October 25, 2026 · Joe Hall
How Are Cash Offers on Houses Calculated?
The short answer
Most cash offers start from the after repair value, what the house should sell for once fixed up. The buyer subtracts repairs, holding and selling costs and a profit margin. Many investors use the 70% rule: 70 percent of after repair value, minus repairs. The result is usually below retail, in exchange for speed and certainty.
The four numbers behind every cash offer
- After repair value (ARV). What the house would likely sell for on the open market once it is repaired and updated, based on recent comparable sales nearby.
- Repair costs. Everything needed to make it market-ready: roof, systems, kitchen, flooring, paint, permits, cleanup.
- Holding and selling costs. Loan interest, property taxes, insurance and utilities while the work is done, plus the costs of reselling, such as commissions, escrow, title and transfer tax.
- Profit and risk. The buyer is taking on the unknowns: hidden damage, permit delays, market changes. They price that in.
Offer = ARV minus repairs minus holding and selling costs minus profit. Every legitimate cash buyer is doing some version of that math, whether they show it to you or not.
The 70% rule, explained
Many house flippers use a shortcut called the 70% rule: multiply the after repair value by 0.70, then subtract the estimated repair costs. The result is the most they want to pay.
Example with round numbers: a Ventura County house with an ARV of $900,000 that needs $100,000 of work. 70 percent of $900,000 is $630,000. Minus $100,000 in repairs gives $530,000.
It is a rule of thumb, not a law. Buyers who plan to rent instead of resell, or who are in a competitive market, may pay more. Houses that need very little work often get offers closer to market value, because the buyer's risk is lower.
Why a wholesaler's offer is often lower
A wholesaler is not the buyer. In Joe Hall's words: "These are wholesalers. They don't have the cash themselves. What their goal is to do is to lock you up under contract for 10, 20, 30 days, and go get a buyer that is a cash buyer, and charge a fee on top of that."
That fee has to come from somewhere. It comes out of the price you are paid. A wholesaler's offer is the real buyer's number minus the wholesaler's cut, which is why you want to deal with the end buyer directly. More on that in selling a house as-is in California.
How to check whether an offer is fair
- Ask how they got the number. A real buyer can explain their ARV and repair estimate.
- Look at the comps yourself. Recent sales of similar homes nearby are the best reality check on ARV.
- Get a contractor's opinion if the repair estimate seems inflated.
- Ask who is buying. Are they the buyer of record, or will the contract be assigned to someone else?
- Ask for proof of funds and what happens if they can't close.
- Compare the net, not the price. A listing at a higher price still has commission, repairs and months of holding costs.
When a cash offer makes sense
A cash sale is the right tool when speed or certainty matters more than the last dollar: a foreclosure deadline, an inherited house that needs major work, a divorce that needs a clean finish, or a property you can't afford to repair. It is usually the wrong tool when you have time and the house will show well.
A cash sale is usually below what the house would bring on the open market. That discount is the price of speed and certainty. If listing would net you more, Joe Hall is a licensed Realtor and you will hear that too.
How Sold Like That makes an offer
Sold Like That is Joe Hall's pool of qualified cash buyers and investors whose liquid funds his team has verified. You share the address, rough condition and your deadline. You usually get a real cash offer within 24 hours, and you can close in as little as 15 days, as-is, with no fees or commission. See exactly how it works.
Quick answers
What percentage of market value do cash buyers pay?
There is no fixed percentage. It depends on the repairs needed, the buyer's costs and the market. Many flippers start with the 70% rule, while houses needing little work often get closer to market value.
What is ARV in real estate?
After repair value: the price a house should sell for once it is repaired, based on recent comparable sales.
Why is a cash offer lower than market value?
The buyer takes on repairs, holding costs, resale costs and risk, and closes on your schedule with no contingencies. The discount pays for that.
Can I negotiate a cash offer?
Yes. Ask how the numbers were built and push back with comps or contractor bids if something looks off.
How do I know a cash buyer is real?
Ask for proof of funds, confirm they are the buyer of record, and ask whether they plan to assign the contract.
Does Sold Like That charge fees on a cash sale?
No. There are no fees and no commission on a cash sale through Sold Like That, and you are free to say no to the offer.
Want to see real math on your house? Get a no-obligation cash offer from Sold Like That, usually within 24 hours, or call 805-222-6925 to talk it through with Joe Hall's team.
Sources
Written by Joe Hall, Realtor, CalRE #01336123, Westlake Village. About Joe. Nothing here is legal, tax or financial advice.
More from the blog
Find out what we would pay.
It takes two minutes, it costs nothing, and if we think you should list instead, we will tell you.