Wholesale MAO Guide
What is MAO?
Maximum Allowable Offer (MAO) is the highest price you can pay a seller while still leaving enough margin for your assignment fee and your end buyer's profit.
The 70% Rule Formula
MAO = (ARV × 70%) - Repairs - Assignment Fee
This leaves 30% of ARV for the end buyer's holding costs, closing costs, and profit.
Why Adjust the Percentage?
- 65%: Use in expensive markets or with nervous buyers
- 70%: Standard rule, works in most markets
- 75%: Hot markets with confident buyers, smaller margins
Typical Assignment Fees
- Beginner deals: $5,000 - $10,000
- Average deals: $10,000 - $20,000
- Great deals: $20,000 - $50,000+
The more equity in the deal, the more room for your fee. Never squeeze the end buyer's profit too thin.
Verifying Your ARV
- Pull 3-5 comparable sales within 0.5 miles
- Match bed/bath count, square footage (±15%)
- Use sales from last 3-6 months
- Adjust for condition differences
Common Mistakes
- Overestimating ARV (be conservative)
- Underestimating repairs (add 10-20% buffer)
- Taking too much assignment fee (buyer walks)
- Not building buyer's list first