MAO Calculator: Maximum Allowable Offer for Wholesalers
Your maximum allowable offer (MAO) is the most you can pay a seller and still leave room for your buyer and your fee: ARV times the percentage your buyers need, minus repairs, minus your wholesale fee.
How the calculation works
- Multiply the ARV by the percentage your buyers pay, often around 70%.
- Subtract the repair estimate.
- Subtract your wholesale fee.
- What is left is the ceiling for your offer to the seller. Open below it and negotiate up only if you need to.
Questions
Should I offer the MAO?
No. MAO is a ceiling, not an opening offer. Start lower so you have room to negotiate and to absorb a repair estimate that grows after a walkthrough.
What fee should I use?
Use the fee you actually need for the deal to be worth your time and marketing cost. A larger fee lowers your offer and can make the price unrealistic for the seller.
What if the seller wants more than my MAO?
Recheck the comps and repairs honestly. If the numbers still do not work, a novation or a different exit may fit; otherwise walk away rather than overpay.