How your cash offer actually gets calculated

If you have called a "we buy houses" company before, you know how it usually goes. Somebody looks at the house, disappears for a day, and comes back with a number. Where did the number come from? Nobody says. You are left deciding whether to trust a stranger's arithmetic that you never got to see.

That is a bad way to make one of the largest financial decisions of your life, so we do it differently. Below is the formula. It is not a secret, it is not proprietary, and it is the same formula every serious cash buyer in this market uses. The difference is that we hand it to you.

The formula

A worked example

Say a three bedroom, one and a half bath house in the Richmond area. Original kitchen, roof at the end of its life, carpet over hardwood, and it has not been updated since the owner bought it. These are example numbers on an example house, chosen to show the shape of the math, not a quote on yours.

Step one: what it is worth fixed up

We look at what comparable houses nearby have actually sold for after a full renovation, not what they were listed at and not what a website estimate says. Same neighborhood, similar size, similar layout, recent sales.

Step two: what the repairs really cost

This is where offers get fuzzy at other companies, because a vague repair number is an easy place to hide margin. So we itemize it and you get the list.

Two honest notes about this list. First, the contingency line is real. Older Richmond houses hide things behind plaster, and a budget with no cushion is a budget that turns into a renegotiation later. We would rather build the cushion in up front than come back and cut your price after you have already told your family the house is sold. Second, if you have already replaced the roof or the HVAC, that comes straight off this list and straight onto your offer. Bring the receipts.

Step three: our costs and our profit

Here is the part nobody else puts in writing. We are a business. We make money on this, and pretending otherwise would insult you.

• Closing costs, twice. We pay them when we buy from you and again when we sell.
• Holding costs. Taxes, insurance, utilities and the cost of the money, for every month we own it.
• Selling costs. When the renovated house goes back on the market, there are commissions on that sale.
• Profit. The reason we get out of bed. If a deal has no margin in it, we cannot do it, and we will tell you that instead of wasting your week.

Step four: your offer

$250,000 minus $45,000 minus $40,000 equals $165,000, and no fees or commissions come out of it. That is the number you would walk away with, minus only whatever you still owe on the house.

Why the offer is below full market value, said plainly

Because you are buying four things with that difference: speed, certainty, zero repairs, and zero work. A cash sale closes in seven to thirty days with no appraisal, no lender, no inspection contingency and no buyer whose loan collapses in week six. Whether that trade is worth it depends entirely on your situation, which is why we would rather you understood the math than trusted us.

What to ask any cash buyer, including us

1. What after repair value did you use, and which specific sold houses did you base it on?
2. What is your repair estimate, itemized, and can I see the list?
3. How much are you making on this?
4. Are you buying this yourself, or assigning it to somebody else?
5. What happens to my price if you find something during the walkthrough?

If a buyer will not answer those five questions, that is your answer about the buyer. Ask us all five. We will answer every one of them, in writing if you like.

See what the process looks like step by step, or get your own numbers.