There is no trick to it. Here is the whole formula, line by line, including the part most buyers would rather not show you.
Everybody wonders and almost nobody asks. So rather than describe it, here is the arithmetic itself.
Offer = what the house is worth fixed up − the cost of fixing it − the cost of holding and reselling it − profit.
Four lines. Every legitimate cash offer is some version of them. What varies between buyers is the accuracy of the first two and the honesty of the last one.
Not what an online estimate says. Online estimates work from public records and cannot see inside your house, which is exactly where the thing that matters is.
The real figure comes from comparable sales: houses close by, of similar size and type, in good condition, that have actually closed recently. Not what they were listed for — what somebody paid.
This is the number a buyer should be able to show you. If they cannot name the comparable sales they used, they are not calculating, they are guessing or anchoring.
The roof, the mechanicals, the kitchen, the bathrooms, flooring, paint, and whatever is found once work starts. This is the line most likely to be wrong in either direction, and the reason two honest buyers can land on different numbers for the same house.
It is worth remembering what this line represents: it is the money you would have had to spend yourself, out of your own pocket and before any sale, to reach the number in line 1.
The costs that accumulate simply because the buyer owns the house for a few months and then sells it again:
We subtract a profit, because we are a business, and pretending otherwise would insult you.
The size of it is the honest difference between buyers. Some price thin and do more deals; some price fat and hope you do not compare. What matters is that it is a line you can see and ask about, rather than a gap hidden inside an inflated repair estimate — which is the usual way a low offer is disguised as a fair one.
You may have heard of the “70% rule” — the rough shorthand that an investor pays about 70% of the after-repair value minus repairs. It is a back-of-envelope habit, not a law, and it varies with the market and the size of the job. Treat any buyer who quotes it as gospel with the same caution as one who will not explain their number at all.
It will be less than a fixed-up house brings on the open market. Anyone telling you different is selling you something.
What you are trading that difference for is specific and worth naming:
Sometimes that trade is clearly worth it. Sometimes it clearly isn’t. The only way to know is to do both sides of the arithmetic rather than reacting to the headline figure.
Ask us for the number and we will walk you through how we got to it, line by line. Free, and with no obligation attached.
Get a no-obligation offerA buyer who answers all five plainly is one you can deal with. A buyer who gets uncomfortable at question two has told you what you needed to know.
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