The short answer: There is no single fixed percentage that tells you what every cash buyer will offer. An investor-style cash offer may be evaluated by estimating what the property could be worth after repairs, then accounting for property-specific costs, risk, and the return the buyer requires. Different buyers can use different assumptions and methods, which is why the same property can produce different offers.
Liquid Liabilities LLC is a property resolution company. We are not a law firm, lender, or licensed real estate brokerage. This guide is general education about how cash offers are arrived at, not legal, financial, or real estate advice.
This guide covers what an offer is anchored to, how an expected resale value is estimated, how repair scope enters the number, what the difference between an offer and a resale value may have to cover, why two buyers reach different figures, how to compare a cash offer against a traditional sale, what to weigh besides the number itself, and how to tell whether an offer is reasonable.
What is a cash offer actually based on?
That question has no single answer, because it depends on what the buyer is estimating.
One way an investor-style cash offer can be evaluated is by estimating what the property could be worth after repairs, then accounting for the costs and the return requirements associated with the transaction. Different buyers may use different methods, and a buyer who is not planning repairs at all is answering a different question.
The comparison being made is the part worth understanding. Where an offer is evaluated that way, it is anchored to what the property is expected to be worth in a condition it is not in today. That is not the same quantity as an automated estimate of your house as it stands, and it is not simply whatever one nearby renovated house sold for.
Three things follow from that.
An offer of this kind rests on assumptions, not just observations. What the property could sell for after repairs is a forecast. What the repairs would cost is an estimate. How long the work and the resale would take is a projection. None of those is a fact at the time an offer is made.
Different assumptions produce different numbers. Two buyers looking at the same house can reach different conclusions about any of the three, which is why the same property can produce different offers. That is covered further on.
The difference between the offer and the expected resale value is not all profit. What else that difference may have to cover is the subject of its own section below.
None of this tells you whether a particular offer is fair. It tells you what kind of number you are looking at, which is the first thing you need in order to ask useful questions about it.
For what a cash sale is, how the process works, and how long it takes, our cash-sale guide covers that ground.
How does a buyer estimate what the house would be worth fixed up?
Where an offer is anchored to an expected resale value, one method for estimating that value is a comparable-sales analysis. This describes one approach. It is not a rule every buyer follows, and a buyer using a different method can be asked to explain it instead.
The method is worth understanding because you can follow it yourself, and because it gives you something specific to ask about.
Comparable sales are sales. Recent sales of similar properties nearby, not current listings and not an automated estimate. A listing is an asking price, which is a statement of what someone hopes to receive. A sale is evidence of what a buyer paid.
Which sales are comparable is a judgment. Size, age, proximity, how recently the sale closed, condition, lot, layout, and other characteristics all affect how useful a given sale is as a comparison. Depending on the method, a sale may be given less weight or excluded entirely when the differences are too substantial to support a useful comparison.
When this method uses adjustments, they are made to the comparable, not to your house. If your house has an extra bathroom that a comparable sale did not have, the comparable's sale price is adjusted upward, because the question being answered is what that property would have sold for if it had the same bathroom. The adjustment is a correction to the evidence, not a deduction from your property.
Condition determines which comparables answer the right question. A house that sold in tired condition and a house that sold renovated are evidence of two different things. Where the value being estimated is an after-repair value, sales of properties in a similar finished condition can be especially useful evidence. Where the value being estimated is as-is, the comparison has to account for the subject property's current condition instead.
What you can ask. If a buyer tells you the offer rests on an expected resale value, you can ask which sales were used, why those sales, and how the differences between them and your property were handled. A buyer working from a documented analysis can answer that. A buyer working from a general impression may answer differently, and the difference is informative.
Two people can run this method on the same property and reach different conclusions, because selecting comparables and weighing differences involves judgment at several points. A different estimate of resale value can produce a different offer, before any other input is considered.
How do repairs affect the number?
Where repair costs are part of the analysis, they can be estimated from an expected scope of work rather than applied as a general discount for condition. The difference matters because a defined scope gives you something specific to examine and question, rather than leaving condition as an unexplained general adjustment.
Condition helps determine scope, and scope helps determine cost. Cosmetic updating, replacement of a major component such as a roof or a mechanical system, and structural or reconstruction work can involve very different levels of work and expense. A house needing the first is not in the same position as a house needing the third, even if both are described as needing work.
