MAO, ARV, repair estimates, assignment fees. Here's the exact formula investors use to run numbers fast, and a free deal analyzer to do it automatically.
Why Most Deals Die on the Numbers
You find a motivated seller. The property looks promising. You do a rough estimate in your head, schedule the appointment, and three days later you're standing in the kitchen realizing the numbers don't work, and you've just burned a lead, your Saturday, and a tank of gas.
The fix isn't working harder. It's running tight numbers before you ever leave your desk.
Here's the complete formula investors use to analyze a wholesale deal in under five minutes.
The Core Formula: MAO
Everything in wholesale real estate runs through one number: Maximum Allowable Offer (MAO).
MAO = (ARV × 0.70) − Estimated Repairs − Assignment Fee- ARV (After Repair Value): What the property is worth fully fixed up. Pull 3–5 recent comparable sales within 0.5 miles, similar square footage, and similar condition.
- 70% Rule: End buyers (flippers) need margin for profit, holding costs, and financing. In hot markets, buyers might accept 75%; in soft markets, 65% is safer.
- Estimated Repairs: Use a per-square-foot estimate for unknowns: light cosmetic = $10–15/sqft, moderate = $25–35/sqft, full gut = $50–70/sqft.
- Assignment Fee: What you pocket. Typically $5,000–$15,000 for residential wholesale.
A Worked Example
Property: 3BR/1BA, 1,200 sqft, needs full kitchen renovation and roof
- ARV (from comps): $180,000
- 70% of ARV: $126,000
- Estimated repairs: $28,000
- Assignment fee: $8,000
MAO = $126,000 − $28,000 − $8,000 = $90,000
If the seller wants $110,000, the deal doesn't work at your assignment fee. You either renegotiate, lower your fee, or walk.
The Free Deal Analyzer
The KlipPack Wholesale Deal Analyzer does all of this automatically:
- Enter ARV, repair estimate, assignment fee → instant MAO
- Sensitivity table at 65%, 70%, and 75% assumptions
- 12-category repair cost estimator
- Deal score (GREEN / YELLOW / RED) based on spread
- Printable one-page deal summary for buyer presentations
Common Mistakes
Over-estimating ARV. New investors compare to the best-looking comps in the neighborhood. Buyers will run tighter comps. Build in a 5–8% haircut until you have enough deals to calibrate.
Ignoring holding costs. If you're closing on the property yourself before assigning, add 2–3 months of carrying costs to your repair estimate.
Anchoring on the seller's price. Run the MAO independently before you know what the seller wants. Numbers first, price negotiation second.
The 5-Minute Pre-Screen
Before you spend an hour on full due diligence:
- Pull 3 quick comps on Zillow or PropStream, ballpark ARV only
- Apply the 70% rule
- Subtract $10,000 (default repair placeholder) and your assignment fee
- Compare to asking price
If the spread isn't there and the seller shows no flexibility, move on. Save the full analysis for deals that pre-qualify.
For a complete walkthrough including negotiation scripts, see the KlipPack Wholesale Real Estate Starter Bundle.