How We Calculate Your Cash Offer, With a Worked Example

By Alex Buys Homes·Published Sep 29, 2026·8 min read

When a cash buyer names a price for your house, you deserve to know where the number came from. Ours comes from a simple formula that we publish on our How It Works page: we start with what your home would be worth after repairs, then subtract what it will cost us to get it there and sell it.

This guide walks through that formula line by line, shows a worked example, and compares a cash offer with what you might keep from a traditional listing. Market figures are current as of September 2026.

How do cash home buyers calculate an offer?

Here is the formula exactly as we use it:

Maximum offer = ARV – (renovation costs + holding and selling costs + our minimum profit)

Because the after-repair value sits at the top of the formula, a realistic ARV matters more than anything else. Every other number is subtracted from it.

What goes into each part of the formula?

Each of the four numbers answers one question: what will the house be worth, what will it cost to fix, what will it cost to own and sell, and what does the buyer need to earn for taking the risk?

1. After-repair value (ARV)

The ARV is the price your house should sell for after it has been renovated to current standards for layout, design and finishes. We estimate it from comparable sales, or “comps”: homes near yours with a similar size, age and style that sold recently in updated condition.

When you first contact us, we ask about the bedrooms, the bathrooms, how long you have owned the home and its condition on a scale of 1 to 10. The more we know, the more accurate the ARV and the offer will be.

2. Renovation costs

This is what it will cost to bring the house up to current market standards, from paint and flooring to a roof, a kitchen, wiring or water damage. Every dollar of repairs comes out of the after-repair value, so a house that needs a lot of work gets a lower offer than a similar house that doesn’t.

We estimate repairs from what you tell us, then confirm them at a walk-through we call a verification visit. If the house needs more work than described, we explain why and adjust the offer, and you are free to turn the new number down. If it matches what you told us, the original offer stands.

3. Holding and selling costs

Holding costs are the bills a buyer pays while it owns and renovates the house: property taxes, insurance, utilities, any HOA fees and financing costs. Renovations take time. ATTOM reports that, nationwide, the median flip took 165 days from purchase to resale in the first quarter of 2026.

Selling costs are what it takes to resell the house: settlement fees, agent commissions and the Pennsylvania realty transfer tax, which is 1% of the price for the state plus any local tax.

4. Our minimum profit

We are a business, so the offer includes a profit margin. We keep it as low as we can so we can make our highest possible offer. It varies with the amount of work, how long the project will take, and the home’s age and location, because those add time and cost. Like any investor’s margin, it also has to absorb surprises, such as repairs that cost more than planned.

What does a worked example look like?

In the example on our How It Works page, a house would be worth $300,000 after $50,000 of repairs. Holding and selling costs and our minimum profit are $30,000 each, so the maximum offer is $190,000. The numbers are illustrative; every house is different.

Here the offer is about 63% of the after-repair value. That percentage is not a fixed rule. A home that needs only cosmetic work leaves more of the ARV for you, while a house with a failing roof or foundation leaves less.

How much will a cash buyer pay for a house?

Market data shows how large that gap can be. ATTOM, a property data company, measured a gross flipping profit of $105,000 on homes flipped in Pennsylvania in the first quarter of 2026, a 70% gross return on the purchase price. Nationally, the gross return was 25.4%.

“Gross” means before the investor pays for repairs, holding and selling costs, so the real profit is smaller. Still, the numbers show that investors typically buy well below finished value.

Be careful with offers that look too good. A buyer who promises close to full market value for a house that needs major repairs may plan to cut the price after an inspection, or may not intend to buy at all. Our guide on how to tell whether a cash home buyer is legit explains what to check.

How does a cash offer compare with listing your house?

Here is an illustration using the same house. The first column assumes you pay for the $50,000 of repairs yourself, then sell at the full $300,000. It uses Pennsylvania’s average total commission of 5.71% from Clever Real Estate’s August 2026 survey of agents, a 2% transfer tax split evenly with the buyer, and an assumed $750 a month in taxes, insurance and utilities over four months of repairs, listing and closing.

Neither column includes settlement fees or any credit a buyer asks for after an inspection. Who pays the transfer tax is negotiable in either kind of sale, so ask any buyer to put it in writing.

In this example, repairing and listing leaves you about $38,770 more. It also takes $50,000 up front, months of managing contractors, and the risk that repairs run over budget or the sale falls through. In an August 2026 survey by the National Association of REALTORS®, 14% of contracts had delayed settlements and 7% were terminated over the previous three months.

If you can’t fund the repairs, your open-market option is to list the house as it is, and buyers will price the needed work into their offers. For a full side-by-side, read cash home buyer vs. listing with an agent.

Is selling your house for cash a good idea?

A cash sale is often a good fit when:

• The house needs repairs you can’t pay for or don’t want to manage, such as after a fire or a flood. See our guide to selling a fire- or water-damaged house.
• You inherited a property and want a simple sale. See selling an inherited house in Pennsylvania.
• You need to close by a certain date because of a move, a divorce, a foreclosure or a tax sale.
• You want to skip showings, open houses and a buyer’s mortgage approval.

Listing is usually the better choice when:

• Your home is move-in ready or needs only light cosmetic work.
• You have time to wait for the right buyer.
• Getting the highest possible price matters more to you than speed or convenience.

How can you get the most out of any cash offer?

Ask how the number was built, compare it with what an agent thinks the house would sell for, get every term in writing, check the buyer, and never pay to receive an offer. Those habits protect you whichever buyer you choose:

1. Ask how the offer was calculated. A serious buyer can tell you the ARV and the repair estimate behind the number.
2. Get a second opinion on value. A local agent can prepare a comparative market analysis that shows what the house might sell for on the market.
3. Get the offer in writing, including who pays closing costs and the transfer tax, and whether the price can change after the walk-through.
4. Check the buyer. Look the company up in Pennsylvania’s business records and read its reviews before you sign.
5. Never pay a fee to receive an offer. A buyer pays you, not the other way around.

We buy houses across the Lehigh Valley, including Allentown, Bethlehem and Easton. To see the numbers for your home, request your cash offer. We typically make an offer within 24 hours, and you choose the closing date.