MAO Formula: How to Write a Wholesale Offer Buyers Take

The number one reason beginners never close is not that they cannot find a house. It is that they never learned the MAO formula, so they do not know what to offer: they either overpay and end up with a contract no buyer wants, or they never make the offer at all. That formula is what experienced wholesalers use to price a deal before they talk numbers with a seller.

There is one formula that fixes this. Every offer we make, and every offer our students make, starts here. Below you will find the formula, how to get each input right, a worked example, how to write the offer down, and how to present a number below asking without losing the seller.

The MAO formula real estate wholesalers use

MAO = (ARV × 70%) − Repairs − Your fee

MAO is your maximum allowable offer — the most you can pay the seller and still have a deal that a cash buyer will take from you. Each piece matters:

ARV (after-repair value) is what the house sells for once it is fixed up. Use sold comps only — same bed and bath count, similar size, within half a mile, within six months. Never use active listings; those are wishes, not sales.
70% is the cash buyer’s margin plus their holding, closing, and selling costs. In hot markets buyers will stretch to 75%; in slow ones they want 65%. Ask your A-list buyers what they use.
Repairs is a real estimate, not a guess. A quick rule: cosmetic work runs $15–25 per square foot, kitchen-and-baths-and-systems $35–55, a full gut $70 and up. Add 10% for surprises.
Your fee is built in from the start. First deals typically carry $8,000–$15,000. Never plan to “squeeze it out of the buyer later.”

The per-square-foot figures above are rough starting points. Labor and material costs differ from market to market, so confirm your ranges with two or three local contractors or with the buyers on your list before you rely on them.

Getting each input right

The formula is simple. The skill is in the inputs. A small error in ARV or repairs moves your MAO by thousands of dollars, and a buyer will catch it at the walkthrough.

Pulling ARV from sold comps

Start with three to five sold properties that match the subject house on bedrooms, bathrooms, size, age, and style, and that sold in renovated condition. Stay close to the property and inside the same subdivision or school boundaries when you can, because a street can change values. Adjust for obvious differences like a garage or an extra bathroom, and throw out any sale that looks like an outlier. If you want the full method, read how to calculate ARV.

Estimating repairs on a walk-through

Walk every room with a checklist and write down what you see: roof age, HVAC age, electrical panel, plumbing type, foundation cracks, water stains, windows, flooring, kitchen, baths, and paint. Then decide which level the house falls into (cosmetic, kitchen-baths-systems, or full gut), multiply by the square footage, and add line items for big-ticket systems. Photos of every problem help you later when the buyer asks how you got your number.

Choosing your percentage

The 70% rule is a starting point, not a law. Some buyers in competitive areas pay more; some want a deeper discount on older homes or larger rehabs. Your cash buyer list is where this number really comes from: ask each buyer what percentage of ARV they pay, and use the one your likely buyer uses. Margins are thinner than they were: ATTOM’s Q2 2026 flipping report put the typical flip’s gross margin at 21.5%, down from 27.6% a year earlier, so expect some buyers to want a deeper discount.

A worked example

A 3-bed, 2-bath house that will be worth $400,000 fixed up. Repairs come in at $45,000. You want a $15,000 fee.

$400,000 × 70% = $280,000
$280,000 − $45,000 repairs = $235,000
$235,000 − $15,000 fee = $220,000 MAO

If the seller needs more than $220,000, it is not a wholesale deal at this ARV. Either the repair number comes down after a closer look, the ARV goes up with better comps, or you walk. Walking is a skill. The offer that does not get made is not the one that costs you money; the bad offer that gets accepted is.

How the numbers shift

Using the same example, look at how sensitive the result is. If your buyer uses 65% instead of 70%, the math becomes $400,000 × 65% = $260,000, minus $45,000 repairs, minus $15,000 fee, for an MAO of $200,000. That five-point change moved your offer by $20,000. If repairs turn out to be $60,000 instead of $45,000 at 70%, your MAO drops to $205,000. This is why you confirm the percentage with buyers and walk the property before you commit to a price.

Leave room to negotiate

Your MAO is a ceiling, not your opening number. Many wholesalers open somewhat below MAO so there is room to move up if the seller counters. In the example above, you might open around $200,000, with $220,000 as the number you will not go past. Whatever you do, never go over your MAO to win the contract. A contract above MAO is a contract no buyer will take.

