How Much Do Cash Buyers Pay vs. Market Value?

Cash buyers typically offer 70–85% of a home's after-repair value (ARV) minus the estimated cost of repairs. That range sounds wide because it is — the exact number depends on your market, your home's condition, and the individual buyer's margin requirements. This article breaks down exactly how the math works so you can evaluate any offer you receive.

The Core Formula: The 70% Rule

The standard formula used by real estate investors is:

ARV (After-Repair Value) is what the home would sell for on the open market after it has been fully renovated and updated. Investors determine this by looking at recent comparable sales of similar renovated homes in your neighborhood.

A Worked Example

Let's say your home is in North Dallas. Based on recent sales of similar renovated homes nearby, the ARV is $320,000. Your home needs a new roof ($15,000), updated kitchen ($25,000), new flooring ($10,000), and various repairs ($10,000) — total estimated repairs: $60,000.

So a buyer using the 70% rule might offer approximately $164,000 on a home with a $320,000 post-renovation value and $60,000 in repairs. Some buyers push to 75% or 80% in competitive markets — which in this example would be $180,000–$196,000.

What the 30% Covers

The gap between the offer and the ARV isn't pure profit. It covers:

• Renovation costs — the repairs already subtracted, plus overruns
• Holding costs — mortgage/hard money interest, property taxes, insurance, and utilities during the renovation (typically 3–6 months)
• Selling costs — agent commissions (5–6%), staging, and closing costs when the buyer resells
• Profit margin — what's left is the investor's return for taking on all the risk

Why Condition Matters So Much

The repair estimate is the most variable part of the formula. A home that needs $10,000 in cosmetic updates versus $80,000 in foundation and mechanical work produces dramatically different offers even if the ARV is identical. This is why "condition" is the single biggest lever in a cash offer.

How Does This Compare to What You'd Net on the MLS?

The gross price from a retail buyer may be higher — but your net after costs may not be. Consider what you actually receive after a traditional sale:

• Agent commissions: 5–6% of sale price
• Repair costs required by buyer or lender: varies
• Closing costs: 1–3%
• Carrying costs during listing: mortgage, taxes, insurance while home sits
• Price reductions if home sits on market: common after 30+ days

On a $320,000 sale, agent commissions alone are $16,000–$19,000. Add $20,000 in repairs and 3 months of carrying costs and the net from a retail sale may be much closer to the cash offer than the headline prices suggest.

Can You Negotiate a Cash Offer?

Yes. Cash offers aren't always take-it-or-leave-it. If you have documentation of recent repairs you've already made, strong neighborhood comparable sales, or can demonstrate the buyer's repair estimate is too high, that's grounds for a counter. Many buyers have some flexibility, especially in strong DFW markets.

→ Deep dive: How Cash Buyers Calculate Offers
→ More money and offer questions answered in our FAQ
→ Get a free written cash offer on your DFW home