How a 24-hour cash offer actually gets built
A cash offer is not a guess and it is not your Zestimate. It is a short chain of estimates, each of which you should be able to see. Here is the chain.
1. Resale value (ARV)
The first step is what the house is worth once it is fixed up and sold on the open market — the after-repair value. This comes from recent sales of comparable homes nearby: similar size, similar age, sold in the last several months, adjusted for condition and features. The tighter and more recent the comps, the more confident the number.
2. The as-is repair budget
Because a cash buyer takes the house in its current condition, they budget for the work they will actually do — not a full gut renovation, and not what you would need to spend to list on the MLS. For most homes that is cosmetic: paint, flooring, fixtures, a few critical items. Typically 5 to 10 percent of the ARV. You are never asked to do any of it.
3. The offer
The offer is the resale value, minus the repair budget, minus the buyer’s margin — the spread they need to cover holding costs, closing on both ends, and profit for taking on the risk. A transparent buyer will tell you what that margin is. The old “70% rule” puts sellers around 55–60% of ARV; a seller-first formula lands closer to 75–80%.
4. Three timelines
You usually see a 7-day, 30-day, and 60-day number. Longer timelines carry less risk for the buyer — more room to line up their own resale — so they pay a little more for them. A fast close trades a slightly lower number for cash in about a week. You pick.
What to check before you accept
- Did they show you the comps and the repair estimate, or just a number?
- Is the offer “cash” or “cash with an inspection contingency” that lets them re-trade later?
- Is there an earnest-money deposit, and is it non-refundable after a short due-diligence window?
- Who pays closing costs? (It should be the buyer.)