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SOUTHERNHOME OFFERS

How we calculate our offer

A cash offer on a house that needs work starts with what the house would sell for fully repaired, then subtracts what it will cost to get it there and resell it. We show you every one of these numbers, because an offer you can check is an offer you can trust.

The formula

After-repair value (ARV)
− Repair costs
− Buying, holding and resale costs
− Buyer's margin for risk and profit
= Your cash offer

1. After-repair value

ARV is what your house would most likely sell for once it is fully updated, based on recent sales of similar, updated houses near you. Our owner is a licensed agent with MLS access, so this comes from real local sales, not an online estimate.

2. Repair costs

We walk the house and price each repair at what local contractors charge: roof, HVAC, plumbing, electrical, foundation, kitchens, baths, flooring, paint, clean-out. You get the list.

3. Buying, holding and resale costs

Closing costs on both ends, property taxes, insurance and utilities during the work, financing costs, and the commission and concessions when the finished house sells.

4. Margin

Whoever buys the house is taking the risk that repairs cost more and the market moves. That margin is what makes the deal worth doing; we keep it as small as the house allows.

A worked example

Illustrative numbers only — every house is different.

After-repair value$250,000
Repairs (roof, HVAC, kitchen, flooring, paint)− $55,000
Buying, holding and resale costs− $25,000
Margin− $25,000
Cash offer$145,000

Listing that same house unrepaired would mean fewer buyers who can finance it, discounts for the repairs, commission, and months of holding costs. If listing — or our Fix & List option — would clearly net you more, we will tell you. Compare cash vs. listing.

Frequently Asked Questions

How do cash home buyers calculate their offers?

Most cash buyers start from the after-repair value (ARV) — what the house would sell for fully fixed up — and subtract the repair cost, the costs to buy, hold and resell the house, and their profit margin. What is left is the offer.

What is the 70% rule in real estate?

The 70% rule is an investor shortcut: offer no more than 70% of the after-repair value minus repairs. It is a rough rule of thumb; real offers depend on actual repair costs, local resale costs and the price range of the house.

What does ARV mean?

ARV stands for after-repair value: the price a house would most likely sell for on the open market once it is fully repaired, based on recent sales of comparable updated homes nearby.

Why is a cash offer lower than market value?

Because the buyer pays for the repairs, carries the house while the work is done, pays the costs to resell it, and takes the risk that something costs more than expected. A cash offer trades price for speed, certainty and no work on your part.

Get a written, as-is cash offer on your house

No repairs, no cleaning, no showings, no commission. You see how we priced it, and you choose the closing date.

Call (423) 888-5217Get My Cash Offer