The estimate carries uncertainty. An estimate made before purchase can turn out low. Conditions can be discovered behind a wall, under a floor, or in a system that was not tested. Where actual costs exceed the estimate, that difference can reduce the buyer's projected return. For that reason, uncertainty about scope can affect an offer on its own, separately from the cost of the work that is already visible, and an offer may be conditioned on a walkthrough or an inspection before it is treated as final.
Repair cost and effect on resale value are two different questions. This distinction matters because assuming repair cost and resale effect move together can lead to a misleading comparison. The amount spent on a repair does not necessarily produce an equal change in what the property later sells for. Some work may be necessary to make a property eligible for certain financing, or to bring it to the condition assumed for a particular resale strategy, and that work may not add its full cost back in resale value. Other work may affect resale value by more or by less than it costs. Whether a specific repair returns its cost depends on the property, the work, and the market, and it is not something this guide can answer for your house.
That last point cuts both ways, and it is worth being plain about it. It means a buyer's repair estimate does not automatically justify the size of the reduction from an expected resale value. It also means your own spending on the property does not automatically translate into a higher offer. Both are claims about a relationship that has to be demonstrated rather than assumed.
What you can ask. If repair costs or condition adjustments are part of the pricing, you can ask what scope was assumed and what the estimate is based on. A scope can be compared against your own knowledge of the property, and against a contractor's bid if you have one.
What else does that difference have to cover?
The difference between an offer and what a property might sell for after repairs should not automatically be read as profit. For a buyer evaluating the property with an eventual resale in mind, part of that difference may have to cover costs expected between the purchase and that later sale.
Those can include:
- Resale costs. A later sale may involve brokerage or marketing expense, title and escrow charges, closing costs, concessions, and other disposition costs. These are separate from the costs of the purchase itself.
- Carrying costs. Holding a property can involve property taxes, insurance, utilities, maintenance, and other ongoing expenses. Some carrying costs increase with the length of the hold, so expected holding time can affect the economics.
- Financing costs. Where the purchase or the renovation is financed, interest and loan fees are part of what the transaction costs.
- Unexpected repairs and other risk. Scope can be discovered after purchase. Any of the estimates above can run higher than assumed, and the resale value itself is a forecast rather than a known figure.
Separately from those costs, a buyer may require enough remaining return for the transaction to make economic sense. That requirement is a driver of the offer rather than an expense paid out of the transaction, and it is a different kind of input from the four above.
Property-specific costs and outcomes can remain uncertain when an offer is made. Repair scope can change, holding time can change, financing costs can depend on the transaction, and an eventual resale value is a forecast rather than a known result. Different assumptions about those inputs can therefore contribute to different offers on the same property.
None of this means any particular offer is fair, or that the difference from an expected resale value is justified in a given case. It means that difference may reflect more than one input, and a seller can ask what assumptions or costs the buyer says the offer reflects.
Why do two buyers give different numbers on the same house?
Because some of the inputs described above depend on assumptions, and different buyers can make different assumptions about the same property.
Some of the things that can vary from one buyer to another:
- What they intend to do with the property. A buyer planning to renovate and resell is working from a different set of expectations than one planning to hold it, rent it, or resell it in its current condition. The previous section focuses on a buyer evaluating the property with an eventual resale in mind. It does not describe every buyer or every strategy.
- How far they would take the work. Two buyers can look at the same house and plan different scopes, different materials, and a different finished result. Different plans can imply different costs and different expectations about the property's eventual value.
- What the work costs them. Access to labour and materials, and the overhead a buyer carries, can differ.
- How they are funded. Borrowing for the purchase or renovation can introduce interest, loan fees, and other financing terms that affect the economics.
- How long they expect to hold it. Expected holding time can affect carrying costs and the period over which capital remains committed to the transaction.
- How they assess uncertainty. Buyers can weigh the same unknowns differently: property condition, permit questions, or uncertainty about a later resale.
- What return they require. What makes a transaction worth doing is a business decision, and it is not the same for every buyer.
This is why a label on a buyer does not tell you what their number will be. Institutional buyer, iBuyer, wholesaler, local investor: the category may tell you something about how the transaction is structured, but it does not resolve the assumptions above. Our guide to buyer types covers what those labels do and do not tell you, and what to verify in writing regardless of the label.
Any single formula for what a cash buyer should pay represents a particular model, not a universal rule. The framework in this guide should be read the same way: it explains possible economic inputs, but it is not a calculation that determines what any particular buyer should offer.
The practical consequence is that comparing offers means comparing more than the figures. Two numbers that look close can rest on very different assumptions about condition, scope, timing, and what the property will sell for later.
How should you compare a cash offer against a traditional sale?
