The MAO formula
MAO = (ARV × target %) − repair costs − assignment fee
ARV is the after-repair value: what the property sells for once fixed up, based on recent comps. The target percentage is what your buyers will pay relative to ARV; 70% is the classic starting point, but it varies by market and price point. Repairs are the estimated rehab cost. Your assignment fee is what you earn for assigning the contract.
Worked example
A house with a $250,000 ARV, a 70% target, $20,000 in repairs and a $10,000 assignment fee:
($250,000 × 0.70) − $20,000 − $10,000 = $145,000
Offer at or below $145,000 and the numbers still work for you and your buyer.
MAO for land deals
Land has no repairs or ARV. A common approach is to start from comparable land sales per acre, multiply by acreage for market value, take your buyers' target percentage of that, and subtract your fee. Carbon REI's calculator has a separate land mode for this, and the Land Due Diligence Report gives you nearby land values per acre.
Mistakes that blow up your MAO
- Inflated ARV from comps that are too old, too far away or a different property type.
- Low repair estimates. Buyers will run their own numbers.
- Using 70% everywhere. Hot markets and higher price points often run higher; slower markets lower.
- Forgetting holding and closing costs your buyer will factor in.
Calculate MAO inside your CRM
In Carbon REI, the MAO calculator handles land and residential, saves the result to the seller's contact, and every Hot Lead is graded Good, Marginal or Bad before you make an offer. See the full wholesaling CRM.
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Individual result. Results vary and are not guaranteed.
Frequently asked questions
What is MAO in real estate wholesaling?+
MAO stands for Maximum Allowable Offer: the highest price you can offer a seller while leaving room for your buyer's profit and your assignment fee.
Is the 70% rule always right?+
No. 70% of ARV is a common starting point, but buyers in competitive markets may pay more, and slower markets may require less. Know your buyers' numbers.
How do I calculate MAO for land?+
Use comparable land sales per acre to estimate market value, apply your buyers' target percentage, then subtract your assignment fee.