How to write the offer

Once you have your number, put it on paper. A written offer looks serious and makes the terms clear to everyone. Use a purchase agreement built for investors, and make sure it covers:

Purchase price at or below your MAO.
Buyer listed as your name or company “and/or assigns.”
An inspection period long enough to confirm repairs and line up a buyer.
Earnest money amount, held by the title company and refundable during the inspection period.
A closing date that gives your cash buyer time to close.
Access for you, your buyers, and contractors before closing.

For a clause-by-clause walk-through, read the wholesale real estate contract explained. Tell the seller plainly that you may assign the contract or bring in a partner to close, and include any disclosures your state requires. Whether you need a license to wholesale also depends on your state; see when a license is required for wholesaling.

Pre-offer checklist

Run through this list before any number leaves your mouth:

At least three sold comps in renovated condition, all from the last six months.
A written repair estimate with photos, plus 10% for surprises.
The percentage your most likely buyer pays, confirmed by asking them.
Your fee written into the formula, not added later.
An opening number below MAO and a firm ceiling at MAO.
Two or three buyers on your list who fit this property.

If any line is blank, you are not ready to make the offer yet. Fill it in first, even if it means calling the seller back the next day.

How to present a number below asking

Sellers do not hate low offers. They hate surprises and disrespect. The script is simple:

Set the expectation before you give the number: “I buy as-is, with cash, and I can close in two weeks. Because of that, my number is going to be below what you would get after fixing it up and listing it.”
Give the number in writing within 48 hours of the walk-through, with the repair list attached. A list of what is wrong makes the number make sense.
When they say it is too low, agree: “It is lower than a retail sale, you are right. What it buys you is no repairs, no showings, no commissions, and a closing date you pick.” Then be quiet.

If the seller says no, thank them and ask if you can check back in a few weeks. Situations change. A seller who was not ready in March may call you in May, especially if they came from a list of motivated sellers with a real reason to move on.

Common offer mistakes

Pulling ARV from active listings or from a house in much better condition.
Guessing repairs from the curb instead of walking the property.
Using 70% when your actual buyers pay less.
Leaving your fee out of the formula and hoping to add it later.
Opening at your MAO, which leaves nowhere to go when the seller counters.
Giving a verbal number and never following up in writing.

If you would rather learn this with a wholesaling mentor beside you, see how our program takes you from your first lead to your first closed deal.

Frequently asked questions

Is the 70% rule always right?

No. It is a common rule of thumb that covers a buyer’s costs and profit on many rehab deals. Your buyers set the real percentage in your market, so ask them and adjust.

What if the seller’s price is above my MAO?

Recheck your comps and repair estimate once. If the numbers still do not work, tell the seller what you can pay and why, and follow up later. Do not raise your offer past MAO to save the deal. Instead, show them how much they would net from listing versus your cash offer once commissions, repairs and holding costs come out.

Should I include my fee in the number I show the seller?

The seller sees your purchase price, not a breakdown. Your fee is part of your math, and it is paid through the closing when your buyer takes over the contract.

How fast should I send a written offer?

Within 48 hours of the walk-through is a good standard. It keeps momentum and shows the seller you are serious.

Inside the Mentorship Program, every offer gets reviewed live before you make it — comps, repairs, and the exit — so you never present a number alone.

Working a specific market? Our state-by-state wholesaling guides cover the licensing rules, deed records and probate courts for each state and its major cities.

Run your numbers: the free MAO calculator works out your maximum offer after your assignment fee in seconds.

When the cash offer is not enough. If a seller rejects your number, a terms offer can still win the deal. Our guide to creative financing explains the options, starting with seller financing. And before you send any offer, check it against the most common wholesaling mistakes.

One house, three exits: running the MAO formula by buyer type

The 70% rule is a shortcut for a longer calculation: exit value, minus every dollar it costs to get there, minus the buyer’s profit. Rebuild it line by line and you see why a flipper, a landlord and a wholetailer can look at the same house and give you three different numbers. The table below uses one HYPOTHETICAL deal: a house with a $250,000 ARV that needs $40,000 of work, and a $10,000 assignment fee for you.

