Maximum allowable offer (MAO) is the most you can pay for a property and still reach your profit target once repairs and other costs are paid. You work backward from the after-repair value (ARV), so it is a ceiling for your offer, not a suggested price.
MAO = (ARV × 70%) minus repair costs
This is the 70% rule version, the most common shortcut. The 30% held back is meant to cover closing, holding, financing and selling costs plus your profit.
Example: a house should sell for $300,000 after $40,000 of repairs. $300,000 × 70% = $210,000, and $210,000 minus $40,000 = $170,000. Your MAO is $170,000. A wholesaler subtracts the fee too: with a $10,000 assignment fee, the most the wholesaler can offer the seller is $160,000.
The most common mistake is treating 70% as fixed. In competitive markets investors often pay a higher percentage, and on low-priced houses 70% may leave too little, because many costs do not shrink with the price. A more careful version subtracts each cost from ARV: repairs, closing costs on the purchase, holding costs, financing costs, selling costs and the pre-tax profit you want. Either way, MAO is only as good as the ARV and repair estimate behind it.