A wholesale deal only works if there's enough spread between what you can lock the property up for and what a cash buyer will pay. Here's a repeatable process for analyzing one.
1. Confirm the property details
Before running numbers, verify square footage, bed/bath count, lot size, and general condition (cosmetic fixer vs. full gut rehab). Photos or a walkthrough — even virtual — materially change your rehab estimate.
2. Estimate the ARV (After Repair Value)
Pull 3-5 recent comparable sales (comps) within roughly a half-mile, sold in the last 3-6 months, similar in size and bed/bath count, already renovated. Average their price per square foot and multiply by your subject property's square footage. See how to estimate ARV for a full walkthrough.
3. Estimate rehab costs
Walk the property (or review photos/video) and estimate cost by category: roof, HVAC, kitchen, bathrooms, flooring, paint, and structural/foundation issues. As a rough industry estimate, light cosmetic rehabs often run $15-$25/sq ft and heavier rehabs $40-$75/sq ft, though these vary enormously by market and finish level — always confirm with local contractor quotes. See how to estimate rehab costs.
4. Apply the MAO formula
The commonly used rule of thumb:
MAO = (ARV × 70%) − Rehab Costs − Your Assignment Fee
The "70%" figure is a common industry starting point that accounts for the end buyer's profit margin, holding costs, and financing costs — adjust it up or down based on your local market and buyer expectations.
Example Deal Analysis
| Line Item | Amount (Estimate) |
|---|---|
| ARV | $250,000 |
| ARV × 70% | $175,000 |
| Estimated rehab costs | $45,000 |
| Target assignment fee | $10,000 |
| Maximum Allowable Offer (MAO) | $120,000 |
5. Check the spread for your cash buyer
After you lock the contract at or below your MAO, confirm the numbers still work for the end buyer: ARV minus rehab minus their target profit margin minus your assignment fee should equal roughly what they're paying you. If the spread is too thin, buyers won't bite.
6. Factor in holding and closing costs
Add estimated closing costs (roughly 1-3% of purchase price as a rough estimate), and if the end buyer will hold the property during rehab, factor a few months of insurance, utilities, and property taxes into their math — this affects how aggressive their offer to you will be.
7. Evaluate seller motivation and timeline
A deal with great numbers but an unmotivated seller (unwilling to accept a below-market cash offer) won't close. Confirm the seller's timeline, reason for selling, and flexibility on price before investing more time.
8. Double-check title and liens
Run a quick title search or ask a title company for a preliminary report. Unexpected liens, unpaid taxes, or heirship issues (common in probate deals) can derail or delay closing even after you've locked up a great contract.
9. Use AI tools to speed this up
Manually running comps, rehab estimates, and MAO calculations for every lead is time-consuming. Offr AI surfaces ARV, rehab range, and MAO automatically for each lead it generates, plus a photo-based rehab estimator and an AI Deal Coach to sanity-check your numbers before you make an offer.
10. Walk away when the numbers don't work
Not every distressed lead is a deal. If the seller's asking price is well above your MAO and they won't budge, it's usually better to move on than to overpay and struggle to assign the contract.
Once you've validated a deal, move to building your cash buyers list or explore Offr AI's pricing to see how deal analysis tools are bundled into each plan.