How much do cash home buyers pay?
Short answer
Less than the house would get listed in good condition, always. Anyone who says otherwise is not being straight. The number to compare is not the headline price. It is what actually reaches your bank account after everything comes out on each route.
Asking how much do cash home buyers pay usually gets you a percentage that is nearly always wrong. It depends on two things nobody quoting it knows: what your house needs and how fast your market sells. We can explain how the number is built. Then you can check an offer, not guess.
What the offer is built from
Every honest cash offer is made of the same four things. Start with what the house is worth once fixed. Subtract the cost of fixing it. Subtract the cost of holding and reselling it. Then subtract a margin.
There is no secret fifth ingredient. A buyer who cannot walk you through those four numbers on your house has not done the work.
The first number is the one to question hard. It should come from what similar houses nearby actually sold for recently. They should be in the condition yours would be in after renovation.
That means sold prices, not asking prices, and recent ones. If a buyer will not show you the comparables they used, that is the number they are hiding behind.
Why the headline price is the wrong comparison
A listed sale does not put the list price in your account. First come the agent commission and some closing costs. Then any repairs the buyer's lender requires, and usually a credit to the buyer after the inspection.
Then there is time. Every month on the market means another mortgage payment, more property tax, another insurance premium and another utility bill. And that is on a house you have decided to leave.
Sellers tend to count the commission carefully and ignore the carrying costs completely. Yet the carrying costs are often larger. Work out a net figure for both routes, with the months included. The gap is often much smaller than the headline numbers suggest. Sometimes it disappears.
The two things that actually move the number
Condition is the first. Repair costs do not rise and fall with local prices. A roof costs roughly the same in a $180,000 market as in a $400,000 one.
So the same repair bill takes a much bigger bite out of an offer in an affordable market. That is why cash offers look harsher at the lower end.
Market speed is the second. In a fast market, a house that shows well does not need a cash buyer. Speed is worth little there, and a cash offer competes poorly.
In a slow market, a listing might sit for months while you pay to hold it. There, certainty is worth much more, and the two routes move closer together.
How to sanity-check an offer you have been given
Four questions. Any serious buyer can answer all of them on the spot.
What after-repair value are you using, and which comps?
Ask for the addresses. Then check them yourself on any public listing site. If the comps are old, far away, or clearly in better shape, the whole number is built on sand.
What repair figure are you using?
You do not need to agree with it, but you should hear it. A buyer who will not say it has room to move it later.
What would change this number between now and closing?
Get the answer in writing. It is the best single sign of whether you will face a last-minute renegotiation.
What would I net if I listed instead?
A buyer who refuses to discuss this wants you to decide without the comparison. Ours is on the comparison page, including the case where listing wins.
Common questions
- Do cash buyers pay closing costs?
- Most reputable ones pay the standard closing costs. There is no commission, because they are the buyer, not an agent. Property taxes are normally split between you and the buyer up to the closing date. Any mortgage or lien payoffs come out of the sale money.
- Can I negotiate with a cash buyer?
- Yes. But ask what the number is built on, rather than just asking for more. A buyer who shows you their comparables and repair figures can be argued with on the facts. One who will not is not really negotiating.
- Should I get more than one cash offer?
- Yes. It costs nothing, and it is the fastest way to see whether a number is fair. Be aware that some sites you submit to are lead brokers, not buyers. So several of the calls may be the same lead, resold.
- Is a cash offer ever higher than listing?
- On the headline number, almost never. On what you actually take home, sometimes. That can happen once major repairs, months of carrying costs, and the risk of a buyer's financing falling apart are all counted.
Point this checklist at us
Everything above is written so you can apply it here. We are the buyer, not a lead broker, so your details are not sold on. And one difference from every buyer described above: we do not make offers. You tell us what you need to get for the house and we tell you whether it works, with the comparables and the repair figure behind the answer. If listing would net you more, we will say so rather than take the deal.
Ask us what we would pay, then check us against this page
You do not need a number ready, or photos, or a plan. Want to know your real options, even the ones that do not involve us? Call and ask.
Sabrina usually picks up. (615) 576-8827