How Cash Home Buyers Calculate Their Offers, Step by Step

How do cash home buyers decide what to offer?

Cash buyers work backward from what they think the house will sell for after repairs, then subtract every cost and their profit. What is left is the most they can pay you and still make the deal work.

The basic formula looks like this:

Offer = After-repair value − Repairs − Holding costs − Buying and selling costs − Profit

Each buyer fills in those blanks differently. That is why two investors can look at the same house on the same day and be thousands of dollars apart.

What is after-repair value (ARV)?

After-repair value is the price your house should sell for once it is fully fixed up, based on recent sales of similar updated homes nearby. It is the starting number for nearly every investor offer.

Buyers usually look for "comps" (comparable sales) that are:

• Close by, often in the same neighborhood
• Similar in size, bedrooms, bathrooms and age
• Sold recently, ideally in the last few months
• In updated, move-in-ready condition

ARV is a judgment call. One buyer may pick comps that support a lower number. If you think their ARV is too low, ask which sales they used. A local agent can pull recent sales for you at no charge, which gives you something concrete to push back with.

How do investors estimate repair costs?

Investors walk through the house and price everything they would need to fix or update to sell it at ARV. That includes obvious problems and the cosmetic work buyers expect.

Typical line items:

Investors also add a cushion for surprises. If a house has a major unknown, like a possible foundation issue, expect a bigger cushion and a lower offer. Getting your own contractor quote for the big item can shrink that cushion. See selling a house with foundation problems.

What is the 70% rule?

The 70% rule is an industry rule of thumb: some investors offer about 70% of the after-repair value, minus repair costs. The 30% left over is meant to cover holding costs, buying and selling costs, and profit. It is not a law, a standard or a statistic.

Offer under the 70% rule = (ARV × 0.70) − Repairs

Many buyers do not follow it exactly. In areas with lots of investor competition, or on houses that need only light work, offers can come in above it. On slow-selling or risky houses, offers may come in below it. Treat it as a way to check whether an offer is in a normal range, not as the "right" price.

What other costs come out of a cash offer?

Beyond repairs, investors subtract three groups of costs: holding, transaction and financing.

• Holding costs. Property taxes, insurance, utilities, HOA dues and loan interest while the house is being fixed and resold. A long rehab means more holding cost.
• Buying costs. Title fees, recording fees and any closing costs the investor agrees to cover for you.
• Selling costs. When the investor resells, they usually pay agent commissions and closing costs, and often give buyer concessions. Redfin reported the average buyer's agent commission at 2.42% in Q3 2025, and sellers gave concessions in 44.7% of U.S. sales in August 2026. Investors build those costs into your offer.
• Financing costs. Many "cash" investors use short-term loans or private money, which carry fees and interest.

Then comes profit, which pays the investor for their time and risk. A house that could lose money if prices drop or repairs run over needs a bigger margin.

What does the math look like on a real house?

Here is a worked example with round, made-up numbers so you can follow the logic.

Example:

Now the same house using a line-by-line budget instead of the rule of thumb:

Both methods land in the same area, but the line-by-line budget gives a little more room. A buyer who has their own crew (lower repairs), plans to keep the house as a rental (no selling costs), or will accept a smaller profit might go higher. A buyer who needs a bigger cushion might go lower.

You can run your own numbers with the cash offer calculator, which estimates a typical investor offer from ARV and repair costs and compares your net to listing.

Why do offers from different buyers vary so much?

Offers vary because every buyer has a different ARV, repair estimate, cost structure and plan for the house. None of them is necessarily wrong.

A wholesaler has to leave room for their own fee and for the end buyer's profit, so their number can be lower, though not always. See what is real estate wholesaling. Cash buyers are common: 27% of existing-home sales in August 2026 were all-cash, per NAR, so there are usually several types of buyers in any market.

How can you get a better cash offer?

The most reliable way to get a better offer is competition: get several written offers at once and tell each buyer you are comparing. After that, give buyers fewer reasons to pad their numbers.

1. Get at least three offers. You can call investors yourself and also ask Cash Offer Desk, which makes written as-is cash offers in the areas where it buys. Sellers never pay us a fee. Compare our offer against the others.
2. Bring your own comps. Ask an agent for recent nearby sales. If a buyer's ARV is low, show them better comps.
3. Get quotes for the big repairs. A real roof or foundation quote replaces a buyer's worst-case guess.
4. Be upfront about problems. Surprises found after you sign often lead to price cuts during the inspection period.
5. Be flexible on closing date. Some buyers pay more for a later close that fits their schedule, or for a quick close that fits yours.
6. Compare net, not price. An offer that pays your closing costs can beat a higher number that does not.
7. Ask for the math. A good buyer will tell you their ARV and repair estimate. Vague answers are a warning sign.

When does a cash offer not make sense?

A cash offer usually does not make sense if your house is in good shape, you have time, and you can handle showings. In that case, listing with an agent will likely net you more, even after commissions and concessions. Compare both paths in cash offer vs. listing with an agent.

Cash makes the most sense when the house needs major repairs, you are on a deadline, or the sale has complications that scare off buyers with mortgages. For a broader look at typical prices, see how much do cash home buyers pay.