Maximum Allowable Offer (MAO) Calculator
This MAO calculator provides multiple underwriting workflows for residential real estate offers: a quick 70% rule, a detailed flip cost model, a rental/cap‑rate-based model, and a wholesale/assignment heuristic. Choose the method that matches your transaction type and supply the inputs you know.
The tool emphasizes transparency: every output links to intermediate cost items so you can see what drives the MAO. These are estimates for underwriting guidance and should be validated with local comps, a licensed appraiser, lender quotes, and legal counsel.
Governance
Record 62f661c84f26 • Reviewed by Fidamen Standards Committee
Breaks down contingency, commissions, holding and closing costs and computes MAO = ARV − desired profit − total estimated costs. Use when you have specific percentages and holding time estimates.
Inputs
Results
Rehab contingency
$1,500.00
Resale commission
$12,000.00
Estimated closing costs
$4,000.00
Total holding costs
$1,500.00
Total estimated costs (excluding desired profit)
$40,000.00
Maximum Allowable Offer (MAO)
$145,000.00
Target profit as % of ARV
750.00%
| Output | Value | Unit |
|---|---|---|
| Rehab contingency | $1,500.00 | USD |
| Resale commission | $12,000.00 | USD |
| Estimated closing costs | $4,000.00 | USD |
| Total holding costs | $1,500.00 | USD |
| Total estimated costs (excluding desired profit) | $40,000.00 | USD |
| Maximum Allowable Offer (MAO) | $145,000.00 | USD |
| Target profit as % of ARV | 750.00% | % |
Visualization
Methodology
70% Rule: heuristic commonly used for quick screening. MAO = ARV × 0.70 − repair_cost. An adjusted variant subtracts target profit and typical resale costs.
Detailed Flip Model: computes contingency, resale commission, closing costs, holding costs and acquisition fees, then MAO = ARV − desired_profit − total_estimated_costs.
Rental (Cap‑Rate) Model: converts expected NOI to a theoretical value via MAO = NOI / (cap_rate %) then subtracts initial rehab and transaction expenses to arrive at a purchase MAO.
F.A.Q.
How accurate are the MAO numbers?
Outputs are estimates based on the inputs and chosen method. Accuracy depends on the quality of your ARV, repair and cost assumptions. Use local comps, contractor bids and lender terms to refine inputs. This tool does not replace professional appraisal or legal advice.
Which method should I use?
Use the 70% rule for fast screening; use the detailed flip model when you have line‑item cost estimates; use the rental cap‑rate model for buy‑and‑hold underwriting; use the wholesale mode when assigning contracts. Cross‑check multiple methods to validate edge cases.
Are financing costs included?
Financing specifics can materially change MAO. This calculator includes acquisition fees as a user input and approximates common resale costs. For precise financed scenarios, obtain lender terms and add explicit financing fees to acquisition_fees before relying on the MAO.
Do you guarantee offers based on these results?
No. These calculations are guidance only. Confirm title, liens, code issues, environmental hazards, and local regulations before making offers. Consult licensed professionals as needed.
How should I account for uncertainty in inputs?
Run sensitivity checks using conservative and optimistic inputs (higher repair, lower ARV) and treat MAO as a range rather than a single number. Follow established measurement and uncertainty practices when documenting assumptions.
Sources & citations
- NIST — National Institute of Standards and Technology — https://www.nist.gov/
- ISO — International Organization for Standardization — https://www.iso.org/
- IEEE — Institute of Electrical and Electronics Engineers (software reliability best practices) — https://www.ieee.org/
- OSHA — Occupational Safety and Health Administration (site safety guidance) — https://www.osha.gov/
- HUD — FHA Single Family Housing Policy Handbook 4000.1 — https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1
- HUD — Property Valuation and Appraisals (HUD 4155.2) — https://www.hud.gov/sites/documents/4155-2_4.pdf
- Fannie Mae — Selling Guide — https://selling-guide.fanniemae.com/
Further resources
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
Record ID: 62f661c84f26What changed (latest)
v1.0.0 • 2025-11-09 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Versioning & Change Control
Audit record (versions, QA runs, reviewer sign-off, and evidence).
What changed (latest)
v1.0.0 • 2025-11-09 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Public QA status
PASS — golden 25 + edge 120
Last run: 2026-01-23 • Run: golden-edge-2026-01-23
Engine
v1.0.0
Data
Baseline (no external datasets)
Content
v1.0.0
UI
v1.0.0
Governance
Last updated: Nov 9, 2025
Reviewed by: Fidamen Standards Committee (Review board)
Credentials: Internal QA
Risk level: low
Reviewer profile (entity)
Fidamen Standards Committee
Review board
Internal QA
Entity ID: https://fidamen.com/reviewers/fidamen-standards-committee#person
Semantic versioning
- MAJOR: Calculation outputs can change for the same inputs (formula, rounding policy, assumptions).
- MINOR: New features or fields that do not change existing outputs for the same inputs.
- PATCH: Bug fixes, copy edits, or accessibility changes that do not change intended outputs except for previously incorrect cases.
Review protocol
- Verify formulas and unit definitions against primary standards or datasets.
- Run golden-case regression suite and edge-case suite.
- Record reviewer sign-off with credentials and scope.
- Document assumptions, limitations, and jurisdiction applicability.
Assumptions & limitations
- Uses exact unit definitions from the Fidamen conversion library.
- Internal calculations use double precision; display rounding follows the unit's configured decimal places.
- Not a substitute for calibrated instruments in regulated contexts.
- Jurisdiction-specific rules may require official guidance.
Change log
v1.0.0 • 2025-11-09 • MINOR
Initial publication and governance baseline.
Why: Published with reviewed formulas, unit definitions, and UX controls.
Areas: engine, content, ui • Reviewer: Fidamen Standards Committee • Entry ID: d6a5d9f4791c