One of the most common questions we get is: 'How much will you pay for my house?' The honest answer: it depends on the property. But here's how cash offers generally work — and why the net proceeds are often closer to a traditional sale than you'd think.
How Cash Offers Are Calculated
Most cash home buyers use a formula based on the property's After Repair Value (ARV):
Your Offer = ARV - Repair Costs - Selling Costs - Buyer's Margin
- ARV (After Repair Value): What the house would sell for on the open market after renovations.
- Repair Costs: What the buyer will spend to bring the house to market condition.
- Selling Costs: Agent commissions, closing costs, holding costs when the buyer eventually resells.
- Buyer's Margin: The profit the buyer needs to make the deal work (typically 10-15%).
What This Means in Practice
For a house with an ARV of $300,000 that needs $30,000 in repairs, a typical cash offer might be $195,000 to $225,000. That may sound low compared to the ARV, but remember: you're getting that money with zero repair costs, zero agent commissions, zero months of waiting, and zero risk of the deal falling through.
Comparing Net Proceeds
When you factor in agent commissions (5-6%), closing costs (2-3%), repair costs, and months of mortgage payments while listed — many sellers end up with similar net proceeds from a cash offer. The key difference: cash is faster, simpler, and certain.
Red Flags to Watch For
- Offers that seem too good to be true (they probably are)
- Buyers who won't show proof of funds
- Contracts with excessive 'weasel clauses' or inspection contingencies
- Buyers who ask for upfront fees
- Offers that get drastically reduced after an 'inspection'
Want to see a real number? Get a free, no-obligation cash offer from SimpleClose. We'll break down exactly how we arrived at our offer — no hidden games.