Somebody quotes you a number for your house and it is well under what the houses on your street sell for. The obvious question is where the figure came from, and the answer you usually get is a shrug and the phrase market conditions. It is not a mystery. It is four subtractions, and you can do them yourself.
This article sets out how a cash offer is actually built, works a Tulsa example, explains which of the four numbers is worth arguing about, and covers what to do when the figure comes back lower than you can accept.
We are a cash buyer, so we have an interest here. We are not appraisers and nothing below is a valuation of your property. Repair figures are ranges for the Tulsa market and vary widely by house, so get three written quotes before relying on any of them. If you want a formal value, an appraisal from a licensed Oklahoma appraiser is the thing to buy.
The formula
Every cash buyer in every market uses some version of this, whatever they call it.
Offer = what it will be worth fixed, minus the repairs, minus the cost of holding it, minus the cost of selling it, minus the margin.
That is the whole thing. The disagreements are never about the formula. They are about what goes in each slot.
What each of the four actually means
What it will be worth fixed. Not what your neighbour listed at, and not what an online estimate says. What comparable houses in that specific pocket have actually closed at, in the last few months, in the condition the house would be in after work. In Tulsa this is where most arguments start, because one block can span four decades of housing and a comparable three streets away is frequently not comparable at all.
The repairs. What it costs a contractor to bring it to the standard those comparable houses were in. Not what it would cost you doing it at weekends, and not the cheapest quote. If a buyer will not show you this figure broken down, that is the moment to ask why.
Holding. Every month between buying and reselling: taxes, insurance, utilities, and the cost of the money. Our holding cost calculator works this out for a property, and it is free whether or not you ever speak to us.
Selling it again. The buyer becomes a seller at the end of this, and pays commission and closing costs like anybody else. Our seller net sheet article covers what those actually come to in Oklahoma.
The margin. The profit, and the reason the business exists. Anybody who tells you they do not take one is not being straight with you.
A worked example
These are illustrative figures for a Tulsa house, chosen to show the arithmetic rather than to describe your property. Your numbers will differ.
- Value once renovated, from closed sales in that pocket: 200,000
- Repairs: roof, HVAC, flooring, paint, one bathroom: 40,000
- Holding for five months: 7,000
- Commission and closing costs on the resale: 14,000
- Margin: 25,000
200,000 minus 40,000 minus 7,000 minus 14,000 minus 25,000 leaves an offer of 114,000.
Against the fixed value of 200,000 that is 57 per cent. Against what the house is worth today, unrenovated, which is the only comparison that means anything, it is a much smaller gap, because a house needing 40,000 of work is not a 200,000 house.
Why we will not give you a percentage
You will read that cash buyers pay seventy per cent of market value, or sixty five, or some other round figure. We are not going to repeat one, for two reasons.
The first is that we cannot source it. There is no register of what cash buyers pay, no regulator collecting it and no dataset anybody can check. A number with no source behind it is a number somebody made up, and this site does not publish those.
The second is that the percentage is an output, not a policy. Nobody sits down and decides to offer seventy per cent. They fill in four boxes and the percentage is whatever falls out. Change the repair figure by fifteen thousand and the same house produces a different percentage from the same buyer on the same day.
So when somebody quotes you a percentage, they are describing an average of transactions you know nothing about. Ask for the four numbers instead.
Which number is worth arguing about
Three of the four are largely fixed. Holding costs are arithmetic. Resale costs are arithmetic. The margin is that buyer's business and they will not move far on it.
The repair figure is the one to challenge, and it is where the offers you receive will differ most from each other. It is the largest of the subtractions and the most subjective, and it is the one where a buyer padding the number is hardest to catch.
So ask for it broken down by line. Ask whether it assumes a full replacement where a repair would do. Ask what standard it is being brought to, because finishing to flip standard and finishing to rental standard are different budgets. If you have quotes of your own, put them on the table. Our repair cost estimator gives you a starting position, and our article on what a turn actually costs has ranges.
The comparable sales are worth checking too. Ask which addresses were used, then look them up. If the comparables are from a different pocket, a different decade of construction, or from before the last few months, say so.
When the number comes back too low
Sometimes the arithmetic simply does not work for you, and the right answer is not to negotiate. It is to take a different route.
If the house needs little work, a cash offer will almost always be the worse outcome. The formula subtracts repairs, holding and a margin from your equity, and when there are no repairs to subtract, you are paying that margin for speed alone. List it. Our page comparing a cash offer against listing with an agent shows this arithmetic including commission, and it does not favour us.
If you have time and can fund some of the work, doing the two or three repairs that stop a lender approving the house frequently moves you back into the financed buyer pool, which is where the higher prices are.
If several offers come in and one is far above the rest, be careful rather than pleased. The commonest version of this is a number designed to get the property under contract and renegotiated later, once you have stopped talking to everybody else. Our page on whether these companies are legitimate covers the practices worth knowing about.
