Your maximum allowable offer (MAO) is the most your end buyer will pay all-in, minus repairs, minus your fee. A common version: ARV × 70% − repairs − fee. Real buyers use their own ARV and repair numbers and a percentage that shifts with price point, so start from the buyer's math, then subtract your fee.
Educational only. This explains how these situations generally work. It is not legal, tax or financial advice, and the rules differ by state — talk to an attorney or CPA about your own situation before you act on any of it.
Every wholesale MAO is a version of this:
The buyer's “all-in” is what they pay you plus what they spend on repairs. The percentage is the part everybody argues about. The well-known 70% rule says a flipper should pay no more than 70% of ARV minus repairs. It is a reasonable rule of thumb, but it is a shortcut for a longer calculation, and the longer calculation changes with the price of the house.
The mistake that kills most wholesale deals is working the formula from your side — starting with the fee you want — instead of from the buyer's side. Buyers do not care what you need. They care what they net.
Strip the rule of thumb out and a buyer's math is: resale price, minus the costs of buying, holding and selling, minus the profit they need, minus repairs. What is left is the most they can pay you.
Our own offer math, which we publish on our sell-my-house-fast page, is exactly this: ARV minus repairs minus about 10% for closing, holding and resale costs, minus about a 12% margin. That puts the ceiling for price plus repairs at about 78% of ARV. Every buyer runs a slightly different version, and the percentage they can pay moves with the market and the price of the house.
Here is the non-obvious part. Costs like title fees, insurance, utilities, taxes during the rehab and a minimum profit worth the risk do not shrink much on a cheap house. On a $90,000 ARV, 10% for costs is $9,000, which may not even cover a few months of holding and two closings. So buyers pay a lower percentage on low-priced houses and can pay a higher one on expensive houses. A 70% rule applied flatly is too generous at the bottom of the market and too stingy at the top.
The settlement statement is where those costs show up line by line; if you have never read one closely, the standard forms from ALTA (ALTA settlement statements) show the categories a buyer is budgeting for on each side of a flip.
After-repair value is what the house will sell for fully renovated. The buyer will run their own comps and trust them over yours. Assume their ARV will be built from the most conservative recent renovated sales, not the best one on the street.
Good comps are closed sales, not listings; similar in square footage, bed and bath count, age and style; in the same neighborhood; and recent. Fannie Mae's appraisal guidance is a useful benchmark because it is how the eventual retail buyer's appraiser will think: at least three closed comparables, generally within the last 12 months, similar in characteristics and appealing to the same buyers (Fannie Mae Selling Guide B4-1.3-08). A flipper who resells to a financed buyer needs the house to appraise, so a comp that would not survive an appraisal will not survive their underwriting either.
Practical rule: if your ARV rests on one outlier sale, use the next-lowest comp instead. If the buyer's ARV comes in $15,000 below yours, their maximum price drops by $11,700 at a 78% ceiling (78% of $15,000) — money that comes straight out of your fee.
Buyers estimate repairs at contractor prices plus a cushion, not at what a relative could do on weekends. Use line items — roof, HVAC, electrical, plumbing, kitchen, baths, flooring, paint, exterior — and add a contingency of 10% or more on older houses. Along with price, an underestimated rehab is one of the most common reasons a wholesale deal does not sell.
ARV is $180,000. Repairs are estimated at $40,000. You want a $10,000 assignment fee.
| Method | Buyer's max all-in | Minus repairs | Buyer's max price to you | Minus your $10,000 fee = your MAO |
|---|---|---|---|---|
| 70% rule | $126,000 | $40,000 | $86,000 | $76,000 |
| 78% (our published screen) | $140,400 | $40,000 | $100,400 | $90,400 |
| 78%, but buyer's ARV is $165,000 and repairs $48,000 | $128,700 | $48,000 | $80,700 | $70,700 |
Read the third row carefully. A $15,000 lower ARV and an $8,000 higher repair estimate — both normal buyer adjustments — cut the maximum you can offer the seller by almost $20,000 compared with the second row. If you had contracted at $90,000 based on your own numbers, you would now be asking the buyer to pay $100,000 against a ceiling of $80,700. That deal does not sell, and the fix is not better marketing.
This is why experienced wholesalers underwrite with the buyer's likely numbers, not their own optimistic ones, and still leave room.
Not every cash buyer is a flipper. A landlord who plans to renovate, rent and then refinance is limited by their lender, not by resale costs. Their ceiling is roughly: the loan they expect to get on the finished house, minus repairs, minus closing costs, because most want all or nearly all of their cash back out.
Using the same house: if the landlord's lender will refinance at, say, 75% of a $180,000 appraised value, the new loan is $135,000. Subtract $40,000 of repairs and about $5,000 of purchase and refinance closing costs and the most they can pay you is about $90,000 — an all-in of $130,000, or 72% of ARV. So a landlord may pay less than a flipper for a heavy rehab and more for a light one where the rent is strong and repairs are small.
The point for your formula: know which kind of buyer the house suits before you set the contract price. A dated but solid three-bedroom in a rental neighborhood can support a landlord's number. A gutted house on a street of renovated retail sales belongs to a flipper.
Your fee is not added on top of a fair price. It comes out of the gap between what the seller will accept and what the buyer will pay. If the seller needs $95,000 on the example house and the buyer's ceiling is $100,400, your fee is $5,400, whatever you had hoped for.
You have three honest ways to make that gap bigger: get a lower contract price by solving a real problem for the seller (speed, as-is, flexible move-out); find a buyer whose math supports a higher percentage (a landlord on a light rehab with strong rent, since they are not paying resale costs, or a builder with cheap labor); or find value others miss (an extra lot, a basement that can be finished, a rent roll below market). Squeezing the buyer is not on the list, because they will simply pass.
Before you commit to a contract price, run the numbers again at the buyer's likely ARV and repairs. If your fee survives that test, the deal will sell. If it only works at your numbers, renegotiate or pass before you sign. For how this plays out once you are marketing, read how to dispo a wholesale deal fast, and for what to do when it is already stuck, why your wholesale deal isn't selling.
One contract point matters here: your inspection or due-diligence period is what lets you adjust or walk away if the buyer's numbers come in lower than yours. Make sure you have one and know when it ends.
Educational only — talk to a real estate attorney in your state before you rely on this.
Restar Acquisitions is a family-owned principal buyer of single-family homes in the markets on our Where-we-buy page. We publish our screen so you can run it before you contract, not after.
A deal fits when contract price plus repairs is at or under 78% of ARV. It is close up to 85%, where we look hard at the ARV and repairs and sometimes make it work. Above 85%, we still review it and tell you the price that would work. The tool on our submit-a-deal page calculates that verdict live as you type your numbers.
Trevor McAmis underwrites every submission personally, with his own ARV and repair numbers, and we reply the same business day. If our numbers differ from yours, we tell you where — usually the ARV comps or the repair items — so you learn something even when we pass. Send us your next deal and compare.
What we will not do: stretch past what the numbers support because a deal is already under contract, or promise a price before we have seen the property details.
Enter your numbers and see the verdict live, then submit. We reply the same business day. Run your deal.
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Keep reading: What Is Dispo in Real Estate? The Wholesale Dispositions Guide · How to Dispo a Wholesale Deal Fast · Selling a Wholesale Contract to a Direct Buyer vs. a Buyer List
