How to determine your max allowable offer

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Objective: This guide provides the exact, battle-tested formula for determining your Maximum Allowable Offer (MAO) on properties you intend to sell on the market to a retail buyer. We're cutting the fluff and giving you a brutally effective system that is simpler and more direct than traditional wholesale calculations.

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Part 1: The Strategic Shift - Forget ARV, Embrace CCV

In most wholesaling, everyone obsesses over the After Repair Value (ARV). You estimate a huge renovation budget and work backward. That is not how this works.

The deals we are targeting here are different. We aren't selling to a flipper who plans to gut the place. We're selling to a regular person or family who wants to live in the house as-is. This makes your job easier because two of the biggest variables are eliminated:

You DON'T need an ARV. The future, fixed-up value is irrelevant because no one is fixing it up.

You DON'T need a Repair Estimate. You aren't doing the work, and neither is your buyer.

Your focus shifts to a single, powerful metric: Current Condition Value (CCV).

Current Condition Value (CCV): The price a property will realistically sell for on the open market (MLS) in its current state.

Your entire calculation hinges on finding this number accurately.

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Part 2: Finding Your CCV - How to Comp Like a Pro

Finding the CCV is an art, but it's one you can master. Your goal is to find what the market is actually paying for similar homes right now. Precision is key, but don't get paralyzed; it's not an exact science.

Your Mission: Find the "North Star" comp—the one property that is most similar to your subject property.

Here's your checklist for finding comps:

Check your steps

Check your steps

The Golden Radius:

Column 2

The Ticking Clock:

Column 2

The Mirror Match:

Column 2

The Red Flag Indicator (Days on Market):

Column 2

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Part 3: The MAO Formula, Decoded

Once you have a solid CCV, the rest is simple math. Here is the formula for your Maximum Allowable Offer.

$math-folder$

The Formula:

MAO=(CCV×0.90)−Profit

CCV (Current Condition Value): The price you determined the house will sell for on the market.

MAO (Maximum Allowable Offe)

Let's break that down piece by piece.

The 10% "Reality Cut" (×0.90): This is not profit. This 10% buffer is absolutely critical and covers the real-world costs of selling a property on the MLS.

Realtor Commissions: Typically 5-6%.

Closing Costs: Can be 1-2%.

Buyer Credits & Miscellaneous: In today's market, buyers (especially those using FHA/VA loans) often ask for credits to help with their down payment or closing costs. This buffer accounts for those potential concessions and other unexpected expenses.

Profit (Your Desired Wholesale Fee): This is your payday. The video recommends a minimum of $30,000. You can adjust this based on the deal, but never skip it.

Part 4: Putting It All to Work - A Real-World Example

Let's run the numbers on a hypothetical deal to lock this in.

You've done your comp research and determined a property's CCV is $300,000. You believe you can get it sold for that price on the market fairly quickly. You're targeting a $30,000 wholesale fee.

1- Start with the CCV:

CCV=$300,000

2- Apply the 10% Reality Cut:

$300,000×0.90=$270,000

This is your All-In Number. It's the maximum price you can have in the deal after your purchase and all selling costs.

3-Subtract Your Profit:

$270,000−$30,000=$240,000

Your Maximum Allowable Offer (MAO) is $240,000.

This is the number you work towards in your negotiation. It protects your profit and accounts for the real costs of doing business. Sticking to this formula prevents you from overpaying and ensures every deal is a winner.

This is not a lesson about simply plugging numbers into a formula. This is a lesson on psychological warfare in negotiation. You will learn to calculate your absolute "brick wall" Maximum Allowable Offer (MAO) and then use the Anchor Method to reframe the entire negotiation.

The goal is to start the conversation at the bedrock bottom and make the seller feel like they are winning as they negotiate you up to a price that still works for you. This is how you close deals that others can't, protect your profits, and build a reputation as a serious operator.

