How do I calculate ARV and MAO for a wholesale deal?
Estimate after-repair value (ARV) from relevant comparable sales of renovated properties, then subtract the buyer’s repair budget, other project costs, and required profit to estimate maximum allowable offer (MAO). To set your seller offer, subtract your planned assignment fee from that buyer ceiling. Treat every input as an assumption to verify, not a guaranteed result.
By Sam Gorgey · Updated September 28, 2026
Key takeaways
- ARV is an estimate of a property's value after the planned repairs are complete.
- Choose comparable sales for similarity and relevance; do not rely on a single automated estimate.
- A useful MAO calculation accounts for repairs, other project costs, and the buyer's required profit.
- Subtract the intended assignment fee from the end buyer's ceiling to estimate a seller-offer ceiling.
- A formula organizes assumptions; it does not verify condition, costs, value, or buyer demand.
What do ARV and MAO mean?
ARV means after-repair value; MAO means maximum allowable offer under the assumptions in your deal analysis.
ARV estimates a property's value in its planned repaired condition. It is not the as-is value, a guaranteed sale price, or an appraisal. A comparable sale, or comp, is a property sale used as evidence for the estimate.
MAO is a calculation, not a universal formula. Separate the end buyer's maximum purchase price from the lower seller-offer ceiling, which also accounts for a planned assignment fee. Buyers can reach different ceilings because their costs and profit requirements differ.
How should I estimate ARV from comparable sales?
Start with closed sales that resemble the subject property in location, property type, size, layout, and renovated condition.
Record the subject's property type, size, layout, condition, and notable features. Research relevant closed sales that resemble the subject in location and characteristics; verify sale details with a reliable local source when possible.
Compare each candidate instead of copying its price. Differences in size, condition, location, lot, or design can limit how useful a sale is. Explain material differences and document why you included or excluded each comp.
Fannie Mae's comparable-sale guidance is a reference for selection and analysis in its lending context, not a substitute for investor underwriting or a local appraisal. Keep addresses, sale dates, and your reasoning so the estimate can be reviewed.
What is the MAO formula for a wholesale deal?
A practical buyer-ceiling formula is ARV minus repairs, other project costs, and the buyer's required profit.
Formula: end buyer MAO = estimated ARV − repair budget − other project costs − required buyer profit. Include the costs relevant to the buyer's exit, such as financing, carrying, transaction, or resale expenses. Use quotes or labeled estimates and avoid counting an item twice.
Formula: seller-offer ceiling = end buyer MAO − planned assignment fee. These are model outputs, not recommended offers or buyer commitments. A shortcut can omit expenses, so use the assumptions for this property and show scenarios when key inputs are uncertain.
Can you show a clearly hypothetical worked example?
Yes. The following made-up arithmetic illustrates how costs and profit reduce a buyer ceiling; it is not a market estimate or recommendation.
Assume only for illustration an ARV of $250,000, repairs of $35,000, other costs of $25,000, and required buyer profit of $30,000. The end buyer ceiling is $250,000 − $35,000 − $25,000 − $30,000 = $160,000. These are invented inputs for arithmetic practice, not market figures.
With a hypothetical $10,000 assignment fee, the seller-offer ceiling is $160,000 − $10,000 = $150,000. This does not mean a buyer will pay the ceiling, a seller will accept the offer, or the fee is typical. Change any input and the result changes.
For a real deal, verify that the comps fit the repair scope, support the ARV, and include all material costs. Use a buyer's own underwriting rather than calling your calculation an approved number.
How do I check whether the result is dependable?
Stress-test the inputs and verify the facts that have the greatest effect on the offer ceiling.
Compare more than one plausible comp set and check whether the finished condition matches the planned repairs. Confirm repair scope with inspection or contractor input when available; disclose limits if access is restricted.
List costs and their sources, then ask the intended buyer about financing, holding, resale expenses, and profit assumptions. Run a conservative scenario to see whether changed inputs remove the margin.
A calculator organizes estimates but does not verify them. DealAnalyzerAI describes ARV and deal-analysis tools; compare its output with comp evidence instead of treating software results as established value. Record assumptions and update them when facts change.
Steps
- Describe the subject property. Record its location, property type, size, layout, condition, and the repairs needed to reach the planned finished condition.
- Research comparable renovated sales. Find and verify relevant closed sales, compare their characteristics with the subject, and document why each comp is useful or limited.
- Estimate ARV. Use the comparable-sale evidence to form a reasoned after-repair value estimate. State uncertainty rather than presenting the estimate as guaranteed.
- Build the buyer's cost and profit assumptions. Estimate repairs, other project costs, and the buyer's required profit using deal-specific evidence and clearly labeled assumptions.
- Calculate the two offer ceilings. Subtract repairs, other project costs, and buyer profit from ARV for the buyer ceiling. Subtract the planned assignment fee from that result for a seller-offer ceiling.
- Stress-test and confirm. Change uncertain inputs, check for missing or duplicated costs, and ask the intended buyer to review assumptions before relying on the calculation.
Frequently asked questions
Is the 70% rule the correct MAO formula?
It is a simplified rule of thumb some investors use, not a universal formula or guarantee of a profitable offer. It may omit costs or assumptions that matter to a specific property and buyer. Build a transparent calculation from the actual ARV evidence, repair scope, project costs, and required profit.
Do I subtract the assignment fee before or after calculating MAO?
First calculate the end buyer's ceiling from ARV, repairs, other project costs, and that buyer's required profit. Then subtract your planned assignment fee to estimate a seller-offer ceiling. Keep the two figures separate so the fee is not mistakenly counted as an end buyer project cost twice.
Can an online ARV calculator establish a property's value?
No. A calculator can help organize estimates, but its output depends on data and assumptions that may not capture the property's condition or the best comparable sales. Review source sales, verify details, and get qualified local input where needed before relying on a valuation for a transaction.
What if I cannot find good comparable sales?
Do not hide the uncertainty. Explain why available sales differ, research a carefully expanded area or time period if appropriate, and consider whether a qualified local valuation professional can help. If the value remains too uncertain to support the offer, pause or use clearly labeled scenarios rather than false precision.
Does this calculation guarantee a buyer will accept the deal?
No. The result is a model based on selected inputs, not an offer or commitment from an investor. Buyers may use different renovation plans, costs, financing, exit assumptions, or profit requirements. Confirm the intended buyer's current interest and underwriting directly, and update the numbers when facts change.