Put it all together! Use the 70% rule to calculate your Maximum Allowable Offer.
MAO = (ARV × 70%) - Repairs
Maximum Allowable Offer = (After Repair Value × 0.70) - Repair Costs
ARV (from Step 5)
$210,000
Repairs (from Step 6)
$35,000
70% Factor
0.70
Step 1: $210,000 × 0.70 = $147,000
Step 2: $147,000 - $35,000 = $112,000
Your MAO: $112,000
The 70% rule leaves 30% for:
~15%
Buyer's profit margin
~10%
Holding/closing costs
~5%
YOUR assignment fee
Example: On a $210K ARV deal, 5% = $10,500 assignment fee
You now know the complete 7-step comping process. Practice this on every deal until it becomes second nature. Next, learn about red flags to watch for in comps.
Put it all together! Calculate your Maximum Allowable Offer using the industry-standard 70% rule.
MAO = (ARV × 70%) - Repairs
ARV
After Repair Value from Step 5
70%
Leaves 30% for profit + costs
Repairs
Estimate from Step 6
Given:
ARV (from comps): $260,000
Estimated Repairs: $35,000
Calculation:
$260,000 × 70% = $182,000
$182,000 - $35,000 = $147,000 MAO
Your maximum offer is $147,000. Start negotiations lower and work up to this ceiling.