How Cash Home Buyers Calculate Offers

A fair cash offer follows a consistent formula. Once you understand it, you can evaluate any buyer's number — including ours — instead of guessing.

It starts with after-repair value (ARV)

ARV is what your home would sell for fully repaired and updated, based on recent comparable sales nearby. It is the ceiling the whole calculation works down from — not what you'll be offered.

Then subtract the cost of getting there

• Repairs and updates to reach ARV
• Transaction and holding costs (closing, taxes, insurance, utilities while owned)
• The cost to resell after improvement
• Risk and a reasonable margin for the work and uncertainty

Why the offer is below retail

A cash buyer takes on the repairs, the carrying costs, and the risk that the market shifts — and removes your need to show, repair, or wait. That value has to come from somewhere, so the offer sits below full retail. You're trading price for speed, certainty, and convenience.

How to judge whether an offer is fair

• Ask for the ARV and the comparable sales used
• Ask for the repair estimate that was assumed
• Ask what margin/discount was applied and why
• Compare the net — not the gross — against a listing

The bottom line

A trustworthy buyer will show you this math. If a buyer won't explain how they reached the number, that itself tells you something.