Compare what you would keep, not what you would be offered. And compare like with like: the same underlying property, consistent treatment of the obligations that apply to each scenario, and the same definition of "net" on both sides.
The first step is deciding what you are actually comparing. "A traditional sale" is not one thing. It could mean listing after repairs, listing in current condition, or listing with the expectation of credits to a buyer. Pick the version you would realistically do. On the other side, a direct offer is a specific number with specific conditions attached. For the marketed-sale side, use a supportable expected sale price rather than the asking price. For the direct-sale side, use the actual offer and identify any conditions that could change or terminate it: an inspection, an appraisal, a walkthrough, a closing date that could move. Neither figure should be treated as guaranteed final proceeds.
Then separate the amounts into three groups. Include a category in a scenario only when it applies based on the contract, your planned preparation, or another documented assumption. Do not assign a cost or a saving automatically because the sale is marketed or direct.
Seller-side costs to include in the marketed-sale scenario, when applicable
- brokerage or representation compensation, if applicable
- closing costs the contract assigns to you as seller
- seller-paid credits, concessions, repairs, preparation, or price adjustments, if applicable
- carrying costs from now until that sale actually closes
Seller-side costs to include in the direct-sale scenario, when applicable
- brokerage or representation compensation, if applicable
- closing costs that particular contract assigns to you
- seller-paid credits, concessions, repairs, preparation, or price adjustments, if applicable
- carrying costs from now until that sale actually closes
Common obligations that can affect proceeds in either path
- mortgage and other loan payoffs
- valid liens
- delinquent taxes, association balances, or other amounts that must be resolved at closing
These can appear on both sides, but the category being shared does not make the amount identical. Some amounts, such as loan payoff balances and property-tax amounts, can change with the assumed or actual closing date, and the two paths may close on different dates. Use the amount appropriate to each scenario rather than copying one figure across.
Two rules keep the comparison honest. First, use the same definition of net on both sides. A closing statement shows what is disbursed to you at closing, but it may not capture money you already spent before closing: preparation, repairs, carrying costs. If the goal is to compare what you ultimately keep, include relevant spending before closing on both sides and use the same categories for both scenarios. A comparison that stops at the closing statement is a comparison of closing proceeds, and should be called that rather than "net." Second, count each amount once. A repair expense and a later credit are separate only if both are actually incurred; do not count one economic obligation under two labels. Likewise, the same debt should not be deducted once as a payoff and again as a lien.
Our cash-sale guide explains what can come out of proceeds at closing and why a written net estimate is useful. Use comparable estimates and documented assumptions for each scenario, then set them side by side.
This guide will not tell you which path nets more. That depends on the property, the market, the offer, and the seller's own constraints. What it gives you is a way to run the comparison on a consistent basis: the same definition of net, the same treatment of comparable categories, and documented assumptions appropriate to each scenario. What conditions are attached to each figure, and how likely each transaction is to reach closing, are the subject of the next section.
What should you compare besides the number?
The conditions attached to it. An offer is a proposal to pay a certain amount if certain things happen. What those things are, who controls them, and what could change if they remain unresolved or are not satisfied are part of what you are comparing.
Two distinctions do most of the work here.
The first is between a commitment and a demonstrated ability to keep it. A contract can state a closing date, an amount, and a set of terms. Whether a party is positioned to perform on those terms is a separate matter, and the document alone does not establish it.
The second is between a condition within a party's control under the written agreement and one that depends on someone else. An agreement may give the buyer discretion over an inspection-related condition. But the buyer and seller's agreement does not control how quickly a lienholder produces a payoff figure, how a title matter resolves, or when a court acts in an estate matter. A dependency that sits outside the transaction can move for reasons neither you nor the buyer chose.
With those in mind, the things worth examining alongside the amount:
- Whether the written amount is firm, or still subject to specified review or adjustment. Some offers can be revised or withdrawn on stated grounds. What matters is which grounds those are and what would trigger them.
- What the transaction depends on for funding. Funding arrangements differ, and some carry their own conditions and timing.
- The closing date and what it rests on. A date can be firm, subject to extension, or dependent on items that are not finished yet.
- Condition and repair obligations. Anything unresolved about the property's condition can affect whether and when the transaction completes.
- Your exposure if timing or obligations change. If a closing moves or an obligation shifts, some of your costs move with it.
Our cash-sale guide makes a point worth carrying here: a buyer may commit to a closing date before every title and payoff item is complete. That means a stated date can reflect an expectation about work still in progress rather than a finished process.
