The most common number sellers hear about cash buyers is that they pay “60 to 70 cents on the dollar.” That range is real, but it tells an incomplete story. How much a cash buyer pays for a house depends on a formula, not a fixed percentage, and the formula is transparent enough that you can run the math yourself before you accept anything.
Here is exactly how cash buyers calculate offers, what the typical ranges look like, and how to compare a cash offer to what you would actually net from a traditional sale.
The formula every cash buyer uses
No matter what a cash buyer says in their pitch, every legitimate offer works backward from the same four inputs:
Offer = After-Repair Value (ARV) - Repair Costs - Holding and Closing Costs - Buyer Margin
After-Repair Value (ARV) is the estimated market value of the home after all repairs and updates are complete. Buyers calculate ARV using recent sales of comparable, updated homes within a half-mile radius. This is the most important number in the formula. If a buyer’s ARV is accurate, the offer can be evaluated honestly. If it is artificially low, every number that follows will be too.
Repair costs are the buyer’s budget to bring the home from its current condition to resale-ready condition. This includes everything: roof, HVAC, plumbing, flooring, kitchen and bath updates, paint, and landscaping. Buyers typically use their own contractor relationships and may estimate conservatively to protect their margin.
Holding and closing costs are the expenses the buyer absorbs while owning the property: property taxes, insurance, utilities, and the transaction costs of reselling. On a home that takes four to six months to renovate and resell, these can total 3 to 5 percent of the ARV.
Buyer margin is the profit the buyer builds in to make the project worth taking on. Most buyers target 10 to 15 percent of ARV as a minimum margin. Some require more in markets with higher labor or material costs.
What typical offers look like by condition
The repair scope is what drives the most variation in cash offers. Here is how the math plays out across different condition levels:
| Home Condition | ARV | Estimated Repairs | Holding/Closing | Buyer Margin (12%) | Cash Offer | % of ARV |
|---|---|---|---|---|---|---|
| Good (cosmetic only) | $300,000 | $15,000 | $12,000 | $36,000 | $237,000 | 79% |
| Fair (updates needed) | $300,000 | $35,000 | $13,500 | $36,000 | $215,500 | 72% |
| Poor (major repairs) | $300,000 | $60,000 | $15,000 | $36,000 | $189,000 | 63% |
| Severe (structural) | $300,000 | $90,000 | $18,000 | $36,000 | $156,000 | 52% |
These are illustrative. Actual numbers depend on your specific market and the buyer’s cost structure. The key insight is that the cash offer percentage drops not because the buyer is being greedier but because the repair costs are higher.
How cash offer math compares to your traditional sale net
Sellers often make the mistake of comparing the cash offer to the listing price rather than to what they would actually pocket after a traditional sale. The comparison looks very different once you run the full math:
| Cost Item | Traditional Sale | Cash Sale |
|---|---|---|
| Gross sale price | $260,000 | $215,500 |
| Agent commission (5.5%) | -$14,300 | $0 |
| Seller closing costs (2%) | -$5,200 | $0 |
| Pre-listing repairs | -$20,000 | $0 |
| Carrying costs, 4 months | -$8,000 | $0 |
| Net to seller | $212,500 | $215,500 |
In this example, the cash offer actually nets the seller more than a traditional listing once the full cost stack is counted. This is not always the case, but it shows why comparing headline prices is misleading.
For a side-by-side comparison of every factor between cash and traditional sales, see our cash offers vs. traditional sales guide.
What the buyer’s margin represents
Sellers sometimes push back on the buyer’s margin, viewing it as a markup on their home. It is more accurate to think of it as the compensation the buyer requires to take on real risk. The buyer is spending their own capital on a property they have not yet renovated, in a market that could shift before they resell. If repairs come in over budget or the resale takes longer than expected, the margin absorbs those losses.
A buyer who builds in a reasonable margin, 10 to 15 percent of ARV, is running a legitimate operation. A buyer who builds in 25 to 30 percent without explaining why is either in a very high-cost market or padding the number.
How to evaluate the ARV yourself
You do not need a real estate license to check whether the buyer’s ARV is reasonable. Here is a simple method:
- Search for recent sales (last 90 days) of homes similar to yours in size, age, and neighborhood using Zillow, Redfin, or your county assessor’s site.
- Focus on homes that sold in move-in-ready condition, since those represent the ARV your buyer is targeting.
- If the buyer’s ARV is within 5 to 10 percent of your own research, it is likely honest.
- If it is 15 to 20 percent below comparable sales, ask the buyer to justify it.
A buyer who is confident in their ARV will show you the comps they used.
Green and red flags in cash offer pricing
Green flags:
- Buyer provides their ARV estimate with supporting comparable sales
- Repair budget is itemized or at least categorized by scope
- Margin is stated as a percentage of ARV, not hidden in a round number
- Offer does not change after you accept
Red flags:
- Offer arrives with no ARV, no repair breakdown, and no explanation
- Buyer’s ARV is 20 percent or more below what comparable sales show
- Repair budget is a single large round number with no detail
- Price drops after signing, attributed to “re-inspection” or “updated comps”
Can you negotiate a cash offer?
Yes. Cash offers are negotiable, especially on the repair estimate. If you have contractor quotes showing the work costs less than the buyer assumed, present them. Buyers will often adjust upward when presented with documentation. You can also ask whether the buyer can accept a higher price in exchange for a slower close date, which reduces their holding cost and gives them room to pay more.
What you generally cannot negotiate is the ARV itself. It is what comparable homes are actually selling for, and no amount of negotiation changes the market.
Use the net proceeds calculator before you decide
Before you accept or reject a cash offer, use our net proceeds calculator to run the math on what you would actually walk away with from both paths. Enter the cash offer on one side and the realistic traditional sale net on the other. The number that matters is the one that lands in your account, not the one on the listing or the offer letter.
The bottom line
Cash buyers pay 70 to 85 percent of after-repair value in most cases, but the percentage that matters is not the offer as a share of ARV. It is the cash offer net compared to the traditional sale net after commissions, repairs, and carrying costs. For homes that need work, in slower markets, or with tight timelines, those two numbers are often within a few thousand dollars of each other.
The best way to know is to see both numbers side by side.
Request your no-obligation cash offer from Homewise and compare it against your realistic traditional sale net before making any decision.
