How much do cash home buyers pay?
Short answer
Less than a house would fetch listed in good condition, always. Anyone telling you otherwise is not being straight. The number worth comparing is not the headline price, it is what actually reaches your bank account after everything comes out of each route.
Asking how much do cash home buyers pay usually produces a percentage, and the percentage is nearly always wrong, because it depends on the two things nobody quoting it knows: what your house needs, and how long your market takes to sell. What can be explained precisely is how the number is built, so you can check whether an offer is reasonable rather than guessing.
What the offer is built from
Every honest cash offer is the same four things. What the house is worth once it is fixed, minus what fixing it costs, minus the cost of holding and reselling it, minus a margin. There is no fifth secret ingredient, and a buyer who cannot walk you through those four numbers on your specific house has not done the work.
The first number is the one to interrogate. It should come from what comparable houses nearby have actually sold for recently, in the condition yours would be in after renovation. 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. Out of it come the agent commission, some closing costs, whatever repairs the buyer's lender requires, and usually a concession after the inspection. Then there is time: every month the house is on the market is another mortgage payment, tax accrual, insurance premium and utility bill on a property you have decided to leave.
Sellers tend to price the commission carefully and ignore the carrying costs entirely, and the carrying costs are frequently larger. Run both routes to a net figure with the months included, and the gap is often much smaller than the headline numbers suggest. Sometimes it closes entirely.
The two things that actually move the number
Condition is the first. Repair costs do not scale with local prices: a roof costs roughly the same in a $180,000 market as in a $400,000 one. That means the same repair bill takes a far larger bite out of an affordable market's offer, and it is why cash offers look harsher at the lower end.
Market speed is the second. In a fast market a well-presented house does not need a cash buyer, so the value of speed is low and a cash offer competes poorly. In a slow market, where a listing might sit for months while you pay to hold it, certainty is worth considerably more and the two routes converge.
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 stale, distant, or in obviously better condition, 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 state it has room to move it later.
What would change this number between now and closing?
Get the answer in writing. This is the single best predictor of whether you will be renegotiated at the last minute.
What would I net if I listed instead?
A buyer who refuses to engage with this is asking you to make the decision 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, and there is no commission because they are the buyer rather than an agent. Property taxes are normally prorated to the closing date, and any mortgage or lien payoffs come out of the sale proceeds.
- Can I negotiate with a cash buyer?
- Yes, and you should ask what the number is built on rather than simply asking for more. A buyer who will show 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 reasonable. Be aware that some of the sites you submit to are lead brokers rather than buyers, so several of the calls may be the same lead resold.
- Is a cash offer ever higher than listing?
- On the headline number, essentially never. On what you actually net, sometimes, once major repairs, months of carrying costs and the risk of a buyer's financing collapsing are all in the arithmetic.
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. We will tell you the comparables and the repair figure behind any number we give you. And 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
It takes about two minutes, there is no obligation, and there is never a fee. If we are not the right answer for your situation, we will tell you that too.