The Maximum Allowable Offer (MAO) formula isn’t new.

But it’s still one of the fastest, most reliable tools for making an offer that protects your margin, especially in fast-moving markets.

And yet, many investors:

• Use outdated rules of thumb (like the rigid 70% rule)

• Rely too heavily on their gut

• Or waste days overthinking the numbers

This guide will teach you how to calculate MAO in under 2 minutes, and more importantly, how to adjust it intelligently based on the deal, market, and your risk profile.

What Is MAO (Maximum Allowable Offer)?

MAO is the highest price you can offer on a property while still hitting your desired profit margin after all expenses.

It’s your financial guardrail, the number that says:

“If I go higher than this, I’m in danger of losing money.”

Unlike retail buyers, flippers have dozens of costs to consider: repairs, financing, holding, selling, and risk.

So the MAO calculation helps you work backward from your ARV (After Repair Value) and subtract everything that eats into your margin.

The Fast MAO Formula

Here’s the classic formula:

MAO = ARV × Buy Box % – Repairs – Other Costs

Where:

• ARV = After Repair Value (expected resale price)

• Buy Box % = Usually 70%–80% depending on market and risk

• Repairs = Estimated cost of rehab

• Other Costs = Anything not captured in repairs (e.g. closing, staging, utilities, financing)

Let’s break it down for fast field use.

Step-by-Step: Calculate MAO in 2 Minutes

Step 1: Determine ARV

This is the future resale value once the property is fixed up.

Quick ways to estimate ARV:

• Look at 3–5 nearby comps that sold in the last 6 months

• Use MLS, PropStream, Zillow (with filters ON for condition and date)

• Focus on true apples-to-apples: bed/bath count, year built, style

Fast hack:

Use the price per square foot method from nearby flips and multiply by the subject property’s size.

Example:
Comps average $250/sqft, andthe  subject is 1,600 sqft
→ ARV = $250 × 1,600 = $400,000

Time: 45 seconds

Step 2: Choose Your Buy Box %

This is where flippers screw up.
The Buy Box % adjusts based on your market, risk tolerance, and strategy.

Use this cheat sheet:

• 65–70%: Slow market, higher risk, thin buyers list

• 70–75%: Balanced market, decent inventory, and demand

• 75–80%: Hot market, low DOM, multiple exit options

The lower the %, the more margin you keep.

Example: $400,000 ARV × 75% = $300,000

This is your “gross budget” before expenses.

Time: 15 seconds

Step 3: Subtract Rehab Costs

You need a quick-and-dirty rehab estimate.

Use this rule of thumb for fast estimates:

• Cosmetic (paint, floors, fixtures): $20–30/sqft

• Moderate (kitchen, baths, HVAC): $30–50/sqft

• Full gut (everything new): $60–100+/sqft

Always round up. Surprises cost money.

Example: 1,600 sqft × $35/sqft = $56,000 repairs

Time: 30 seconds

Step 4: Subtract Other Costs

These include:

• Closing costs (buy + sell): 4–8% of ARV

• Holding: mortgage, taxes, insurance

• Agent fees (if listing): 5–6%

• Staging, punch list, final cleanup

• Financing (points, interest)

Use 10–15% of ARV as a quick proxy.

Example:
$400,000 ARV × 12% = $48,000

Time: 15 seconds

Step 5: Final MAO Calculation

Let’s recap:

• ARV = $400,000

• Buy Box % = 75% → $300,000

• Repairs = $56,000

• Other costs = $48,000

• MAO = $300,000 – $56,000 – $48,000 = $196,000

So you should not offer more than $196,000 to keep your margins intact.

Total time: 1 min 45 seconds

How to Speed It Up Even More

If you want to run MAO on dozens of leads fast:

Create a MAO calculator sheet or app with:

• Input fields: ARV, sqft, condition level

• Auto-fill repair estimate based on condition + size

• Auto-calculate Buy Box % based on zip or property type

• Embedded logic for holding + closing %s

Or use tools like:

• DealCheck

• FlipperForce

• Goliath Data’s internal calculators

When You Should Break the MAO Rule (Rarely)

MAO is a guideline, not a commandment.
But in some cases, you can intentionally offer slightly above MAO, if:

• You’re flipping in a high-appreciation market

• You’ve done multiple deals with contractor pricing locked in

• You’ve got a buyer lined up already (e.g., reverse wholesaling)

• You’re playing the creative finance game (e.g,. Subto, seller carry)

Just know: every time you go above MAO, your risk spikes.

How MAO Fits Into the Bigger Picture

MAO protects your margin when:

• Comps are fuzzy

• Rehab scope changes

• The market shifts

• Your timeline stretches

MAO also helps you:

• Justify your offer to sellers (“I’d love to offer more, but these are the numbers”)

• Compete with wholesalers (“I can close fast, but I don’t overpay”)

• Stay disciplined when emotions kick in

Think of MAO like your seatbelt; it doesn’t matter how good you are at driving. You wear it anyway.

Common MAO Mistakes to Avoid

Mistake #1: Using the same Buy Box % for every zip code
Adjust for risk, buyer pool, and property type.

Mistake #2: Underestimating rehab
Walk the property or at least demand photos; it’s never just “paint and carpet.”

Mistake #3: Not updating your MAO with new info
Contractor bid comes in higher? Comp down the street sells for less? Update your MAO.

Mistake #4: Forgetting about dispo costs
MAO should protect profit after you pay commissions, staging, and final cleanup.

Mistake #5: Treating MAO as a goal, not a limit
MAO is your ceiling, not your target. Always offer below it to leave room for negotiation.

MAO = Fast, Focused, and Flippable

You don’t need a spreadsheet army to make smart offers.

You just need to:

• Know your ARV

• Choose a margin based on your risk

• Estimate repairs conservatively

• Factor in all the other costs (especially the hidden ones)

• Stick to the number, or walk away

Because a great flip starts with a disciplined offer. And no spreadsheet will save you if you start too high.