The direct answer
ARV, as-is value, purchase price and maximum allowable offer are different concepts. ARV estimates market value after planned work, as-is value reflects current condition, purchase price is the negotiated transaction amount, and MAO is an investor-specific offer ceiling derived from assumptions rather than an appraisal conclusion.
Keep value opinions separate from transaction prices
A property can trade above or below an indicated as-is value because price reflects negotiation and transaction circumstances. ARV requires assumptions about completed work and market conditions at the relevant date; it should not be substituted for current value.
To apply the approach to an editable scenario, use the ARV Calculator. For the neighboring question, explore Maximum Allowable Offer Calculator.
Treat MAO as a decision model
Maximum allowable offer usually works backward from a projected exit value, desired margin and estimated costs. Different investors can rationally calculate different MAOs because financing, required return, rehab estimate and risk tolerance differ.
Support ARV with relevant evidence
Use comparable sales that reasonably reflect the expected post-renovation property, then adjust for material differences rather than choosing a target value first. Document condition, timing and uncertainty, especially when the renovation materially changes utility or quality.
Worked example
A property may have a $220,000 as-is value, a negotiated $205,000 purchase price and a $330,000 projected ARV after renovation. An investor’s MAO might be $195,000 after applying its own cost and margin assumptions. None of the four numbers is automatically interchangeable.
Common mistakes and limitations
Do not call a formula-generated MAO an appraised value, and do not treat projected ARV as money already created by renovation.
User-entered comparable analysis only. Not an appraisal and no MLS data is accessed.
Frequently asked questions
Can purchase price be below as-is value?
Yes. Price is a negotiated transaction amount and can differ from a value opinion.
Is MAO a market value?
No. It is an investor-specific decision threshold based on a chosen model and assumptions.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- IRS — Instructions for Form 709 (2025) — real property valuationComparable-sales concept and adjusting for differences in date, size, condition and location.
- IRS — Publication 551 (12/2025), Basis of AssetsFair-market-value concept and use of similar-property sales as evidence.
Read our editorial policy for the scope of these educational methods.