How to run a 70% rule offer without lying to yourself

The rule, in one breath

Your maximum offer is the after-repair value times 0.70, minus repairs:

The part everyone forgets: the 30% wedge is not profit. It has to cover buying costs, holding costs, selling costs, financing — and only then profit. When someone says "I'm buying at 70%," the honest question is: 70% of whose ARV, minus whose repair number?

Worked example, with real costs

Say the comps support an ARV of $760,000 and the scope prices out at $54,000:

That $478,000 is a ceiling, not a verdict. Sanity-check it against the cost stack the Rehabfolio flip calculator runs by default — buying around 3% of purchase, a holding allowance, selling around 6% of ARV, and financing on an 80% loan at 10% plus 2 points over six months:

That is a healthy deal. Now watch the seller counter at $540,000 — only $62,000 higher. Re-run the same stack and the profit compresses toward $60k, under 9% of ARV. For six months of capital, permits, and crew risk, that is thin. This is what the rule is for: it tells you when to stop negotiating with yourself.

Where the rule breaks

Condos and luxury. The 30% wedge does not map to every product. Luxury inventory sits longer, so holding and financing eat far more of the wedge. Condo margins run thinner and HOA fees or a special assessment can quietly consume what is left.

Wholesale spreads. An assignment fee does not need a 30% margin. Quoting the 70% rule to justify a wholesale offer just tells the seller you are using the wrong playbook.

The repair number — the biggest lie. Underestimate the scope and the rule blesses a bad offer. At the same $760k ARV, calling the rehab $40k instead of $54k moves your max offer up $14,000. The rule did not fail; the input did. Walk the property, price the scope line by line, and add contingency before you run the rule — not after.

The ARV — the second-biggest lie. Which brings us to the part operators fudge the most.

Pressure-testing ARV like an adult

Sold comps only. Active and pending listings are asking prices — opinions. ARV has to be anchored to closed sales, adjusted for size, condition, and date.

City-locked. The same street name exists in two towns in most counties, and a comp from the wrong city can be worth $100k in the wrong direction. Every comp in your ARV should be from the subject's city. (Rehabfolio's Web CMA hard-locks comps and tax data to the subject city for exactly this reason, and drops ultra-luxury outliers rather than averaging them in.)

Do not floor to the cheapest comp. This one sounds conservative and is actually just lazy. The cheapest closed sale is usually the most distressed one — the estate sale, the divorce, the deferred-maintenance special. If your ARV is automatically "the lowest comp," you will systematically under-bid and lose good deals to buyers who did better comp work. The honest ARV is a point estimate you can defend with adjusted comps — where the cheap comp is explained, not obeyed.

Write the defense down. If you cannot say, in two sentences, why this ARV is right, you do not have an ARV — you have a hope.

Let the machine do the arithmetic

The rule fails in the inputs, not the math — but the math still has to be right, every time, for every lead. Every Rehabfolio underwrite computes the 70% max offer automatically (metrics.seventyRule) alongside the drafted ARV and repairs, and the flip calculator re-runs the full cost stack the moment any input moves. Your job is the judgment: the comps, the scope, the walk-away. The spreadsheet arithmetic is the machine's job.