. Then run the deal the way your end buyer will, with the [House Flipping Calculator](/calculators/house-flipping-calculator) for a resale exit or the [BRRRR Calculator](/calculators/brrrr-calculator) for a rent-and-refinance one. If the buyer is using short-term financing, the [Bridge Loan Calculator](/calculators/bridge-loan-calculator) prices what that costs them. The [House Flipping Guide](/blog/property/house-flipping-guide) covers ARV, the 70% rule, and profit margin in narrative form. ## Frequently asked questions ### What is the MAO formula in real estate? Maximum Allowable Offer = (ARV × 70%) − Repair Costs − Your Fee. On a $320,000 after-repair value with $45,000 of repairs and a $12,000 assignment fee, that is $224,000 − $45,000 − $12,000 = $167,000, or 52.19% of ARV. ### What is the 70% rule in wholesaling? A screening heuristic that caps the total of purchase price, repairs, and your fee at 70% of after-repair value. The 30% held back covers the end buyer's closing costs, holding costs, agent commissions on resale, and profit — roughly $34,000 of costs before any margin on the worked example. ### Should I use 70%, 75%, or 65%? It tracks market conditions and deal size. Hot markets with fast resales support 75% or occasionally 80%; slow or falling markets argue for 65%. But the higher you push it, the less the rule protects the end buyer — at around 77% on the second example the rule stops being more conservative than the itemised calculation at all. ### How much should a wholesale assignment fee be? Typically the low thousands to the mid five figures, depending on the spread and the market. It is carved out of your offer rather than added to it, so the seller receives $167,000 and the end buyer pays $179,000 on the worked example. Setting it too high does not earn more; it makes the contract unassignable. ### Is MAO the same as a normal home-buying offer? No, and treating it as one leads to offers nobody accepts. MAO is investor math for distressed acquisitions, deliberately built to leave a rehab margin for a professional buyer. A retail purchaser buying a house to live in is not solving this equation at all. ### What is the difference between the rule MAO and the itemised MAO? The rule uses a flat percentage as a proxy for the end buyer's costs and profit; the itemised version prices those costs individually. When they agree you have a normal deal. When the itemised figure is lower — common on small deals, long rehabs, or high-commission markets — the rule is not conservative enough and the itemised number should govern. ### How accurate does the ARV need to be? It is the single most important input, and errors flow straight through at 0.70 of their size. Use comparable sales of renovated properties in the same submarket, not listing prices of unrenovated stock. An ARV overstated by $20,000 overstates your maximum offer by $14,000 and takes it out of someone's profit. ### Does the end buyer's profit matter to a wholesaler? Entirely, because it determines whether the contract assigns. At the worked example's offer the buyer projects $62,560 of profit on a $281,600 all-in cost — a deal a flipper will take. If that number is thin, the offer was too high no matter what the formula produced. ## Related concepts - **After-Repair Value** — The finished resale value from renovated comparables. Every other number in a wholesale deal is derived from it. - **Assignment Fee** — The wholesaler's compensation for transferring a purchase contract. Carved out of the offer, so it reduces what the seller receives. - **Spread** — The gap between the contract price and what an investor will pay. Wide enough for a fee and a buyer's margin, or there is no deal. ## Related guides - [House Flipping Guide: How to Calculate ARV, 70% Rule, and Profit Margin](https://dothecalculation.com/blog/property/house-flipping-guide) — Underwrite house flips with professional precision. Learn how to calculate after-repair value (ARV), maximum allowable offer (MAO), repair contingency, and financing drag. ## Related calculators - [After Repair Value (ARV) Calculator](https://dothecalculation.com/calculators/after-repair-value-calculator) — Calculate ARV, the 70% rule maximum allowable offer, and projected flip profit from purchase price, repair budget, and selling costs. - [House Flipping Calculator](https://dothecalculation.com/calculators/house-flipping-calculator) — Calculate house flipping profit potential, including maximum allowable offer, renovation budget, holding costs, and expected ROI for property flips. - [Real Estate Closing Costs Estimator](https://dothecalculation.com/calculators/closing-cost-estimator) — Estimate real estate closing costs, including buyer and seller expenses, prepaid items, reserves, and total cash needed to close on a home. - [Cash-on-Cash Return Calculator](https://dothecalculation.com/calculators/cash-on-cash-return-calculator) — Annual pre-tax cash flow over cash invested, shown next to cap rate and debt service coverage ratio. - [Real Estate Partnership Profit Split Calculator](https://dothecalculation.com/calculators/real-estate-partnership-profit-split-calculator) — Split deal profit in waterfall order: fees, preferred return, then the residual where the promote is earned. - [Lego Resale ROI & Fees Calculator](https://dothecalculation.com/calculators/lego-resale-roi-calculator) — Calculate real net profit and ROI on a Lego resale after marketplace fees, payment processing fees, shipping, and packaging costs. --- _This calculator is arithmetic on estimates, and the two that matter most — after-repair value and repair cost — come from outside it; bad inputs produce a confident-looking maximum offer that is simply wrong. It models a single assignment or straightforward flip, and excludes double closings, transactional funding, buy-and-hold buyer economics, and properties with title defects, liens, occupancy issues, or code violations. Holding costs are a flat monthly figure over a fixed period, and the end buyer's financing costs are not modelled at all, so hard-money buyers need more margin than the itemised figure assumes. Wholesaling is regulated differently by jurisdiction and several require disclosure of your position. This is a general educational tool, not investment or legal advice._ --- _Source: [Do The Calculation](https://dothecalculation.com/calculators/maximum-allowable-offer-calculator). Quote freely with attribution and a link to this page._