The Maximum Allowable Offer Formula
Maximum Allowable Offer (MAO) = (ARV × Target %) − Rehab Costs
The target percentage is a cushion, not a discount. It's meant to leave enough room in the deal for holding costs, financing, agent fees, closing costs, and an actual profit — all the costs that don't show up in a quick mental calculation but absolutely show up on the settlement statement.
Why 70% Isn't Universal
The 70% rule is a reasonable default for a mid-priced flip, but the right percentage shifts with price:
| ARV Tier | Typical Target % | Why |
|---|---|---|
| Under $250,000 | 60–65% | Fixed costs (agent fees, closing costs) are a larger share of a smaller deal |
| $250,000–$700,000 | 68–72% | The standard 70% rule range |
| $700,000–$1.5M | 72–76% | Fixed costs shrink as a percentage of the deal |
| Above $1.5M | 75–80% | Percentage-based costs like agent commission scale down relative to margin, especially with a flat fee |
A flat fee agent widens that cushion further at every tier, since the buy-side and sell-side agent costs are fixed dollar amounts ($7,250 or $9,250) rather than a percentage that grows with price.
Maximum Offer Calculator
Adjust the sliders below to see your own maximum offer. The target percentage is set automatically based on which ARV tier your deal falls into — watch the tier badge change as you move the ARV slider.
Illustrative only. Default values ($650,000 ARV / $75,000 rehab) match the $380,000 example referenced elsewhere on this page. This is the same pair used in the profit calculator — try the numbers there to see the full cost breakdown once financing, holding costs, and agent fees are added.
Want to run your own numbers? Move ARV, purchase price, rehab and holding period on the interactive calculator to see net profit and your 70% rule ceiling update live.
Open the Profit Calculator