Wholesale MAO
The most you can offer and still hit your assignment fee.
Share or save these exact numbers. The link keeps every input, so whoever opens it sees the same result and can change any number to compare options.
What you expect the property to sell for once the repairs are done, based on recent sales of similar nearby homes. It is an estimate, so also try a lower number to see how risky the deal is.
Your estimate of what it will cost to repair the property. Get a contractor's quote if you can, since repairs often cost more than expected.
What the wholesaler is paid for passing the contract to the end buyer. It is part of the total the end buyer pays, and it comes out of the offer. The breakdown below shows exactly where it sits.
The percentage of the after-repair value an investor is willing to pay before repair costs come off. 70% is the common starting point. The section below explains why.
Maximum allowable offer
$100,000
- ARV × 70%
- $140,000
- Offer
- $100,000
- Repairs
- − $30,000
- Assignment fee
- − $10,000
Deal check
Rules-based reviewStrong wholesale deal
The numbers clear the usual bars with room to spare.
Pass: the numbers don't work. Thin: little room for mistakes. Solid: workable. Strong: clears the usual targets with room to spare.
- Your maximum offer is 50% of ARV. That is a realistic ask for a seller who needs to move.
- After your fee, the end buyer pays $110,000 and keeps roughly $40,000 once repairs and about 10% of ARV for selling and carrying costs come out. Buyers who see less room tend to walk.
What would change the answer
- →Every $1,000 you can confirm in lower repairs becomes $1,000 more room in your offer.
Terms used:ARV (after-repair value)MAO (maximum allowable offer)ARV rule (the 70% rule)Assignment feeWholesalingRehab budget
An estimate from your inputs, not financial, tax or legal advice. Verify every number with real comps, quotes and the source records.
Exactly how this offer is built
If you own a property and you are looking at an offer calculated this way, here is what every part means, in plain English. Nothing here is hidden, and none of it means you have to accept anything.
What is the ARV rule?
ARV is the estimated value of the home after repairs. The ARV rule says an investor should pay no more than a set percentage of that value, minus repair costs. Here the percentage is 70%. The rest, 30%, is kept back to cover the buyer's costs and the risk they take, including money lost if repairs run over or the house sells for less than hoped.
It is a rule of thumb investors use to set an offer. It is not an appraisal and it does not say what your home is worth.
- After-repair value (ARV)
- $200,000
- × 70% (the ARV rule)
- $140,000
- − Repairs
- $30,000
- − Assignment fee
- $10,000
- = Maximum offer to the owner
- $100,000
What is the assignment fee?
A wholesaler signs a contract to buy the home, then passes that contract to an investor (the end buyer), who closes with the owner. The fee is what the wholesaler is paid for finding the home and the buyer, and for the risk of getting nothing if the sale falls through. It is paid by the end buyer, and it is the gap between the price the owner receives and the total the end buyer pays. In this example that gap is $10,000, which is 5.0% of ARV.
Where the after-repair value goes
- Paid to the owner$100,000 (50%)
The contract price, the number the owner receives.
- Wholesaler's assignment fee$10,000 (5%)
Paid by the end buyer at closing, for finding the deal and the buyer.
- Repairs$30,000 (15%)
Paid by the end buyer to contractors.
- End buyer's selling and carrying costs (estimate)$20,000 (10%)
About 10% of ARV for closing, agent commission, loan interest, taxes and insurance.
- End buyer's profit$40,000 (20%)
What is left for taking on the risk of repairs and resale.
- Total = ARV$200,000
If you own the property: compare, don't just accept
An investor offer is lower than a fully repaired retail sale on purpose. Here is the comparison with these numbers, so you can judge it for yourself.
- Repair it and sell it yourself at ARV
- $200,000
- − Repairs you would pay for
- $30,000
- − Agent commission (assumed 6%)
- $12,000
- = What you might net, before carrying costs
- $158,000
- The investor offer
- $100,000
- Difference
- $58,000
The difference is what you give up in exchange for a faster sale, no repairs to pay for or manage, no showings, and a buyer who does not need a mortgage approval. For some owners that is worth it, and for others it is not. A traditional sale also costs months of taxes, insurance and upkeep that are not counted here, and it carries the risk of repairs running over or the sale price coming in low. The choice is yours.
Questions you can ask any buyer
- ?Are you buying this property yourself, or will you assign the contract to someone else?
- ?Is there an assignment fee, and how much is it?
- ?What ARV did you use, and which recent sales (comps) is it based on?
- ?What repair cost are you assuming, and can I see how you got it?
- ?Can I take time to get other offers or a market opinion before I sign?
- ?Is there an inspection or cancellation period, and what happens to my deposit if you back out?
Wholesaling rules, including licensing and disclosure, differ by state. Consider a real estate attorney before you sign any contract. This page is educational, and the numbers are estimates from the inputs above. See the glossary for every term.
For education and planning only. Results are estimates based on the numbers you enter and are not financial, tax, legal or lending advice. Loan rules, rates and taxes vary, so confirm details with a licensed professional.
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