Deal Analysis for Wholesalers: MAO, the 70% Rule, and Repair Estimates

Step 1: Nail the ARV first

ARV (after-repair value) is the price the property will sell for once it's fixed up. Everything else depends on it, so it has to be grounded in real comps: recently sold homes of similar size, condition, and location within the last 90 days, ideally within a mile. Don't use list prices — only sold prices count.

Step 2: Estimate repairs honestly (then add a buffer)

Repair estimates are where most wholesalers lose deals. Walk the property, get a contractor or two to quote the real scope, and be honest about what 'rehabbed' means in that neighborhood. Then add a contingency — 10–15% — because actual repairs run over the initial estimate more often than not.

Step 3: Run the 70% rule to find your MAO

The 70% rule says your maximum allowable offer is roughly 70% of ARV minus repair costs. The formula: MAO = (ARV × 0.70) − repairs − your assignment fee. The 70% accounts for the buyer's profit, holding costs, and closing costs on their end. If your number comes out below what the seller will accept, the deal doesn't work — and that's the analysis doing its job.

A worked example

Say a property's ARV is $200,000 and repairs will run $35,000. The 70% rule gives you a $105,000 ceiling ($200,000 × 0.70 = $140,000, minus $35,000). If you want a $10,000 assignment fee, your offer should be around $95,000. That leaves the buyer room to buy at $105,000, put in $35,000, and sell at $200,000 with a profit margin. If the seller won't come near $95,000, walk — forcing it only costs you later.

Where the analysis usually goes wrong

The three classic mistakes: overestimating ARV with bad comps, underestimating repairs to make the deal 'work', and forgetting that the buyer needs their own profit margin. Any one of these turns a paper profit into a deal you can't assign.

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Key takeaways

• ARV must come from recent sold comps, not list prices.
• MAO = (ARV × 0.70) − repairs − your fee.
• Add a 10–15% contingency to repair estimates.
• If the numbers don't work, the best move is to walk.