Why Transparency Matters
Most cash home buyers give you a number and expect you to take it or leave it. We think that's wrong. When someone offers to buy your most valuable asset, you deserve to understand exactly how they arrived at that number.
That's why we show you everything: the comparable sales we used, the repair estimates, the math behind our offer, and how your net proceeds compare to what you'd likely walk away with after a traditional sale. No black boxes. No mystery formulas.
Step 1: Comparable Sales (Comps)
The foundation of any home valuation is comparable sales — recent sales of similar homes in your area. When we evaluate your property, we look for homes that:
- Sold within the last 3–6 months
- Are within a close radius of your property (typically 0.5–1 mile)
- Have similar square footage, bedroom/bathroom count, and lot size
- Share similar characteristics (style, age, garage, etc.)
We pull these comps from the same MLS data that real estate agents use. When we present your offer, you'll see each comparable sale — the address, sale price, photos, and how it compares to your home.
Step 2: After-Repair Value (ARV)
The After-Repair Value is what your home would be worth if it were fully updated and in excellent condition. This is the number we start with when calculating your offer.
We determine ARV by looking at comps that sold in good-to-excellent condition. If your home is a 3-bedroom, 2-bath in Kent and similar renovated homes nearby sold for $500,000, that's roughly your ARV.
Step 3: Estimated Repair Costs
Next, we estimate what it would cost to bring your home up to the condition of those comparable sales. Common repair categories include:
- Cosmetic updates: Paint, flooring, fixtures, landscaping ($5,000–$20,000)
- Kitchen and bath remodels: Cabinets, countertops, appliances ($15,000–$40,000)
- Major systems: Roof, HVAC, plumbing, electrical ($10,000–$30,000+)
- Structural issues: Foundation, framing, drainage ($15,000–$50,000+)
Our repair estimates are based on actual contractor pricing in your area, not arbitrary numbers. We share the full repair breakdown with you so you can see exactly what we're accounting for.
The 70% Rule Explained
The "70% rule" is a widely used guideline in real estate investing. It states that an investor should pay no more than 70% of a property's ARV, minus repair costs. Here's the formula:
Maximum Offer = (ARV x 70%) - Repair Costs
This 30% margin accounts for:
- Holding costs: Property taxes, insurance, utilities, and loan interest while the home is being renovated and resold
- Selling costs: Agent commissions and closing costs when the investor eventually resells
- Profit margin: The investor's compensation for taking on the risk and managing the project
- Unexpected issues: A buffer for problems that are discovered during renovation
It's important to note that not every deal follows the 70% rule exactly. In competitive markets, investors may pay more; for properties in very poor condition, they may need to pay less. The rule is a starting point, not a rigid formula.
Holding Costs and Other Factors
Beyond the purchase and repairs, investors incur costs while they own the property:
- Property taxes: Prorated from purchase through resale
- Insurance: Builder's risk or vacant property insurance
- Utilities: Water, electric, gas during renovation
- Financing costs: Interest on any loans used for the purchase or renovation
- Resale closing costs: Typically 8–10% of the resale price (agent commissions + title/escrow)
These costs are real and significant. For a $400,000 home, holding and resale costs can easily exceed $40,000. This is why cash offers are below market value — they have to account for all these expenses.
How This Compares to Selling with a Realtor
A common objection is: "But I could get more listing with an agent." Let's look at the actual math:
| Cash Sale | Agent Listing | |
|---|---|---|
| Sale Price | $320,000 | $370,000 |
| Repairs Before Sale | $0 | -$15,000 |
| Agent Commission (5.5%) | $0 | -$20,350 |
| Closing Costs | $0 | -$7,400 |
| Holding Costs (3 months) | $0 | -$4,500 |
| Net Proceeds | $320,000 | $322,750 |
In this example, the difference in net proceeds is just $2,750 — but the cash sale saved the seller 3 months and all the stress of listing, showings, repairs, and uncertainty. For many sellers, that tradeoff is well worth it.
See Your Transparent Cash Offer
We'll show you the comps, the math, and your offer. No black box, no mystery formula.
Get My Free Cash Offer →A Real-World Example
Let's walk through a real scenario for a home in Tacoma, WA:
- Property: 3-bed, 1.5-bath, 1,400 sq ft, built 1965
- Condition: Original kitchen and baths, needs new roof, outdated electrical
- Comparable sales (renovated): $415,000, $425,000, $410,000
- Estimated ARV: $417,000
- Estimated repairs: $55,000 (roof $12K, kitchen $18K, bath $8K, electrical $10K, cosmetic $7K)
Offer = ($417,000 x 70%) - $55,000 = $291,900 - $55,000 = $236,900
At $236,900, the seller avoids spending $55,000+ on repairs, pays zero commissions ($25,000 saved), zero closing costs ($8,000+ saved), and closes in 10 days instead of 3+ months. The effective difference in net proceeds versus a traditional sale is often less than 5%.
Every situation is different. The best way to see what your home is worth is to get your free cash offer and compare the numbers yourself.