How to Calculate MAO in Real Estate Wholesaling

Every profitable wholesale deal starts with the right offer. Too high and you lose money. Too low and you lose the seller. The Maximum Allowable Offer, or MAO, is the simple formula that protects your margin and builds trust with buyers.

This guide walks through what MAO is, how to calculate it, and how to use it in real-world deals.

What is MAO?

MAO stands for Maximum Allowable Offer. It is the most you can offer a seller and still make a profit after repairs, assignment fees, and buyer margins.

It is based on a simple formula that wholesalers across the country rely on.

MAO Formula

MAO = (ARV × investment percentage) minus repair costs minus your assignment fee

The most common investment percentage is 70 percent. This accounts for your buyer’s profit and holding costs.

Example Calculation:

• ARV: 250,000
  
• Repairs: 40,000
  
• Assignment Fee: 10,000
  
• MAO = (250,000 × 0.70) minus 40,000 minus 10,000 = 125,000

This means you should not offer more than 125,000 if you want to maintain that profit structure.

When to Adjust the Formula

• In hot markets, investors might use 75 or even 80 percent.
  
• In slow or rural markets, stick with 65 percent or lower.
  
• For light rehab, you might adjust the repair buffer down.

Always talk with your buyers to understand their ideal margin before adjusting your formula.

Check out more vital questions in the world of real estate, here.

Using MAO Inside REsimpli

REsimpli makes MAO calculation automatic. Once you enter the ARV, repair costs, and assignment fee, the platform shows you your ceiling offer. You can tag leads based on offer type, save multiple offer versions, and track seller responses from one dashboard.

Final Tips

• Always aim to offer below your MAO so you have negotiation room
  
• Double check your ARV and repair numbers for accuracy
  
• Save and timestamp every offer inside your CRM for future reference

The MAO formula is simple but powerful. Use it consistently, and you will protect your business from bad deals.