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  • maximum allowable offer

Find The Maximum Allowable Offer

How to Find Maximum Allowable Offers Easy and Fast!

maximum-allowable-offerIf you’re a new real estate investor, the task of coming up with an offer to present to the seller is probably a little bit intimidating.  You may fear that you’re going to offer too much and not be able to sell the property.  Or Maybe you’re afraid to get punched in the nose when you come out with a “low-ball” offer.  Never fear!

Finding the maximum allowable offer is easier than you think. It’s a simple formula that you can memorize in 2 minutes.  The downside is that you usually need a calculator to find MAO relatively quickly.  UNTIL NOW. I’ve created this super cool maximum allowable offer CHEAT SHEET!!  You can download it, keep it on your iPad, or in your pocket (if you’re still a dinosaur) and whip it out when you’re trying to find MAO quickly.

There’s a simple formula on how to calculate maximum allowable offers (also called MAO – and pronounced “mayo”). Typically, we take the After Repaired Value (a.k.a. ARV) and multiply it by 65% and then subtract the estimated repairs.  Since finding the maximum allowable offer is an art and not a science, then your MAO may be slightly different then someone else’s MAO.

The reason your Maximum Allowable Offer may be different than your BUYER’s MAO, is for 2 reasons.

1.You may estimate repairs at $10,000 – and your fellow investor may estimate them at $15,000.00, causing your formula to be different.

2. You may determine that ARV is $200,000, and your fellow investor may determine that ARV is $195,000.00

Watch this video and find out how to calculate MAO

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  1. Mike July 13, 2010 at 3:50 pm - Reply

    When you come across an REO and want to wholesale it, can you get around the banks 1000-1500 deposite and their request for proof of funds? How do I get my potential buyer into an REO to look at it? In a nutshell how do you wholesale an REO?

  2. Lady November 3, 2018 at 12:27 pm - Reply

    You cant wholesale an Reo by assigning the contract you have to purchase the prooerty in a Llc And Assign the LLC or do a double escrow close.

    • Mallory Caywood November 8, 2018 at 2:53 pm - Reply

      You are correct.

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