What the gap % means

The formula

Gap percent equals (Listing Price minus MAO ceiling) divided by ARV. If a property is listed at $300k, MAO ceiling is $260k, and ARV is $400k, the gap is ($300k - $260k) / $400k = 10%.

The thresholds

Gap percent maps directly to grade on the cash path. Quick reference:

• Under 10% — HOT, almost always worth an offer
• 10-20% — WARM, negotiation range, watch DOM
• 20-30% — COLD for now, monitor for price drops
• Over 30% — Dead unless creative path opens up

Why gap matters more than absolute dollars

A $40k gap on a $400k house (10%) is workable. The same $40k gap on a $150k house (27%) is dead. Always think in percents — they tell you whether the seller can move and you can still make a fee.

When a wide gap can still close

Long DOM (90+ days), recent price drops, agent frustration, or a seller life event (divorce, job loss, inheritance) can collapse a 25% gap to 10% with one phone call. Gap is a snapshot — motivation can move it.

Use gap to triage your day

When you have 50 leads to scan, sort by gap percent ascending. The top 10 are your call list. Below 10% — call today. 10-20% — call this week. Above 20% — only if the seller has motivation signals.

Gap percent is the single most important number on a cash deal. It tells you how far apart you and the seller are on price. Under 10% is HOT. Over 20% is dead. Here's the math.