Maximum allowable offer (MAO): a simple formula

The common rule of thumb

Many investors start from this formula: MAO = after-repair value (ARV) × 70% − estimated repairs. Wholesalers then subtract their own assignment fee.

A worked example

• ARV: $200,000
• 70% of ARV: $140,000
• Estimated repairs: $30,000
• MAO before your fee: $110,000
• If you want a $10,000 assignment fee, your contract price should be at or below $100,000.

Where the numbers come from

• ARV comes from recent sales of similar, renovated homes nearby, called comps.
• Repairs come from a walkthrough or a contractor's estimate. Budget a cushion, because repairs usually run over.
• The 70% figure is a rule of thumb. In hot markets buyers may accept less margin, and in slow ones they may want more.

What the formula leaves out

It ignores holding costs, closing costs, financing costs and your local market. Treat the result as a starting point and test it against what your actual buyers will pay.

Where BAP fits

BAP provides estimated value and rent ranges and an AI deal summary with estimated repairs and a suggested maximum offer. These are estimates, not appraisals, and AI output can contain errors, so check them before you make an offer.