Find The Maximum Allowable Offer
Intro: Why This Warning Matters
The hot real estate market draws eager new investors—many of whom overpay without realizing it.
In wholesaling, paying too much isn't just a rookie mistake — it's a fast track to failure.
At Property M.O.B., we don’t sugarcoat anything. This article isn’t just about running numbers — it’s about protecting your future deals, your reputation, and your real money.
Inside, you'll learn:
- Why you should never offer your Maximum Allowable Offer (MAO) first
- How anchoring low protects your profit margin
- Why relying on Zillow’s Zestimate wrecks your investment property profits
- Why different exit strategies like flipping REOs shift your MAO in real estate
- How seller psychology manipulates newbies (if you let it)
- How daily action—not emotion—builds your real estate investing future
If you want to survive — and thrive — you need to dominate both the math game and the mental game.
This post shows you how, M.O.B. style.
What Is Wholesale Real Estate (And Why It Attracts Beginners)
Wholesaling real estate offers simple entry: no license, no credit, little cash needed.
Quick profits are possible—but only with the right structure and strategy. Learn more about the pros and cons of wholesaling real estate.
Wholesalers act as the bridge between distressed sellers and property investors.
Top wholesalers master:
- Finding undervalued properties and comparable properties
- Negotiating favorable purchase price points
- Matching property investors with strong potential deals
They build networks of real estate agents, contractors, and cash buyers.
They read market conditions, maintain transparency, and control fixed costs.
At Property M.O.B., we turn hustlers into pros. Know the market. Know the math. Control the money.
Understanding MAO: Maximum Allowable Offer
The Maximum Allowable Offer (MAO) real estate term is non-negotiable. It's your sword and shield.
Classic formula:
(After Repair Value × 70%) – Repair Costs = MAO
Here’s the hard truth:
If you exceed the MAO, you wreck your desired profit margin—or worse, you blow the entire real estate deal.
Real estate investors must know:
- Your MAO before you ever speak to a seller
- Repair costs accurately, not emotionally
- True comparable sales, not random listings
Never offer your Maximum Allowable Offer first. Start lower to anchor negotiations.
Exit Strategy Matters:
- Wholesaler MAO = ARV × 60% – Repairs
- Rehabber MAO = ARV × 80% – Repairs
Different plans = different math. Lock this in.
Master the maximum allowable offer formula and stop trusting your gut. Trust your numbers.
The Real Problem: Why New Wholesalers Overpay
Newbies fail for simple reasons:
- They don’t respect fixed costs like lender fees, property taxes, and closing costs.
- They estimate repair costs too low—and blow their rehab budget.
- They fudge their estimated repair costs just to make a bad deal look good.
Overconfidence plus unknown expenses is a killer combo.
Reminder: Zillow's Zestimate ignores property condition, lot size, proximity, and rehab costs. Don't let a Zestimate set your repair value or after-repair assumptions.
Overpaying drains your cash flow, piles up expenses, and murders your ROI.
Real success comes from accurately calculating—not guessing.
Competition: The Two Types of Newbies You're Competing With
Wholesaling is filled with:
- Educated Rookies: understand MAO, repair value, holding costs.
- Reckless Contract-Chasers: ignore maximum offer numbers, flood the market with junk deals.
Don’t be a reckless newbie who ruins deals for everyone.
Be the pro who calculates offers based on accurate methods and clear calculation estimates.
Sellers Value Trust Over Highest Price
Forget offering the highest price just to “win.”
Sellers want:
- Certainty
- Speed
- Professionalism
Solve their problem, honor your word, and stick to your purchase price.
At Property M.O.B., we teach you to win deals by being the safest bet — not the flashiest talker.
Don’t Compare—Prepare
This isn’t Instagram wholesaling.
This is serious real estate investing.
Focus on:
- Understanding fixed costs and closing costs
- Estimating rehab expenses like a surgeon
- Sticking to numbers that remain constant in any market
Wholesaling is an exact science built on numbers—and a mental discipline built on consistency.
Every real estate investor worth their salt masters this.
Action Over Outcome: Focus on Your Inputs
Obsess over the right things:
- Pull marketing lists
- Drive for dollars
- Conduct thorough property inspections
- Track your seller follow-ups
- Bandit signs
Every property you inspect sharpens your gut—and your numbers.
Property inspections reveal hidden renovation costs before they kill your profit margin.
Ego Is the Enemy of Profit
Ego says, "I know better."
Reality says, "Stick to the MAO formula."
Smart investors master humility, not hype.
They:
- Walk away when a deal doesn't fit their maximum offer
- Update repair estimates ruthlessly
- Analyze real selling prices before making offers
Stay sharp. Stay calculating. Stay profitable.
Two Fixes That Solve 90% of Wholesaler Problems
- Volume: More leads, more shots at the right price.
- Reps: More seller conversations, better negotiation skills.
It's a straightforward process:
More deals = more profit = faster growth.
Risks of Paying Too Much for a Property
Overpaying destroys you:
- Failed assignments damage your name.
- Forced renegotiations kill trust.
- Missing accurate repair values ruins your entire rehab budget.
Protect yourself:
- Stick to your maximum allowable offer.
- Anchor to after repair values—not inflated asking prices.
- Walk away when numbers don't hit your target profit.
Better to lose a deal than lose your shirt.
Customizing Deals to Buyers Without Overpaying
Customize smart:
- Know your buyer criteria.
- Lock up properties that match investor needs.
- Avoid the temptation to fudge numbers to fit a bad deal.
When you customize, you avoid overpaying and maintain good profit margins.
Legal Considerations for New Wholesalers
Stay compliant:
- Assign contracts correctly
- Respect real estate laws
- Know the difference between wholesaling and brokering
Talk to a real estate attorney if you’re ever unsure.
Protect your investment portfolio from the beginning.
Final Thoughts: Be the Pro, Not the Problem
Get M.O.B.-minded:
- Master MAO and calculate it cold, ensuring you have an accurate idea of your maximum allowable offer before you even start negotiations.
- Know your fixed cost method inside and out. Fixed costs, such as property taxes, lender fees, and closing costs, remain constant and must be accounted for in every deal. By understanding these just fixed costs, you can avoid unexpected expenses that could eat into your profit margins.
- Understand repair value ARV and how it aligns with similar properties in the area. This involves comparing your investment property to comparable sales to ensure your repair value and after-repair value estimates are accurate.
- Watch your overall costs and selling expenses, considering every aspect of the transaction. By doing so, you maintain control over your profit margins and ensure your real estate deals remain profitable.
At Property M.O.B., we don’t chase dead deals —we chase cashflow.
Get M.O.B.-minded. Get M.O.B.-paid.