How to Determine Cash Offer Value

When a house buyer comes in to make an offer on the property typically they follow a simple formula. It all comes down to what the house might be worth when it is all fixed up. If you own a house in a rough part of town that is only worth $30,000, then it will be extremely difficult for the investor to make sense of the purchase.

But let's jump into the simple formula that almost all investors use to offer on houses. Like I mentioned above they first have to determine the ARV which means after repair value. This is what the house is worth on the open market.

After they determine ARV normally they multiple that number by 70%. The 30% reduction accounts for 10% in closing costs/fees & a 20% potential profit margin. Of course if you miss interpret the repaired value or rehab cost, this number can shrink drastically.

Once they can the 70% value, then the minus they repair cost off & that is the cash offer they can provide. Most investors shoot for 15-20% on their money which is still a great return. If you need to sell your house fast contact us today!