No mystery number
How we calculate your offer
Most cash buyers hand you a number and leave you to wonder where it came from. Here is the whole thought process, including the parts that are in our favour.
An offer on a distressed property is really one question with several parts: what will this be worth when it is finished, what will it cost to get it there, how long will that take, and what is left over. The hard part — the part where offers from different buyers diverge the most — is the middle one.
That is where being a contractor matters. Most buyers estimating your repairs have never built anything; they are applying a rule of thumb to a house they walked through once. We do the work ourselves, so we are pricing from jobs we have actually run. We don’t have to guess what repairs cost. We do the work.
The factors
What goes into the number
- 1
What the house is worth once it is finished
Everything starts here. We look at what comparable houses in the same neighbourhood have actually sold for in resale condition — not the county's appraised value, and not an online estimate, which cannot see the inside of a house. The finished value sets the ceiling on everything below it.
- 2
The condition of the property as it stands today
This is the part we do differently. We are a licensed contractor, so the person looking at your roof, foundation, and mechanical systems is the person who would have to repair them. We are not applying a percentage to an unknown, we are counting materials and labour on work we have done before.
- 3
The scope of repairs and what is hidden behind it
Some work is visible on a walkthrough. Some is not — failed sheathing under shingles, cast-iron drain lines, aluminium branch wiring, a foundation issue behind a finished wall. We price known work from real numbers and carry a contingency for what a house of that age and type usually hides, rather than inflating the whole estimate to cover ourselves.
- 4
Holding costs while the work happens
Once we own it we pay the property taxes, insurance, utilities, and the cost of the money tied up in the project for however long the work takes. A four-week cosmetic refresh and a six-month structural rebuild carry very different holding costs, which is one reason condition affects the offer twice.
- 5
Transaction and resale costs
There are closing costs on the purchase, and then commissions, closing costs, and concessions again when the finished house sells. Those are real deductions that exist in every deal, including a traditional listing — the difference is that on a listing the seller pays them at the end instead of seeing them netted out at the start.
- 6
Risk and margin
We are buying without inspection contingencies, without a financing contingency, and without asking you to fix anything, which means we absorb the surprises. The margin has to cover being wrong occasionally. It is a business, and we would rather say that plainly than pretend the number is charity.
Illustration only
A hypothetical walkthrough
The following is a made-up example used to show the shape of the arithmetic. It is not a quote, not an average, and not based on a specific property. Your numbers will differ.
| Resale value once repaired | Start here |
| Less: repair scope | Priced line by line from the walkthrough |
| Less: holding costs | Taxes, insurance, utilities, cost of funds, across the project timeline |
| Less: transaction and resale costs | Closing on both ends, commissions on the resale |
| Less: margin and risk | Scaled to how much of the scope is unknown |
| = Your cash offer | One number, in writing, no repairs asked of you |
Land is different
How a parcel is evaluated
Land has no repair scope, so the weight moves to what a buyer can actually do with the tract. Legal and physical access, road frontage, topography, whether utilities are at the road, soil and septic feasibility where there is no sewer, recorded easements, boundary clarity, and the tax status all change the value more than acreage alone does.
Title is usually the biggest variable. A parcel with clean recorded ownership prices very differently from one that passed through three generations without an estate being opened, and that gap is work, not opinion.
FAQ
Questions about the offer
- Is every offer calculated with the same formula?
- No. There are cash buyers who run one fixed percentage on every house, and we do not, because it produces a bad number on both ends — too low on a clean house and too high on one hiding structural work. The factors below are consistent; the weight each one carries depends on the specific property.
- Will you show me your repair numbers?
- Yes, if you want to see them. We can walk you through what we found and what we priced it at. Most sellers do not ask, but the people who do are usually deciding between repairing and selling, and that is a reasonable thing to want to see.
- Why is a cash offer below the listing price of similar houses?
- Because those houses are being sold finished, with the seller paying for repairs, commissions, and closing costs out of the sale price, after several months of carrying the property. A cash offer nets those costs out at the front instead. The right comparison is what you actually keep and when, not the two headline numbers.
- Can I get an offer and still decide to list instead?
- Yes. The offer is written and there is no obligation attached to it. Some people use it as a floor while they try a listing, and that is a legitimate way to use it.
- Does the offer change after you get into the work?
- The signed offer is the price. We re-trade only where something material was genuinely concealed and could not have been found on the walkthrough, which is rare, and we would show you what it was. Making a high offer and cutting it before closing is a known tactic in this industry and it is not how we operate.
Want the number for your property? Call (865) 277-6808.
Call (865) 277-6808This page is general information, not legal or financial advice. Every situation is different — call us and we'll walk through yours.