How We Calculate Our Cash Offer

How much do cash home buyers pay?

Less than the house would sell for fixed up, and how much less depends on your house. On a move-in-ready house the gap is small, and you will probably do better listing it. On a house that needs a roof, a kitchen and new wiring, the gap is large, because those costs come out of the price.

You may hear that cash buyers pay a set share of value, such as 70%. Some investors do use shortcuts like that. A shortcut cannot tell a house with a new roof from one with a leaking roof, so our math goes line by line instead.

What goes into our offer?

After-repair value

What your house would likely sell for once the work is done, based on recent sales of similar fixed-up houses nearby: same style (rowhome, twin or single), similar size, same neighborhood, ideally the same few blocks. We use actual sales, not automated online estimates.

Repairs

The work it takes to make your house as good as the ones that sold: roof, heating, electrical, plumbing, kitchen, baths, floors, walls, windows and permits. Older rowhomes can hide expensive surprises, like old wiring or a failing sewer line.

Costs to buy, hold and resell

Buying means title insurance, settlement fees, recording the deed, the transfer tax and the seller's closing costs, because we pay all the closing costs. Holding means property taxes, insurance, utilities and the cost of the money tied up in the house, every month until the resale closes. Reselling means the agent commission, our share of the transfer tax again, closing costs and any credits the next buyer asks for.

Margin for risk and profit

Part is what we earn for the work; we are a business. Part covers what can go wrong, like hidden damage, repair overruns or prices softening before we resell. Ask every buyer about this line, including us.

What does the math look like on a sample Philadelphia rowhome?

The sample house is a three-bedroom brick rowhome in Philadelphia. Similar renovated rowhomes nearby recently sold for about $250,000. This one needs a new flat roof, a kitchen and bathroom, updated electrical, a new heater, and floors and paint.

Our assumptions: six months to fix and resell, all the closing costs on our purchase paid by us (including the whole transfer tax), the transfer tax split evenly on the resale (the usual practice in Philadelphia), and a 5% total commission on the resale. Commissions are negotiable: Pennsylvania's rules require a broker's agreement to say the commission was set by negotiation. Many sellers pay more: a 2025 Federal Reserve research note puts buyer's agents alone at about 2.7% on average. Using 5% keeps the example from leaning our way.

The transfer tax on our purchase depends on the price we pay, so it is figured on the final offer. Notice that the costs other than repairs add up to $68,320. Across the two sales, this one house pays about $17,250 in Philly transfer tax, and our share alone is about $11,520.

Now run the same math on a house that only needs $15,000 of paint, floors and small fixes, keeping every other number the same. The offer comes out near $165,000, still well under $250,000. A house like that will usually do better listed with an agent, and we will tell you so.

What would you walk away with: our offer, or fixing it up and listing?

Here is the same sample house sold two ways. Your mortgage payoff and any liens come out the same either way, so they are left out.

In this example, fixing it up and listing nets about $45,000 more. If you have $55,000 for repairs, six months, and the patience to manage contractors and buyers, listing may be the better choice. If you would borrow the repair money, subtract the interest too.

In the cash column, we pay all the closing costs, including the transfer tax, so those lines are $0. Your written offer shows exactly what you walk away with before you sign.

A middle path is listing as-is with an agent. You skip the repairs, but many buyers for a house like this are investors doing similar math, and you still pay a commission. Get an agent's opinion and our offer, and compare. Our full comparison covers every option.

Why cash offers are lower, and when that is worth it

A cash offer is lower because the buyer takes on the repairs and the surprises behind the walls, pays the transfer tax twice, carries the house for months, pays to resell it, and still has to earn a margin. In return, you get no repairs, no cleaning, no showings, no agent commissions, no fees from us, and a closing day you pick.

That trade tends to be worth it when:

• The house needs more work than you can pay for or want to manage.
• You inherited it, maybe from far away, and want it settled. See our Philadelphia inherited house guide.
• A deadline is coming, like a sheriff sale.
• Tenants live there and you are done being a landlord. See selling with tenants.
• The house has problems that could make a buyer's lender back out.
• A sure date and privacy matter more to you than the last dollar.

It is usually not worth it when the house is in good shape and you have time. Then list it.

How to protect yourself from lowball and bad-faith buyers

A lowball offer is far below what the math supports. A bad-faith buyer never planned to pay the price they offered.

1. Get more than one offer. Get two or three cash offers and an agent's opinion of the list price. When numbers are far apart, the gap is usually in the after-repair value or the repair estimate.
2. Ask for the math. Which sales did they compare? What repairs did they price? What costs did they subtract? If a buyer will not explain their number, be careful.
3. Never pay a fee upfront. A real buyer does not charge you to make an offer or to buy your house. If you are behind on your mortgage, the FTC says it is illegal for a company to charge you upfront for promises to help with your mortgage payments.
4. Watch for the late price cut. Some buyers offer high to get your signature, then cut the price after an inspection, once you have stopped talking to anyone else. Before you sign, ask what could change the price.
5. Know who is really buying. Ask whether the buyer will close on the house themselves or might assign (sell) the contract to someone else.
6. Keep the deed at the closing table. Never sign your deed over outside a closing run by a title company or attorney. The FTC warns that transferring the deed does not transfer the mortgage. Philadelphia owners can also sign up for the city's free Fraud Guard, which emails you when a document is recorded with your name on it.

For a full checklist, see how to check any cash buyer, including us.

Want to see this math on your house?

Use our 1-minute form, or text or call (267) 551-5554. We buy in Philadelphia, the Pennsylvania suburbs and South Jersey, and your written offer usually comes within 24 hours.

Questions about our offer

This page is general information, not legal or tax advice. For your situation, talk to a Pennsylvania attorney or tax professional.