Maximum Allowable Offer (MAO)
Your maximum allowable offer is the most you can pay for a property and still make the deal work. It is a ceiling, not a target — the number you walk away from, decided before you ever talk to the seller.
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Work out your ceiling
70% of $300,000 is $210,000, less $50,000 of work.
MAO and the 70% rule are not the same thing
People use the terms interchangeably, but they describe different things. The 70% rule is the method. The MAO is the number it produces. You apply the rule and what comes out the other side is your maximum allowable offer.
That distinction matters because the 70% rule is only one way to arrive at an MAO. An investor targeting a fixed profit rather than a percentage might work backwards instead: ARV, minus repairs, minus every cost, minus the profit they insist on. Different method, same kind of answer.
A worked example
A three-bed that comps at $300,000 renovated, needing $50,000 of work:
| Step | Amount |
|---|---|
| After-repair value (ARV) | $300,000 |
| × 0.70 | $210,000 |
| − Repair costs | −$50,000 |
| Maximum allowable offer | $160,000 |
Wholesalers subtract one more line
If you are assigning the contract rather than renovating, your fee has to come out of the same margin — because your end buyer needs the deal to work at their MAO, not yours.
On the example above, a $15,000 assignment fee drops your maximum offer from $160,000 to $145,000. Leave the fee out and you will tie up properties your buyers cannot use — the most common way new wholesalers waste a month.
Never open at your MAO
This is the mistake that turns a correct calculation into a bad deal. Your maximum allowable offer is where you stop. Open there and two things go wrong:
- No room to negotiate. Any movement from your opening number now comes out of profit.
- No margin for error. Repair estimates come in high far more often than they come in low. Opening at the ceiling means the first surprise puts you underwater.
Experienced investors open meaningfully below the MAO and negotiate up toward it. PropGlimmer calls that opening number the anchor price.
Everything depends on the ARV
The formula has two inputs and one of them is guesswork if you get it wrong. Repair costs you can learn by walking properties and collecting quotes. ARV is harder, because it is not the property's current value and not an automated valuation — those describe the house as it stands now, unrenovated.
ARV is what it sells for after the work, which means finding genuinely comparable recent sales: same area, similar bed and bath count, similar size, recent enough to reflect today's market. Miss by 10% on the example above and your ceiling moves $21,000 — the entire margin.
PropGlimmer calculates this for any address
Enter an address and it pulls comparable sales, filters them to properties that genuinely match, and returns the ARV, a repair estimate, and this exact maximum offer. Free to start, on iOS, Android and the web.
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