Wondering how cash offers are calculated? We explain the formula used by investors so you know if the offer is fair.
The Investor's Formula
Most cash buyers follow this math: (After Repair Value x 75%) - Repairs = Your Cash Offer.
An Example with Real Numbers
Imagine your house would be worth $300,000 if it were fully renovated (new roof, new kitchen, etc.).
But, it currently needs $40,000 in repairs.
The Math: ($300k x 75%) is $225k. Subtract the $40k in repairs.
The Offer: ~$185,000 cash.
What You Get in Exchange
While the offer is lower than full retail, you save the 6% agent commission ($18k), closing costs ($6k), holding costs (insurance/taxes for 6 months), and the stress of renovations. For many, the 'net' amount in their pocket is surprisingly close.
Understanding the Discount
Investors must budget for holding costs, resale commissions, and the risk of market changes. The discount from retail ensures they can renovate and resell while earning a modest profit.
Focus on Your Net
After paying a realtor, making repairs, covering closing costs, and waiting months for a buyer's financing, many sellers net roughly the same as a fair cash offer—without the stress or uncertainty.
Our Promise
We always explain our numbers and encourage you to compare. If listing makes more sense for your situation, we'll tell you.