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Part 1: The Fortress MAO — Your First and Last Line of Defense

Your Maximum Allowable Offer isn't just a number; it's your fortress wall. It's the absolute, final, drop-dead price you can pay. If you can't get the deal at or below this number, you walk away. No emotion. No exceptions. Breaching this wall is how you go from investor to charity case.

Your MAO must be built on two foundational pillars:

Protect Your Time:

Wholesaling isn't passive. It takes hustle, follow-up, and focus. A deal that nets you a paltry sum after weeks of work is a failed deal. Your time is your most valuable asset. A significant profit target (a minimum of $30,000 is a good benchmark) ensures the effort is worthwhile.

Build a Risk Buffer:

Your initial After Repair Value (ARV) is an educated guess. You might be wrong. The inspection might uncover a cracked foundation or a colony of rabid squirrels in the attic. Your profit margin is your safety net. It absorbs unexpected costs and errors in judgment, ensuring you can still cash a check even when things go sideways

The standard formula for your "brick wall" MAO is:

$math-folder$

The Formula:

MAO=(CCV×0.90)−Profit

CCV (Current Condition Value): The price you determined the house will sell for on the market.

MAO (Maximum Allowable Offe)

Example 2:

If a property's ARV is $300,000 and your minimum desired profit is $30,000:

MAO=($300,000×0.90)−$30,000

MAO=$270,000−$30,000

MAO=$240,000

This $240,000 is your line in the sand. You don't offer this upfront. This is the absolute ceiling you cannot exceed.

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Part 2: The Trap of Thin Deals

Beginners get seduced by the idea that "any profit is good profit." This is a lie. Low-profit deals ($10k or less) are traps that will drain your time, energy, and capital.

Opportunity Cost:

The time you spend grinding out a high-stress, low-profit deal is time you could have spent landing an easy deal for $30k, $50k, or even $85k. The biggest money is often in the simplest deals.

The Buyer Pool Evaporates:

Your cash buyers are investors, not rehabbers looking for a hobby. They need to see a clear and substantial profit for themselves. When your deal has razor-thin margins, there's no "meat on the bone" for them. Your list of potential buyers shrinks to almost zero, dramatically increasing the risk that the deal collapses and you walk away with nothing but wasted time.

There are no rows in this table

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Part 3: The Anchor Phase — Seizing Control of the Negotiation

This is where the battle is won. The Anchor Phase is a deliberate strategy to change the narrative from the very first conversation.

The Amateur's Mistake: Negotiating Down from the Summit

The Scenario: The seller says, "My house is worth $300,000, and that's what I want." The amateur wholesaler then spends the entire negotiation trying to chip away at that price.

The Flawed Psychology: Even if you successfully negotiate them down to $280,000, they don't feel like they agreed to a fair price. They feel like they lost $20,000. You created an adversarial relationship where they feel beaten and you look greedy.

The Pro's Method:

The core of the strategy is to ignore their asking price and anchor the conversation to a new, much lower starting point.

Anchoring Low and Building Up

Anchoring Low and Building Up

Find the Bedrock Comps:

Column 2

Reframe the Narrative:

Column 2

The Psychological Judo:

Column 2

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You can now "let them" negotiate you up to a number like $230,000. They feel like they've successfully negotiated you up by $15-20k from the comps you presented. In reality, you are still $10,000 below your MAO of $240,000.

They feel like they won. You got the deal at a price that ensures a massive profit. That is the power of the Anchor Method.

📌 Action Summary 📌

Rule #1: Know Your Wall. Always calculate your Fortress MAO before engaging a seller. It is non-negotiable.

Rule #2: Reject Thin Deals. The opportunity cost is too high and the risk of failure is immense. Focus on deals with substantial profit potential.

Rule #3: Anchor Low. Do your homework. Find the lowest, ugliest, cash-sale comps. This is your ammunition.

Rule #4: Let Them "Win". Frame the negotiation by starting at the low anchor. Let the seller fight to bring your offer up. They walk away feeling victorious, and you walk away with a profitable contract.

If you’re looking for novations, Prexium is where you’ll find the right leads to close more deals. Start today 👉

The Cowboy Marketer⁠

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