Do Cash Buyers Really Pay Fair Market Value? An Honest Answer

You’ve probably heard the pitch: “We pay top dollar for your home!” Or the counter: “Cash buyers only pay 50-70% of market value — they’re rip-offs.” Neither is quite right. Here’s what the real math shows.

The Honest Formula Cash Buyers Use

Most legitimate cash buyers use some version of the “70% rule” or ARV formula:

Offer = After-Repair Value × 70-85% – Cost of Repairs

ARV = what the home would sell for fully renovated and updated. The percentage covers the buyer’s holding costs, resale commissions, financing, and profit. So if your home is worth $300,000 fixed up and needs $40,000 in repairs, a reasonable offer would be somewhere around $170,000-215,000.

When Cash Buyers ARE Fair Market Value

For homes in livable but dated condition (no major repairs needed), the gap between a cash offer and MLS-net proceeds can be surprisingly small — often within 5-10%. Once you subtract 6% Realtor commissions, 2-3% buyer concessions, 90 days of holding costs, and pre-listing repairs, the cash offer is often within striking distance of an MLS sale on a net basis.

When Cash Buyers Are the Better Deal

• Home needs $20,000+ in repairs
• You need to close in under 30 days
• Property has liens or title issues that scare MLS buyers
• You’ve inherited the home and can’t manage repairs
• Home is tenant-occupied
• You’re facing foreclosure with weeks to go

When MLS Is the Better Deal

• Home is in excellent condition
• You have 3-6 months and don’t need certainty
• You don’t mind showings and negotiations
• Local market is hot with multiple offers

Use our Commission Savings Calculator to run your own numbers.