The honest answer: less than the house would sell for fully renovated on the open market, and often about the same as or more than you'd net selling it as-is through an agent after repairs, commissions, and months of holding costs. Here's how we get to a number, with real math.
The formula
Every legitimate cash buyer uses some version of this:
- Start with the after-repair value (ARV): what the house would sell for once fully fixed up, based on recent sales of similar renovated houses nearby.
- Subtract the cost of repairs to get it there.
- Subtract holding and selling costs: insurance, utilities, taxes, and the commissions and closing costs we'll pay when we eventually resell.
- Subtract a margin for the risk and the work.
What's left is the offer.
A worked example
Say you own a 3-bedroom brick house in west Mobile. Renovated houses like it on the same streets have been selling for about $220,000. Yours has an original roof, dated kitchen and baths, some soft floors in a bathroom, and needs paint inside and out.
- After-repair value: $220,000
- Repairs: new roof ($12,000), kitchen and two baths ($28,000), flooring and subfloor repair ($9,000), paint, fixtures, landscaping, and the surprises that always come up ($11,000). Total: $60,000.
- Holding and resale costs: roughly 10% of ARV once you add insurance, utilities, taxes for a few months, commissions, and closing costs on the resale. Call it $22,000.
- Margin: $25,000 to $30,000 on a project this size. That's what makes it worth the risk of finding termites behind the tub.
Offer: around $110,000 to $115,000.
Compare that to listing as-is
If you listed the same house as-is with an agent, it wouldn't sell for $220,000. Buyers with mortgages would either walk after the inspection or demand a price that accounts for the same $60,000 in repairs, plus their own margin for the hassle. As-is listings in that condition often sell in the $130,000 to $145,000 range, if they sell.
From that, subtract a 5% to 6% commission ($8,000), seller closing costs ($2,000 to $3,000), three to four months of mortgage, insurance, and utilities while it sits ($4,000 to $6,000), and any repairs the buyer's lender requires before closing. Your net lands somewhere around $115,000 to $125,000, three to five months from now, if nothing falls through.
The cash offer is close to that, and you get it in two weeks with no showings and no risk.
When the cash offer loses
If your house is in good shape and you're not in a hurry, listing it will almost always net more. We're licensed agents, so we'll tell you that at the walkthrough, and we can list it for you. A cash offer is the right tool for houses that need work, sellers who need certainty, and situations where time matters more than the last dollar.
How to tell if an offer is fair
Ask the buyer to show you their ARV, their repair estimate, and their margin. A real buyer will. If they won't, or if the offer is a round number with no explanation, get a second opinion. We put our numbers in writing, and you're welcome to take them to anyone.