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Real Estate Glossary

Maximum Allowable Offer (MAO)

Quick Answer

MAO, or maximum allowable offer, is the highest price a buyer can pay while leaving room for repairs, resale risk, financing, and the return that buyer needs. In wholesale, MAO is the price gate. A seller's ask can be below ARV and still be above MAO.

What is Maximum Allowable Offer?

MAO Formula

Buyer MAO = (ARV x 0.70) - repairs

Frequently Asked Questions

Is MAO the same as the seller's asking price?+

No. Ask is the seller's price. MAO is the buyer's ceiling after ARV, repairs, and the buyer's other assumptions.

Does the assignment fee go above MAO?+

No. If the fee is part of the wholesale plan, leave room for it under the buyer's MAO. Max contract price equals buyer MAO minus assignment fee.

Can a rental with cash flow still be over MAO?+

Yes. Projected cash flow does not make a seller's ask acceptable if it is above the buyer's defined ceiling. Check ask vs MAO first.

Is the 70% rule always correct?+

No. It is a screening formula. Buyers may use different factors and costs by market, property, financing, and strategy. Confirm the buyer's model.

Related Terms

Arv 70 Percent Rule