What’s a Fair Cash Offer for My House?
- Brad S.
- Apr 27
- 3 min read
Understanding a Fair Cash Offer in Maryland
When a homeowner hears a cash offer that’s 70% (or even less) of what they think their home is worth, the reaction is usually suspicion: "Are they trying to rip me off?" But the reality is that legitimate cash offers are based on math, risk tolerance, and business sustainability.
This article breaks down how cash home buyers in Maryland calculate offers, what expenses they factor in, and why a seemingly low offer may actually be fair.
Step 1: Start with ARV (After-Repair Value)
ARV is the estimated market value of your home after it has been repaired or updated to match current buyer expectations. This isn’t what your home is worth today in its current condition—it's what it could sell for on the open market once it's fully renovated.
A local investor will calculate ARV by:
Looking at recent comparable sales ("comps") in your neighborhood
Accounting for square footage, layout, condition, and upgrades
Consulting with Realtors or using MLS tools to validate price trends
For example, if nearby renovated homes similar to yours are selling for $350,000, that becomes the ARV.
Step 2: Subtract Renovation Costs
This is where the biggest chunk of your perceived value starts to disappear. Renovation costs aren’t limited to just paint and flooring—they include:
Licensed contractor labor (more expensive than DIY)
Materials (which fluctuate)
Permits and inspections (required for many repairs in Maryland)
Contingencies for unexpected repairs (mold, foundation, plumbing)
Project management/time delays
If the home needs $50,000 in repairs, that amount gets deducted from the ARV.
Step 3: Subtract Holding and Transaction Costs
Holding costs are the monthly expenses the investor pays while renovating and reselling the property. These can include:
Property taxes (varies by county in Maryland)
Insurance
Utilities (water, gas, electric)
Lawn care and maintenance
Loan interest (many investors use short-term hard money loans with high interest rates)
Transaction costs include:
Real estate agent commission (typically 5-6%)
Title, escrow, and closing fees
Seller concessions if needed to close the deal
Source: According to the National Association of Realtors, the average seller pays 8-10% of a home’s final sale price in closing costs and commissions (NAR Closing Cost Guide).
If a home resells for $350,000, the investor could easily pay $28,000–$35,000 just in transaction and holding costs.
Step 4: Subtract Profit Margin and Risk Buffer
Investors are running a business. They take on significant risk: property values could drop, interest rates might climb, repairs could go over budget, or the home might sit unsold for months. To protect themselves and justify the effort, they build in a profit margin.
Typical profit goals range from 10-20% of ARV. For a $350,000 resale, that could be $35,000–$70,000. This isn’t greed—it’s the cost of operating a sustainable flipping or buy-and-hold business.
Add it up:
ARV: $350,000
Repairs: -$50,000
Holding/Transaction Costs: -$30,000
Profit Margin: -$40,000 = Max Offer: $230,000
Even though $230,000 seems far below the resale price, it may still be a fair cash offer.
Why Investors Can’t Just Offer Market Value
Investors aren’t traditional buyers. They don’t plan to live in the home, and they can’t get traditional financing for most fixer-uppers. Their offer reflects the true cost of:
Repairing the property
Carrying the risk
Paying out-of-pocket for all expenses
Making the numbers work in a high-liability, low-margin business
That’s why your home might be worth $300,000 retail but still receive a $200,000 cash offer.
What If You Want More for Your Home?
If your home doesn’t need major repairs, or if you’re not in a hurry, listing with an agent might yield more. But that route comes with its own costs:
Staging and prepping the home
Showings and inspections
Buyer financing contingencies
30–60 day timelines (or longer)
A fair cash offer for your house trades price for speed, simplicity, and certainty.
If you’re still unsure, ask for both options:
What your home might net if you list it
What you could receive with a no-hassle cash offer
At Salvato & Co. Real Estate, we’re both licensed agents and investors. We give homeowners in Maryland the complete picture—with no pressure, just options.
Need to See Your Numbers?
We’ll break down your potential ARV, expected repairs, and what you might net from both a cash offer and a traditional sale.
