How Much Do Cash Home Buyers Pay? Here's the Actual Math

The Formula Every Professional Buyer Uses

Strip away the branding and every serious cash buyer, local flipper, national company, or wholesaler, prices houses roughly the same way:

Offer = After-Repair Value (ARV) × Percentage − Repair Costs

Three inputs decide everything:

• ARV is what the house would sell for fully renovated, based on recent sales of comparable updated homes nearby. Not the Zillow estimate of your house today, the value of the finished product.
• The percentage covers the buyer's costs of getting there: financing or opportunity cost of capital, property taxes and insurance during the renovation, utilities, resale closing costs and commissions when they sell, plus profit for the risk. The classic "70% rule" was the flipper's standard for years; in today's more competitive markets, lighter-rehab houses often trade at 78–85%.
• Repair costs are estimated at contractor pricing for whatever it takes to reach that ARV: roof, mechanicals, kitchen, baths, flooring, paint, landscaping.

Three Worked Examples

The cosmetic house

ARV $250,000, needs $20,000 (carpet, paint, kitchen refresh). At 82%: $250,000 × 0.82 − $20,000 = $185,000. A listed as-is sale might fetch $205–215K, but subtract 6% commission ($12,600), seller closing costs, a buyer inspection credit, and three months of carrying costs, and the listed net lands around $185–195K. The gap is real but small, which is why we tell owners of houses like this to seriously consider listing.

The heavy project

ARV $250,000, needs $70,000 (roof, furnace, full kitchen and baths, electrical). At 74%: $250,000 × 0.74 − $70,000 = $115,000. Sounds brutal against a $250K ARV, but the honest comparison is against what a financed buyer would pay for a house their lender won't approve. This house's real as-is market is other investors, all running the same math.

The higher-priced market

ARV $500,000, needs $60,000. At 80%: $500,000 × 0.80 − $60,000 = $340,000. Percentage margins scale with price, which is why cash offers in expensive markets can feel further from ARV in absolute dollars while being identical in structure. It's also why sellers in high-cost metros should always collect multiple offers, the dollar spread between buyers' assumptions is largest exactly where the prices are.

Why Offers Vary $20,000+ Between Buyers

Same formula, different inputs. Buyers disagree about ARV (which comps count?), repair scope (does the kitchen need $8K or $25K?), and their own percentage (a local flipper funding with hard money at 12% needs more margin than a buyer with cheap capital). This is exactly why you should get two or three offers and why we show our inputs: when you can see each buyer's ARV and repair estimate, you can spot who's being straight.

Spotting a Lowball vs. a Fair Offer

A fair offer survives questions. Ask any buyer:

1. What ARV did you use, and which comparable sales support it?
2. What's your repair estimate, itemized?
3. What percentage are you applying, and why?

A buyer who answers specifically is showing you a real underwrite, even if the number disappoints, it's honest. A buyer who deflects ("that's just what we can do") either didn't underwrite the house or doesn't want you comparing. Walk toward the first kind of buyer, whoever they are.

Want to run your own numbers first? Use our cash offer calculator, it applies this exact formula and compares the result against your likely net from listing. Then, if the range looks workable, get the real version with an actual walkthrough behind it.