How to check any buyer's number in ten minutes
- Ask for the four figures in writing: fixed value, repairs, holding, resale costs
- Ask which addresses the fixed value came from, and look them up
- Ask for the repair estimate broken down by line, not as one total
- Put your own quotes next to theirs. Three written ones, from people who have been in the house
- Run your own net figure both ways with the net proceeds calculator, so you are comparing what reaches your pocket rather than two headline numbers
- If they will not show you the working, that is your answer about the buyer, whatever the number was
The short version
- An offer is the fixed value, minus repairs, minus holding, minus resale costs, minus the margin
- The percentage of market value is an output of those four numbers, not a policy, which is why quoted percentages are not worth much
- The repair figure is the largest and most subjective subtraction, so it is the one to challenge
- Check the comparable addresses yourself
- The less work a house needs, the worse a cash offer looks against listing it
- An offer far above the others is a reason for caution, not celebration
- A buyer who will not show the working has told you something
Frequently asked questions
How do cash home buyers calculate their offer?
They take what the house will be worth once renovated, then subtract the repair cost, the cost of holding it until resale, the commission and closing costs they will pay when they sell it, and their margin. What is left is the offer.
What percentage of market value do cash buyers pay?
There is no reliable figure and we will not repeat one. No register of what cash buyers pay exists, and the percentage is an output of the four subtractions rather than a policy. Ask any buyer for the four numbers instead.
Why is the offer so much lower than my neighbour's sale?
Because your neighbour's house was probably in finished condition. A house needing 40,000 dollars of work is not worth the same as the renovated one three doors down, and the gap between them is most of the difference.
Which part of the calculation should I question?
The repair figure. It is the largest subtraction and the most subjective, and it is where offers differ most from each other. Ask for it broken down by line.
Should I ask which comparable sales were used?
Yes, and then look the addresses up. In Tulsa one block can span four decades of housing, so a comparable three streets away is frequently not comparable at all.
What are holding costs?
Taxes, insurance, utilities and the cost of the money, for every month between buying and reselling. On a five month project they add up to real money.
Does the buyer pay commission when they resell?
Usually yes. The buyer becomes a seller at the end of the project and pays commission and closing costs like anybody else, which is why that line is in the calculation.
Is the margin negotiable?
Rarely by much. It is the reason the business exists. Anybody claiming not to take one is not being straight with you.
Can I get the repair estimate in writing?
You should insist on it, broken down by line rather than as one total. A buyer who will not show the working has told you something about how they operate.
What if my own quotes are lower than theirs?
Put them on the table. Three written quotes from contractors who have been in the house is a strong position, and a reasonable buyer will engage with them.
Does the finish standard change the repair figure?
Considerably. Finishing to flip standard and finishing to rental standard are different budgets, so ask which one the estimate assumes.
When is a cash offer clearly the wrong choice?
When the house needs little work. The formula subtracts repairs, holding and a margin from your equity, so with no repairs to subtract you are paying that margin purely for speed.
One offer is much higher than the others. Is that good?
Treat it carefully. A number designed to win the contract and be renegotiated later is a known practice, and it works because by then you have stopped talking to everybody else.
Do cash buyers use online value estimates?
A serious one does not rely on them. Automated estimates misfire badly in Tulsa, where housing stock varies enormously street to street. Closed sales in that specific pocket are what matter.
Will repairing the house first get me more?
Frequently yes, particularly the two or three repairs that stop a lender approving it. That moves you back into the financed buyer pool, which is where the higher prices are.
How do I compare a cash offer with listing?
Compare what reaches your pocket, not the headline numbers. Commission, concessions, repairs demanded after inspection and the months of holding all come off the listed price.
Do you pay closing costs?
We pay normal closing costs on our side and charge no fees or commission, so the offer is the number. Confirm that with any buyer rather than assuming it.
Can the offer change after we agree?
It should not, unless something genuinely new is found. A price agreed and then reduced shortly before closing is the practice that gives cash buyers their reputation.
Is a higher offer with conditions better than a lower clean one?
Not necessarily. An offer that depends on an inspection outcome, a partner approving it or a property being sold first is a maybe, not a price.
Should I get an appraisal first?
If you want a formal value, an appraisal from a licensed Oklahoma appraiser is the thing to buy. It is not required to sell, but it gives you an independent figure to argue from.
What if I disagree with the whole calculation?
Then the route is probably not for you, and that is a legitimate outcome. A cash sale buys speed and certainty at a cost, and if you do not need either, it is a poor trade.
What should I ask for before signing anything?
The four figures in writing, the comparable addresses, the repair estimate line by line, and a clear statement of what fees come out at closing.
We are a cash buyer, so we have an interest here. We are not appraisers and nothing in this article values your property. Repair figures are Tulsa market ranges and vary widely, so get three written quotes. For a formal value, use a licensed Oklahoma appraiser.
Comparing your options?
See the arithmetic for a cash sale against listing with an agent, commission included.
- A written offer within 24 hours, not a range on the phone
- No repairs, no cleaning, no fees, and no showings
- If listing would net you more, we say so
No fees, no obligation, and your property is never listed publicly.