What is Maximum Allowable Offer (MAO)?
Maximum Allowable Offer (MAO) is the highest price a wholesaler or flipper can pay for a property and still hit their required profit margin. Derived from the 70% rule: MAO = (ARV × 0.70) − repair costs − assignment fee.
MAO is the wholesaler's discipline anchor. Any offer above MAO erodes the buyer's spread; any offer below MAO leaves negotiation room. The number is non-negotiable internally — it changes only when the inputs (ARV, repair costs, profit target) change.
For wholesalers, MAO must also account for the assignment fee that gets paid to the wholesaler at close. A common error is calculating MAO using a flipper's formula then forgetting to subtract the assignment fee — the wholesaler ends up offering more than the buyer's actual MAO and the deal dies at the closing table.
Different operators apply different multipliers: 70% for high-volume markets, 75% for steady markets with predictable rehabs, 65-67% for declining or uncertain markets where ARV slippage is a real risk. The multiplier should also bake in carrying costs (interest, taxes, insurance, utilities for the rehab period) which often eat 5-8% of ARV on their own.
ARV $250,000, repair estimate $35,000, target assignment fee $10,000. MAO = ($250,000 × 0.70) − $35,000 − $10,000 = $130,000. Any offer above $130,000 starts squeezing the buyer's margin.
Concepts that connect.
After Repair Value (ARV) is the projected market value of a property after all planned renovations are complete, based on recently-sold comparable properties in similar condition within a half-mile radius. It is the single most important number in any flip or BRRRR underwrite.
The 70% rule is a flipper's underwriting heuristic: total all-in cost (purchase + rehab + carry + closing) should not exceed 70% of the property's After Repair Value. The remaining 30% covers profit, slippage, and the cost of being wrong.
An assignment fee is the amount a wholesaler is paid for assigning the rights of a real estate purchase contract to an end buyer. Typical fees in 2026 range from $5,000 to $25,000 on single-family deals, depending on the spread and the market.
Wholesaling is the real-estate strategy of putting a distressed property under purchase contract and assigning that contract to a cash buyer for a fee. The wholesaler never owns the property — they're paid for connecting motivated sellers to investor buyers.
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