MAO — Maximum Allowable Offer — is the ceiling on what you can pay for a property and still deliver a deal your buyer will take. Get it wrong upward and your buyer walks. Get it wrong downward and you leave money on the table. The 70% rule is the fastest MAO heuristic in the business — here's how to use it, and when to flex it.
The formula
MAO = (ARV × 0.70) − Repairs − Your Assignment Fee
Plug in real numbers: ARV $300,000, repairs $45,000, fee $10,000.
That's the highest price you can pay and still sell the contract to a cash buyer who expects a 30% built-in margin.
The four variables
Every variable is squishy. You need all four to be realistic.
- ARV:Pulled from recent sold comps — not a Zestimate. Use 3–5 comps within 0.5 miles, sold in the last 90 days, ±20% square footage. See our ARV walkthrough for the full method.
- Repairs:If you haven't walked the property, assume $25–$40 per square foot as a floor. Flag foundation, roof, or systems issues separately — each usually adds $10K+.
- 70% factor: Not a law. See next section.
- Assignment fee: Your target, not a given. Most wholesalers bake in $5K–$15K as default.
When to adjust the percentage
The 70% rule is a national-average starting point. Flex it based on three signals:
- Hot markets (Phoenix, Austin, Nashville, Tampa): push to 75% or 80%. Buyers accept thinner margins because retail sells fast.
- Soft markets (Memphis, Jackson, rural counties): drop to 65% or even 60%. Longer hold times mean buyers need more cushion.
- A-class single family can flex to 78%; small multifamily and rural properties usually stay at 70% or below.
If you're new, start at 70% until you've closed three deals. Don't flex based on vibes.
Example: hot market vs. soft
Austin (hot)
ARV $400,000, repairs $60,000, fee $12,000, factor 0.78.
MAO = (400K × 0.78) − 60K − 12K = $240,000
Memphis (soft)
ARV $180,000, repairs $35,000, fee $8,000, factor 0.65.
MAO = (180K × 0.65) − 35K − 8K = $74,000
Same formula, wildly different answers. The percentage matters almost as much as the comps.
Common mistakes
- Using asking prices from active listings instead of sold comps.
- Underestimating repairs by skipping the property walk.
- Flexing the factor upward because you “want the deal.”
- Forgetting to subtract your own fee from MAO.
Skip the math
Use the free MAO calculator to run this live with your own numbers. For the full wholesaling playbook, see our complete guide.