Fair Home Cash How are cash offers calculated?

Key takeaways

• A cash offer works backward from after-repair value, minus renovation, resale costs and profit.
• A common rule of thumb is 70 to 85% of ARV minus repairs.
• The formula is fixed; the inputs move with the renovation and location.
• Ask for the comps, keep the repair list, and show a contractor bid.
• Fair Home Cash publishes its buyer-side formula with every cost itemized.

The formula

Four numbers, and every serious buyer runs the same math

A cash offer is built backward from what the house will sell for once it is fixed: what it sells for fully renovated (set by recent comparable sales on your block), minus the renovation to get it there, minus the buyer's costs to resell it, minus the buyer's profit for taking the risk. What is left is the offer. Every cash buyer in the country runs this same math; the only difference is whether they show you the breakdown or hide it inside a lowball.

We publish the buyer-side formula. How cash buyers price offers works the whole formula on a real set of numbers: a bungalow worth $150,000 fully renovated, minus $38,000 of renovation, minus $16,500 of resale costs, minus $20,500 of profit, lands at a $75,000 cash offer, with the comps, the repair scope, and every cost itemized on the page.

The range

Why the rule of thumb is 70 to 85% of after-repair value, minus repairs

The formula is fixed; the inputs move. A house with big unknowns, like a roof, a rewire, and a kitchen, sits low in the range because the buyer carries more risk; a house needing paint and carpet sits high. Location moves the resale-cost line: a slower block means more months of taxes, insurance, and utilities while the renovated house waits for its buyer. That spread of inputs, not buyer generosity, is the whole distance between 70 and 85%. If you want a fast read on your own house before anyone visits, the cash offer estimator runs the same arithmetic.

Checking any buyer

Three questions expose a made-up number in two minutes

What did you use for the fixed-up value, and can I see those sales? Can I keep a copy of the repair list you priced? What happens to this offer if I get my own inspection first? A fair buyer hands you addresses, leaves the repair scope with you, and answers "nothing changes" to the third. A lowballer changes the subject on all three.

And remember the inputs are negotiable even when the formula is not: if you think a repair number is high, show a contractor bid and a fair buyer will rerun the math with you. The rest is facts you can check together.

More quick answers

Related questions