None of this ranks anything. An offer with fewer stated conditions is not thereby more likely to close, and one with more is not thereby less likely. Evidence that a buyer has funds is not performance. A buyer's category (institutional, iBuyer, wholesaler, local investor) does not establish how a particular transaction will go. What you are examining is this offer and its terms, not the type of party who made it.
What to ask about all of this, and what documents and evidence to look at, is the subject of the next section.
How can you tell whether an offer is reasonable?
You cannot verify that a number is reasonable in the abstract. What you can do is find out what it rests on, and see whether the answers hold together.
Three things are worth keeping separate as you go: what the buyer says, what supports what the buyer says, and what has not been settled yet. An answer is not evidence, and evidence is not a completed transaction.
Trace the economic basis, if the buyer gives one. If a buyer says the offer is based on an expected after-repair or resale value, you can ask what value was assumed and what comparable sales support it. If repair costs or condition adjustments are part of the pricing, you can ask what scope was assumed and what that estimate is based on. A buyer who arrives at a number a different way can be asked to explain that instead. The point is not to audit the arithmetic. It is to find out whether a stated basis exists and what it depends on.
Get the current economic terms in writing. Record the current offer amount and identify any pricing, inspection, condition, or scope review that remains unresolved. If the amount later changes, compare the written versions and identify what assumption, information, or scope changed with it.
Funding. You can ask how the purchase is to be funded and whether that arrangement carries conditions of its own. Our guide to buyer types covers what to verify in writing about a buyer's ability to close.
The wholesale-buyer disclosure. Arizona law requires a wholesale buyer, as defined by A.R.S. § 44-5101, to disclose that status in writing before the parties enter a binding agreement. Our guide to buyer types explains who that applies to and what the disclosure involves.
More than one offer, where time permits. Another offer can provide another comparison point. Differences between offers can prompt questions about the assumptions, scope, terms, or conditions behind each number; as explained earlier in this guide, different buyers can reach different numbers on the same property.
Our guide to buyer types sets out six structural questions about who you are dealing with, how the transaction is structured, and what the agreement permits. Those questions cover the structure of the transaction; this section focuses on the evidence and assumptions behind the number.
One limit worth stating plainly. An explanation is not proof that the assumptions behind it are accurate, that the price is fair, or that the transaction will close. How clearly a buyer answers reasonable questions about the assumptions and conditions behind an offer is one factor a seller can consider. Apply the same standard to us.
Which situation matches yours?
Understanding what an offer is based on is only part of the decision. Your circumstances can affect which deadlines, alternatives, and professional guidance matter most. If one of these describes your situation, the specific guide will be more useful than this one:
- Behind on payments, or a trustee sale is scheduled → What Are My Options If I'm Facing Foreclosure in Arizona?
- The owner died and the estate is going through court → Selling a House in Probate in Maricopa County
- You inherited a property and live out of state → Selling an Inherited House in Arizona from Out of State
- The house needs major work → What Are My Options If My House Needs Major Repairs in Arizona?
- You are trying to work out who you are dealing with → What Is a Property Resolution Specialist and How Is It Different From a Cash Buyer?
- You want to know how a cash sale works and how long it takes → Selling Your House for Cash in Arizona: How It Works
Where Liquid Liabilities fits
We are a property resolution company. We are not attorneys, lenders, or a licensed real estate brokerage, and we do not represent you as your real estate broker or agent. We do not charge homeowners for consultations.
This guide has argued that a number you cannot ask questions about is a number you cannot evaluate. That applies to us.
If we make an offer on your property, and you ask, we will explain:
- How we arrived at it. How we reached the number.
- What the offer actually says. The price, the terms, the conditions attached to it, and the closing timeline, in writing.
- How the purchase is to be funded, and whether that funding arrangement carries conditions of its own.
What we will not do is tell you that our offer is the highest available or that it is the right decision for you. Whether a direct sale fits your circumstances is a decision you should make after considering the offer, your alternatives, and any qualified advice you need.
There is no obligation attached to asking. If, based on what you tell us, another route appears to fit your goals better than a direct sale, we will tell you that.
Liquid Liabilities LLC is a property resolution company. We are not a law firm, lender, or licensed real estate brokerage. Any offer depends on property details, title, condition, timing, and written agreement terms. This page is not legal, financial, or real estate advice.
Sources
Primary authorities
- A.R.S. § 44-5101: Wholesale buyers; wholesale sellers; disclosure; unlawful practice; definitions
Statutes summarized for general information. This is not legal advice, and the law can change. Verify current requirements or consult a qualified Arizona attorney about your situation.