No mystery. Here’s the real math.
If you’ve ever gotten a cash offer on your house, you may have wondered how the buyer landed on that number. It can feel like it came out of thin air. It didn’t. There’s a simple formula behind it, and we’ll walk you through it.
We’ll even show you a full example with real numbers. After this, you’ll be able to check any cash offer yourself and judge whether it’s fair.
The formula in plain words
Every fair cash offer starts from the same place. Here’s the basic math:
Your Offer = After-Repair Value − Repair Costs − Our Costs − A Modest Profit
Let’s break down each piece.
After-Repair Value (ARV) is what your home would sell for once it’s fully fixed up. We figure this out by looking at recent sales of similar homes near you. Same size, same neighborhood, same kind of house. Agents and investors call these “comps,” short for comparable sales. If three updated three-bedrooms near you sold for around $400,000, that’s a strong clue about your home’s ARV.
Repair Costs are what it takes to get the home to that fixed-up value. New roof, kitchen, bathrooms, flooring, paint. Whatever the house needs.
Our Costs are the expenses we take on to buy, hold, and resell the home. More on those below.
A Modest Profit is what lets us keep doing this. We’re upfront about it. No business runs at zero.
A worked example (these are example numbers, not a quote)
Let’s say you own a three-bedroom in Brockton, MA. We want to be clear: the numbers below are made up to show the math. They are not an offer on your home. Every house is different.
Here’s how it might look:
- ARV (fixed-up value): $400,000
- Minus repairs: −$60,000
- Minus our buying, holding, and selling costs: −$40,000
- Minus a modest profit: −$25,000
- Example offer: about $275,000
That’s it. No tricks. Start with the fixed-up value, subtract what it costs to get there and to do the deal, and what’s left is the offer. If your house needs less work, the repair number drops and the offer goes up. If it needs more, the offer comes down. The house in front of us decides the number.
Why the offer is less than a retail listing
Here’s the honest part. A cash offer is usually below what you’d get listing on the open market with an agent. We won’t pretend otherwise. But the headline price isn’t the whole story. Look at what each path actually costs you.
When you list a home the traditional way, you often pay:
- Repairs to get it ready to show
- Agent commissions, usually 5% to 6% of the sale price
- Months of mortgage, taxes, insurance, and utilities while it sits
- Showings, open houses, and keeping the place clean for strangers
- The risk a buyer’s loan falls through and you start over
When we buy, we take on all of that. The work, the cost, the waiting, the risk. That’s the trade. You get speed and certainty instead of the highest possible price.
So compare the right thing. Don’t just compare our offer to a listing price. Compare your net proceeds on each path. Net proceeds means what actually lands in your pocket after repairs, fees, and months of carrying costs. Sometimes a lower cash offer leaves you with more in hand than a higher listing price does. Sometimes it doesn’t. Run your own numbers either way.
How Premier Fort Properties works
We’re a family business, run by two brothers, Joshua and Jordan St. Fort. We’ve been buying homes for cash in Massachusetts and Rhode Island since 2018, and we’ve bought more than 100 of them.
Here’s what working with us looks like:
- Your cash offer is free, with no obligation to take it
- No fees and no commissions
- No repairs. We buy as-is, even if the house needs a lot
- You pick the closing date that works for you
- We’re local, so we know MA and RI home values firsthand
Want to see your real number?
Now you know the formula, so a real offer on your own house won’t be a mystery. If you’d like one, we’re glad to put it together. It’s free, there’s no obligation, and you’re never on the clock to decide. Call or text us at 617-749-2973, or request your free cash offer online. We’ll show you our math, just like we did here.