Line item (HYPOTHETICAL)	Flipper, 6 months	Flipper, 9 months	BRRRR landlord	Wholetailer
Exit value	$250,000 resale	$250,000 resale	$187,500 refi (75% of ARV)	$215,000 near as-is resale
Repairs	$40,000	$40,000	$40,000	$8,000 cleanup
Selling costs (8%)	$20,000	$20,000	None (keeps it)	$17,200
Purchase closing costs	$3,000	$3,000	$3,000	$3,000
Hard money interest (12%, interest-only)	$10,500	$15,750	$7,000 (4 months)	$2,800 (2 months)
Lender points (2)	$3,500	$3,500	$3,500	$2,800
Taxes, insurance, utilities	$6,000	$9,000	$4,000	$2,000
Refinance closing costs	None	None	$4,000	None
Profit target	$30,000	$30,000	No cash left in the deal	$20,000
Most the buyer can pay	$137,000	$128,750	$126,000	$159,200
Your MAO after a $10,000 fee	$127,000	$118,750	$116,000	$149,200

Loans are assumed at $175,000 for the flipper and landlord and $140,000 for the wholetailer; the 12% rate and two points are placeholders, not quotes. Ask your buyers what their lender charges and plug those terms into the fix-and-flip calculator or the BRRRR calculator. Our guide to the hard money loan explains how points and draws work.

What the table teaches

Time is a line item. Stretching the flip from six to nine months added $8,250 in interest and carrying costs, and every dollar of it came out of your offer.
The 70% shortcut lands close to the six-month flip, not the others. $250,000 × 70% − $40,000 − $10,000 = $125,000. That is near the flipper’s $127,000 but $9,000 above what the landlord can pay.
Landlords are capped by the appraisal and the lender. A landlord using the BRRRR method wants their total cost at or under the refinance amount, so a lender’s loan-to-value limit sets their ceiling.
Wholetailers pay more, but only for the right house. Their exit depends on a retail buyer who can inspect, appraise and finance the home after light work. A house that needs a roof and a furnace usually does not fit.

Adjusting the percentage to market conditions

Buyers move their percentage when the market changes how long a house takes to sell and what it costs to carry. The National Association of REALTORS® September 2026 existing-home sales report put the median existing-home price at $417,500, with 4.8 months of supply, up from 4.5 months a year earlier, and a median of 33 days on market. Freddie Mac’s Primary Mortgage Market Survey had the 30-year fixed rate averaging 7.32% as of October 22, 2026, compared with 6.19% a year earlier.

More supply means longer resales. When inventory builds, flippers add a month or two of holding costs and take a lower percentage. Check local days on market for renovated homes.
Higher rates shrink the retail buyer pool. Fewer qualified retail buyers can mean price cuts on finished flips, so buyers protect themselves with a bigger discount up front. Landlords feel it in the refinance payment, since the rent still has to cover it.
Low-price houses need a lower percentage. On a $120,000 ARV, 30% is only $36,000 to cover closing, financing, selling and profit, and many of those costs do not shrink with the price. Buyers in those markets often think in dollars of profit and land well below 70%.
High-price houses can carry a higher percentage. On a $600,000 ARV, even 75% leaves a large dollar cushion, which is why buyers in expensive markets sometimes stretch.

State rules that change your offer timeline

Some states write wholesaling rules directly into their licensing laws, and those rules can change your timeline. Pennsylvania’s Act 52 of 2024, effective January 4, 2025, requires a real estate license to engage in wholesale transactions. Contracts must prominently disclose that the deal is a wholesale transaction, and the seller may cancel until the 30th day after signing or conveyance, whichever comes first, with payments refunded within 10 business days. Contracts missing the disclosures can be canceled any time before conveyance (Tucker Arensberg summary). In Illinois, the Real Estate License Act treats dealing in assignable purchase contracts on two or more occasions in any 12-month period as a pattern of business that requires a license.

A 30-day cancellation window means your buyer must be willing to wait it out, and your inspection period, earnest money terms and closing date should be set with that in mind. Check your state’s page in our state-by-state guides, and have a local attorney or title company review your contract form before you use it there.